First Steps to Solvency

theoretica

getmore4less said:

I think -  here is your pocket money is a bit controlling and could backfire.

It could - but asking Mrs Alt if she would actually like an account with just her money so it is easier for her to keep track of and she doesn't feel every spend is being scrutinised or needs to be discussed might get a yes.  How does she want to manage not-unlimited money?

Purplelady65

You invited comments on your proposed budget. Just wondering if the budget for occasions which you said is for presents at £85 per month (£1,020 per annum) is realistic? As you’ve spent £2.5k on your son this year this amount is going to be a lot less than your wife is used to spending on him. What about everyone else - parents, brothers, sisters, nieces, nephews, friends e.t.c. Also your wife said she didn’t want any presents but then went out and bought her own. Might she do that again? Also post covid there’s likely to be lots of kids birthday parties that your son will be invited to particularly as many won’t have taken place this year due to lockdown. You say your wife isn’t very good with numbers but it’s key that she fully understands what you’re proposing, what it means in terms of future spending and that she’s fully signed up to it and the long slog ahead. I can see that if she’s spent the last 10 years or so being lavished with expensive gifts, able to spend money whenever she likes on whatever she likes without having to earn any of it herself it’s going to take some adjustment and resetting of expectations if going forward you’re both following quite a strict budget compared to what you were both spending previously. 

getmore4less

alt80 said:

Don’t know !!!!!! has happened to the formatting of the figures. Half copied from excel and tried to move about on page - looks ok in edit mode.

Pasting from excel does not always work it creates tables with formatting.
You can toggle into html mode and change the formatting(if you know a little html) its the last icon on the bar ( </> )

Will have a look and see what I can do. also it will look very different on small screens that a lot use, it was unreadable on my mobile trying on the laptop now.

enthusiasticsaver

getmore4less said:

I think -  here is your pocket money is a bit controlling and could backfire.

The slow burn approach might be better. 

Agree the budget for the year, allocate and track the spends

 X*12 for the year for each category. 
Over spend month one what's left for 11 months, reduced pm amount
Repeat

Keep reminding when it runs out that is it no more or needs to come from somewhere else. 

As someone who had a spouse who also spent unthinkingly when we were on a strict and very tight budget pocket money is sometimes the only way to keep spenders on track with a budget. We just have a personal allowance each in separate accounts , a credit card with additional card holder for my DH which is for food and fuel and the joint account for variable spends. The deal on the joint account is any more than £50 we run past each other first. The problem with Mrs alt is the numbers are multiplied in that she will spend more than £700 or whatever in spite of alt reminding her of the budget of only £80 left I think it was. She is no good with figures but she must have understood that and if not she has to be made to understand so if pocket money is the only way she can be forced to keep to a budget I think that has to be the way to deal with it or this will happen again. I do think the budget for Christmas will need to be bigger if she does this every year or the holiday fund has to go. 

Alt seems to have had a massive LBM and is on board with a budget because he knows why he has to keep the spending within limits and is motivated to do so. He wants the cards paid off, he wants the RR sorted, less stress and to be able to grow his business and BTL portfolio. Mrs alt does not have the same motivation in that her spending is purposeless. She just wants to treat herself and her son and portray an image on social media of how she wants to be perceived. I am not sure how you get through to someone like that. Normally it could be sold as keeping to a budget and having finances under control but she doesn't care about that either as alt is the one juggling figures to cover her overspends so she doesn't have to take responsibility for them. Giving her control over a part of the budget and not giving her the opportunity to overspend by not allowing her access to his cards may not be the worst idea as long as she has no means of destroying his credit record. The problems come if she does the food shopping and starts dipping into that for treats. 

getmore4less

lets try this adjustment ( remove some columns ) to make the table narrower, might still be a problem on mobile.
I would pull the school out into its own line its all or nothing where the life stuff are things you can adjust and prioritise. 
I think the variable need breaking out into categories probably under Life where the other discretionary/adjustable spends are.

