Starting to budget after years of wishful thinking

LegoHead

MalMonroe said:

What I learned from my very long affair with debt was that you can sell everything you own but you can STILL be in debt. Until you can learn how to budget properly, you will just keep going around in circles. It was a very hard lesson indeed for me to learn. 

I ended up having a DRO - it was just like a slap in the face but it taught me how to budget and how important it is to never bury your head in the sand. I thought that because I had a good, well paying job that I was immune. But I also had so many store cards and credit cards on the go at one time, I was never going to be able to pay any of them off. All of that stemmed from having a divorce and being left as a single parent years before. I never caught up with myself and spending. 

Now, two years after the DRO has dropped off my credit report, I'm finally debt free and a bit more finance-savvy. I feel a bit like I'm an alcoholic, only with money spending. I have to be careful and think about what I'm spending. I do still manage to run a decent car and pay all my bills, with not a lot left at the end of each month but now I have peace of mind. I know I had a really cavalier attitude towards money but didn't realise it. Now I feel older and wiser - in that I know I have to watch what I'm doing or I could end up in dire straits again.

You could have a word with someone at one of the free debt help agencies, I know you're not in a desperate situation right now but they do offer advice for those who struggle. First you have to see the real problem before you can solve it, though. 

I can see myself getting straight back into spending lots again once debt free. Personally if I have a chunk of cash saved up I would be quite happy spending any excess above that, but maybe thats not the best attitude either. Who knows, I may go the other way and never want to spend cash again! Being mortgage free after clearing the mains debts would also be a great goal to aim for and then an early semi-retirement and less stress.

LegoHead

tealady said:

Hi
Well done on facing up to your debt.
Re tools, could you look at hiring (or borrowing) kit. If you only use something once and it cost £100 then the cost per use is £100. If you use it 10 times then the cost per use is £10.
Is there a "man in sheds" type of group you can join? Dont know your circumstances but meeting with like minded people might encourage you to borrow/hire rather than buy.

I pretty much have everything I need now. All my tools I would end up buying would be specialist lathe tools or milling tools. Maybe I could be the one to loan them out to other people? Do these types of groups exist? I dont really know where to look.

enthusiasticsaver

Why don’t you try putting money into savings when you get paid and after paying your bills? Then you know what is left is there for you to spend? Your soa doesn’t cover everything so not all of that supposedly free money is available but I would divide what is left after paying bills, put some aside in savings for car expenses/holidays etc, some for emergencies, some for debt over payments and some for spending. It is a question of finding the right balance between spending and saving. 

kimwp

LegoHead said:

Being mortgage free after clearing the mains debts would also be a great goal to aim for and then an early semi-retirement and less stress.

If this is the case, then when you are out of debt, I really recommend that on payday you put some money to overpaying your mortgage and some money to pension AVCs (or a different pension contribution). It's gone, so you can't spend it and it will go a long way to achieving these goals.

From your earlier posts, you seem to think money has to be saved as a big sum before you can do anything useful with it, but the reality is that little and often in the right place will have a big impact.

tealady

LegoHead said:

tealady 

I pretty much have everything I need now. All my tools I would end up buying would be specialist lathe tools or milling tools. Maybe I could be the one to loan them out to other people? Do these types of groups exist? I dont really know where to look.

Hi
Just Google men in sheds. Theres a UK organization
HTH

gizmo111

I found that by setting up Standing Orders for savings I treat it as part of my monthly outgoings, and as such don't even think about it anymore.  So much so that when I was considering reducing my hours I decided that I couldn't afford to as my outgoings were so high, took a while for me to realise that this was because I factored the savings amount in every month.......  

josephine82

I earn a similar amount to you OP, and while I’m not in debt, I have a clear plan with what I do with leftover cash each month: 
- emergency fund
- holiday fund
- car maintenance fund
- Christmas and birthday fund
- remaining is mine to spend as I wish

This means I always have a ‘pot’ to be used for large expenses, along with an emergency fund for the future (if needed) and then some money to just ‘enjoy’ whether that is eating out, clothes, etc. 

Once you get in the habit of putting money aside once you get paid, really you don’t miss it, but you do enjoy paying for a holiday in cash with no credit  and always having money for your car service/MOT and Christmas presents! 

So maybe balance paying off your debt with having a small amount of money to spend as you wish, and then when you’ve got that debt paid off you can think of how else to use it, whether that’s savings or mortgage overpayments or additional pension contributions etc. 

Good luck. 

LegoHead

josephine82 said:

I earn a similar amount to you OP, and while I’m not in debt, I have a clear plan with what I do with leftover cash each month: 
- emergency fund
- holiday fund
- car maintenance fund
- Christmas and birthday fund
- remaining is mine to spend as I wish

This means I always have a ‘pot’ to be used for large expenses, along with an emergency fund for the future (if needed) and then some money to just ‘enjoy’ whether that is eating out, clothes, etc. 

Once you get in the habit of putting money aside once you get paid, really you don’t miss it, but you do enjoy paying for a holiday in cash with no credit  and always having money for your car service/MOT and Christmas presents! 

So maybe balance paying off your debt with having a small amount of money to spend as you wish, and then when you’ve got that debt paid off you can think of how else to use it, whether that’s savings or mortgage overpayments or additional pension contributions etc. 

Good luck. 

Just looked at doing these funds and it highlighted a few things I missed. I should be putting money away each month for car insurance, home insurance, tyres, servicing, tax etc.. that I have never really budget for. Have now adjusted my plans for my money each month. It does change how long it will take to pay off my debts, also a little depressing, but now there should be less surprises. :-( 

LegoHead

Thought I would write an update. 

Got a lodger which has helped massively with expenses.
Debt left is as follows

£1500.00 credit card @ 0%
£12321.52 Loan @ 3.2%
£6142.76 Loan @ 9.2%
Total = £19,964.28

have been trying to apply for loans so I can transfer the high interest loan to a lower one, but no success even with a good credit rating. Have created a spreadsheet so I can look at all my yearly expenses like car maintenance and put aside cash monthly to cover these. Feel like I am in much better control now, thanks for all your help.

Andyjflet

This post has exhausted me in how difficult you are making it.... just add up your outgoings , ensure you have £1000 emergency fund and then each time you get paid throw the rest at the debt, smallest to largest for quick wins. 

You don't seem to have grasped the concept of budgeting in any way, get a budget app or work out a zero based budget where every £1 has a job each month.