Getting a grip of my finances

WinterWarrior

Well done you. All those little spends add up and are best avoided!

SweetPeaGirl

Well, I've been a little blown off track by two things, both of them not problems, but definitely outside of my plan:

1) A bunch of unexpected costs. Most of which I will be reimbursed for later so don't affect my spending in the end, but did make staying in the 'no spend' mindset quite hard.

2) A client has decided that it will be better for him to pay in advance for the next 3 months, along with my payment for the last 2 months. So now my challenge will be sticking to my budget even while I have lots of dosh sloshing around - because I'm going to need it later on!

The second one is both a blessing and curse - as I wrote in my OP, unpredictable income can make budgeting hard and cash flow challenges have led to debt in the past, and this change resolves that. BUT also a problem is that when I have money, I tend to spend it. And now I can't. So I'm going to use it to pay off the most urgent credit card debt, and then move it into savings to use for living costs down the line.

Will power is not my strong suit, but here we are!

gizmo111

It took me ages to get my business finances organised as same as you it could be months after I'd started a piece of work.., and sometimes in advance! I've now got a Starling account, which has a great hidden space/pots to save money, when I get an invoice paid I split into 3.  Corp Tax, VAT and Salary/Dividends.  I then pay myself on a set day of each month, the amount I've agreed with myself I will take from the business, and leave the rest in the salary space.  It means that I don't have a fluctuating income and can budget my personal spends better.  It was definitely a game changer for me and is less stressful than just guessing/hoping for when I was going to get invoices paid.

SweetPeaGirl

Here's my little update since I started two weeks ago. I've moved some of my debt to interest free credit cards, and paid the rest of my CC debt down, so that cuts a chunk off my interest every month, yey!

Here's my current position:

L1: £4,094
L2: £9,470
CC1: £0
CC2: £2,123 (0% to May 2022)
CC3: £520 (0% to November 2021
CC4: £900 (0% to January 2022)

Total: £17,107

I have also put £3,000 into premium bonds as the start of my emergency fund / tax fund. I like this idea because a) I might win something, b) it's accessible, and c) it's not TOO accessible so I think it will help to stop me spending it unnecessarily!

Oh, and my spending has been under control, which I am very happy with.

I will definitely NOT be making this much progress every month - as mentioned above a client wanted to pay me in advance, so I've put the extra into a mix of paying down credit cards to save on interest, and putting it into premium bonds. That leaves me with cash to cover 1.5 months expenses in my regular account (and other income expected over the next couple of weeks).

I'm feeling fully in control now. I'm really, really happy to have sorted out the CC interest, so now even when I'm not able to pay extra off, I know that my regular monthly payments will be paying it all down.

TheAble

I'd be tempted to use half that PB money to pay off the smaller credit cards. People think it's 0% so it doesn't matter but the weight off your mind of having them gone is worth more than the interest/winnings you might have earned. You tend to find this has a motivational impact which will help you speed along paying off the remainder of your debts.

SweetPeaGirl

TheAble said:

I'd be tempted to use half that PB money to pay off the smaller credit cards. People think it's 0% so it doesn't matter but the weight off your mind of having them gone is worth more than the interest/winnings you might have earned. You tend to find this has a motivational impact which will help you speed along paying off the remainder of your debts.

I would if it was just normal savings, but it's a mix of my back up plan for if I have cash flow issues again (as mentioned above, a key driver of me getting into debt in the first place), and also £££ I am going to owe the tax man 😊

My plan from now is to put all spare cash after minimum payments into my CCs in order of their interest free period ending - the two smaller ones will be gone well before that - and if I haven't cleared the bigger one by this time next year it will be much reduced, and I'll have options. 

WinterWarrior

That makes sense. Good luck for May ⭐️