Food/groceries is still a standout item for 3 people, 
take the alcohol out to its own category.
many put pet expenses as their own group food/vet/ins etc.
once you pull out school and the long terms stuff(holiday/emergency) and fuel as most of that is work related covered by expenses

That makes your controllable spends around £2200pm that needs prioritising.
the other £5,800 is just not available to spend as it is committed

That £2,200 does not have to cover a lot as the house cars & school are all paid for.
The main job  is feed you, what's the rest getting blown on that's where you can make a difference.

alt80 said:

Thanks for comments. Not in the best frame of mind so not really going to respond but have read. Someone asked about BTLs and what the point is in growing - they are income producing but rather than taking income to spend one turns into the next and also I invest retained profits from flips/ main business so bit of a winner all round. I do have a plan to deleverage a little so no personal risk and then offset further units to buy some toys. Still get to keep the unit and get the toy but not at expense of my day-to-day living. I enjoy investing in property also and have a bit of an ambitious goal of 100 units at c.60/65LTV by the time I’m done. If it happens great if not I’ve tried. Would like to have something to pass to son, yes.

Hopefully a more positive post from me, checked the cards for the coming month, will be ending with an outstanding balance of £27,245 if there are no further sales. I have rolled the savings on my res home mortgage into the cards balances. Very pleased to have got a new deal on the res mortgage @ 1.4% with no product fees through my bank on a 5 year fix. Some deal they were doing for account holders and haven’t found much if anything better, was already with them for res mortgage / current account def happy days on that front.

Jan-21	Balance
Barclaycard	£6,490.00
M&S	£2,695.00
Sainsburys	£6,650.00
MBNA	£11,410.00
	£27,245.00

Properly worked out the !!!!!! stupid Christmas spends. Hopefully seeing the consequences of her decision will knock some sense into swmbo but not holding out that much hope lol. 

CHRISTMAS ‘20	Jan.	-£385.00	£1435 from Resv 1 + CA o/d	£850+£170 EF, hols, occ, x2 serv, x2 maint
	Feb.	£-	Variable £1165
	Mar.	£300.00	Variable £1250
	Apr.	£600.00	Variable £1250
	May.	£900.00	Variable £1250
	Jun.	£1,200.00	Variable £1250
	Jul.	£1,435.00	Variable £1315
	Aug.		Variable £1550

CA o/d is 0% for first £1k. Rest coming from the total reserve we have so far built. Some for yearly bills etc so needs to be paid back. Means our variable for this month is actually £1,165. Telling her she can !!!!!! forget makeup this month and I’m on the dry Jan so no drinks being bought either. Should be able to do it.

Also updated this:

INCOME	£8,050.00			Inc £300 HMRC fuel rev x12
HOUSE					LIFE
Mortgage	£1,240.00				Food (Variable)	£650.00
Council tax	£250.00				Petrol (Variable)	£300.00
Utilities	£290.00				School / son	£1,100.00
B/C Ins	£30.00				Entertainment (Variable)	£300.00
	£1,810.00				Occasions	£85.00	1000/y
					Holiday	£170.00	2000/y
CARS					Emergency fund	£170.00	2000/y
RANGE ROVER						£2,775.00
Finance	£1,220.00
Insurance	£50.00				CREDIT CARDS	£1,105.00
Tax	£40.00
Servicing	£40.00	500/y
Maintenance	£40.00	500/y
	£1,390.00
BMW
Finance	£430.00
Insurance	£40.00
Tax	£40.00
Servicing	£40.00	500/y
Maintenance	£40.00	500/y
	£590.00

 
It makes sense to me but happy for comments -
‘Income’ is net of tax but includes my £300/m HMRC fuel rebate. It’s normally around the £300 mark sometimes slightly more but if slightly more I’ll throw the extra straight at the cards. Occasionally it’s less so will adjust income accordingly on a monthly basis. As someone asked on the original post about this; Divs tax kept in a separate reserve account, I deal with it the moment the money comes in so irrelevant for the point of month to month personal budget. Owing HMRC 100 not worth it.
‘Food’ includes actual food, dog food, few coffees / alcohol. Occasions is meant to include presents ha. Tbh I don’t want to spend anymore.
BMW can go Feb if it does that’s £590/m rolled into cards balance.

getmore4less

enthusiasticsaver said:

getmore4less said:

I think -  here is your pocket money is a bit controlling and could backfire.

The slow burn approach might be better. 

Agree the budget for the year, allocate and track the spends

 X*12 for the year for each category. 
Over spend month one what's left for 11 months, reduced pm amount
Repeat

Keep reminding when it runs out that is it no more or needs to come from somewhere else. 

As someone who had a spouse who also spent unthinkingly when we were on a strict and very tight budget pocket money is sometimes the only way to keep spenders on track with a budget. We just have a personal allowance each in separate accounts , a credit card with additional card holder for my DH which is for food and fuel and the joint account for variable spends. The deal on the joint account is any more than £50 we run past each other first. The problem with Mrs alt is the numbers are multiplied in that she will spend more than £700 or whatever in spite of alt reminding her of the budget of only £80 left I think it was. She is no good with figures but she must have understood that and if not she has to be made to understand so if pocket money is the only way she can be forced to keep to a budget I think that has to be the way to deal with it or this will happen again. I do think the budget for Christmas will need to be bigger if she does this every year or the holiday fund has to go. 

Alt seems to have had a massive LBM and is on board with a budget because he knows why he has to keep the spending within limits and is motivated to do so. He wants the cards paid off, he wants the RR sorted, less stress and to be able to grow his business and BTL portfolio. Mrs alt does not have the same motivation in that her spending is purposeless. She just wants to treat herself and her son and portray an image on social media of how she wants to be perceived. I am not sure how you get through to someone like that. Normally it could be sold as keeping to a budget and having finances under control but she doesn't care about that either as alt is the one juggling figures to cover her overspends so she doesn't have to take responsibility for them. Giving her control over a part of the budget and not giving her the opportunity to overspend by not allowing her access to his cards may not be the worst idea as long as she has no means of destroying his credit record. The problems come if she does the food shopping and starts dipping into that for treats. 

This is not a tight budget, 
Everything is covered house, cars, school, holidays, emergency THEN there is over £2k left for food and some personal stuff.

That is where the adjustments need to happen that can be a joint effort under tight control on a daily basis, once it runs out no more food shopping. 

Might sink in when they are on beans and toast for a week.

alt80

Thanks all. 

@getmore4less just seen what happens to it on a mobile. FML. 😆 I was complaining it wasn’t working as it should have on my work computer haha. Will try to adjust it later.

Thanks mate. The £2.2k should make some sense when I can actually see the figures haha but doesn’t off the top of my head right now.

@enthusiasticsaver 100 I’m on board get it gone for good. Realised no miracle cure for this and not going to finance my way out of being in debt.

Wife still being a nightmare and yeah me sorting it out as usual. Not going to make any rash decisions but need to sort it can be rescuing her from herself forever lol. Showed her the Christmas !!!!!! going to take 7 months to clear she doesn’t even see it. Actually said why can’t it just be paid off the card at the minimum amount (the spends card is now cleared because it’s interest baring and I’m not going to BT the balance into another card as there’s a fee). 

FML if your husband is just as bad absolute kudos to you for achieving your retirement goals. 

@Purplelady65 she’s just going to have to forget it or expand the nails empire. I’m not going to miss out on having a holiday for Christmas gifts. I’m willing to have one cheap holiday a year and the rest can go towards paying my cards off and RR after they’ve gone. Not overly bothered about Dubai etc but I would like to get away for a week or two at some point covid permitting.

getmore4less

For the formatting  it needs to be narrow to fit most platforms, one item/number per row would work better(going wide works on  spreadsheet).

Can still be grouped with sub totals for the likes of car and house.

I think the message is that from that £8kpm/£96kpy  there is ~£26kpy to share out for food, living, luxury, Christmas, birthdays.

If you pull out your current food budget that goes down to £18,500 that ~£500pm each for the 3  of you.

You could make her in charge of her and the kids money, if she blows the kids money then she is responsible for no presents next xmas

ryanm8655

alt80 said:

Thanks all. 

@getmore4less just seen what happens to it on a mobile. FML. 😆 I was complaining it wasn’t working as it should have on my work computer haha. Will try to adjust it later.

Thanks mate. The £2.2k should make some sense when I can actually see the figures haha but doesn’t off the top of my head right now.

@enthusiasticsaver 100 I’m on board get it gone for good. Realised no miracle cure for this and not going to finance my way out of being in debt.

Wife still being a nightmare and yeah me sorting it out as usual. Not going to make any rash decisions but need to sort it can be rescuing her from herself forever lol. Showed her the Christmas !!!!!! going to take 7 months to clear she doesn’t even see it. Actually said why can’t it just be paid off the card at the minimum amount (the spends card is now cleared because it’s interest baring and I’m not going to BT the balance into another card as there’s a fee). 

FML if your husband is just as bad absolute kudos to you for achieving your retirement goals. 

@Purplelady65 she’s just going to have to forget it or expand the nails empire. I’m not going to miss out on having a holiday for Christmas gifts. I’m willing to have one cheap holiday a year and the rest can go towards paying my cards off and RR after they’ve gone. Not overly bothered about Dubai etc but I would like to get away for a week or two at some point covid permitting.

I just don’t think it’s clicked. She seems quite happy to be in debt, was just worried she’d lose everything but now that’s not the case she isn’t interested. Happy to live a life of debt. To be fair I probably would be too if someone else was paying for it all She needs to grasp the principle of opportunity cost...and the fact the debt and lifestyle holds back your business. If you’re using debt to buy things then it isn’t an affordable lifestyle and in the longterm the house of cards will fall. Maybe talk her through how much you’d end up paying back if you just paid the minimum on the card...and the total you’d pay back versus what you spent...

Sadly I think you are going to have to treat her like a child as far as money is concerned. She doesn’t understand the value of money at all...

On a positive note, your mindset change makes me really happy! I think you’ve got the right balance. Still have ambitions and dreams, still want toys and to live but within your means and growing towards the things that aren’t affordable right now.

katsu

alt80 said:

Wife still being a nightmare and yeah me sorting it out as usual. Not going to make any rash decisions but need to sort it can be rescuing her from herself forever lol. Showed her the Christmas !!!!!! going to take 7 months to clear she doesn’t even see it. Actually said why can’t it just be paid off the card at the minimum amount (the spends card is now cleared because it’s interest baring and I’m not going to BT the balance into another card as there’s a fee). 

I think that's a great place to start the conversation. What if we pay this off at minimum?  What will it cost us over X time?  What does all this debt cost us over all the years in interest? 

Talk about her fear,  losing the house,  and how moving from debt to savings helps prevent that. 

Talk about the cost of the fear for you both - how waking up at night feels.

Can you maybe give her some insight into this by talking about it? Can you find a clip of Martin talking on the radio and let it start a conversation between you? 

The Katsu house started out overspending,  as you see from our signature. I put wedding spending on my credit card because I *had* to get ABC and had run out of cash. I didn't think about the ABC costing me £X + the credit card interest over time. I just thought some debt was normal. 
Martin inspired me and the community here helped change me,  as its changing you.  I'm hoping your wife can be reached too.  It might take more time as she doesn't earn money or have to balance it.  Maybe sit with her and the budget? 

What I want for you is peace. In the last few years we've both been out of work and thanks to Covid, Mr Katsu isn't working right now, so we are both living off my income.  To be able to do that without worrying is priceless.  My decision to pay off the house wasn't as smart as investing,  I think, but the peace I have is worth so much as its meant I'm not worrying about how to juggle the money.  I know our modest lifestyle doesn't appeal to you but maybe you can talk to your wife about what does appeal to you both and how the decisions you make now impact on that. 

(And yes there are times I think about how even a small wage from him would be worth so much compared to me earning extra... I'm human after all!  😉)