Prosperous soul, mortgage neutrality & creativity Year 2

MovingForwards

It's great you've got 5 - 15 year plans, but perhaps what's missing is 1, 6 and 12 month plans.

At the moment you're almost spending reactively, however if you sat down, worked out short-term budgets and plans things may feel more controlled.

You could consider using a current account for spends, move in enough money to cover a weeks planned spends, once it's gone that's it until the following week.

It is easy to pull a card out and not really think about what's in the basket, so the cash option may work better until you've adjusted forget the cashback/ points as you'll save more by not spending.

Maybe add up how much you've earned from CB / points etc. Add up all the surplus / impulse spends. See if they balance up, if they don't then you're not gaining anything.

savingholmes

EssexHebridean said:

I thought that these days the CC co's were meant to offer a rate increase but not apply it unless you asked them to - a bit naughty if they're just applying it like that! ...

Can you set a specific budget for fritter spends if you know they're going to happen? Or reallocate some of your household budget for incidentals like bits for the garden? 

For closing CC's - the last couple I've done I've done in good old fashioned writing - San I discovered last week, will happily close card accounts for you via online chat too, which is helpful! 

I need to be proactive on closing the CCs... 

I do have a budget for fritter spends - but I am exceeding it.

Blackcats said:

do you have a personal spends category in your budget?  It's then guilt free spending and helps prioritise what you want to spend it on.  As @foxgloves says "once it's gone it's gone".

I do - but I am over-spending against it compared with my ideal budget.

LadyWithAPlan said:

I am with you on the no cc's idea - I definitely only have one to up my credit score for my house buying .. but it is amazing how it creeps up! I budget all my categories each month and have a pot called CC so when I spend on the card, I transfer that amount from the right pot -eg grocery, clothing etc into the pot so when the bill is due I have enough ready to pay it off. Yet somehow I am always out and have to add in more.

If I didnt need to show I can handle debt I would not have a cc. I only got it last year - and have managed to travel the world without a credit card for over a decade so. I cant wait to stop using it.

They just encourage you to spend ... Glad you have a new frugal hobby 'Til Debt do us part' thats enough to put everyone off credit cards. 

I like EssexHebridean and @blackcats idea of a personal spends pot. I do have a odds and ends pot and also a blow money one - £20 in each a month but I hate spending from them ... 

I need to re-focus. Like I say my savings are still going up (as is my pension) just not as fast as I'd like. I am sorting out decades long maintenance issues though so that is some of it but some of it is 'house presents'.

savingholmes

WelshmansDaughter said:

I like Gail's idea of percentages. It's like what you were saying before about DS living by a set of principles but for money. You put 25% or your own percentage in the Life category and then it goes on all the little things that make up life like gardens and fritter spends. Or even just go back over your spending and categorize it like that and see how much goes where.

I've looked at it on an estimated basis - and my net income has dropped recently due to increased AVCs. The figures below are just from my net income.

The shocker is using her formula - I spend between 42-47% on housing related costs. She recommends 35%. I was only counting the mortgage as within the 35% before but she includes fixed utility costs, council tax etc. Luckily I have no debt outside the mortgage (other than for a few days at a time) - for which she would otherwise allocate 15% so it roughly balances.

I am trying to save closer to 15% on average (she recommends 10-15%) but my income and annual bills fluctuate so each month is different. Luckily my transport is closer to 7% than her recommended cap of 15%.

That suggest I am spending 31% on life. If you have no debt she suggests adding 5% to the 25% life category to make 30% so that seems okay.

That would suggest I'm doing okay overall.

What the exercise showed me though is that with buying holidays from October and doing the AVCs at the same time it has significantly impacted my net pay (and therefore the ratios above) - and that I'm probably beating myself up unnecessarily. 

I'm currently paying close to 18% of my gross into my pension and AVCs.

savingholmes

MovingForwards said:

It's great you've got 5 - 15 year plans, but perhaps what's missing is 1, 6 and 12 month plans.

At the moment you're almost spending reactively, however if you sat down, worked out short-term budgets and plans things may feel more controlled.

You could consider using a current account for spends, move in enough money to cover a weeks planned spends, once it's gone that's it until the following week.

It is easy to pull a card out and not really think about what's in the basket, so the cash option may work better until you've adjusted forget the cashback/ points as you'll save more by not spending.

Maybe add up how much you've earned from CB / points etc. Add up all the surplus / impulse spends. See if they balance up, if they don't then you're not gaining anything.

I have set budgets including on a monthly basis - I'm just not squeezing out my desired savings... 

My longer term goal is time freedom and financial independence - and therefore I want to speed up my progress. What is interesting is how my income fluctuates far more dramatically between months than I ever would have anticipated - mainly due to additional income I've managed to bring in or random backpay or one off payments.

I want to be able to give DD £ towards her first car - so want to accelerate my savings so it doesn't have too big an impact on my overall financial health. It's all doable - just needs more discipline.

WelshmansDaughter

It's that old gratification problem, long term satisfaction versus some cheap thrills. If you find the solution will you let me know? 

WelshmansDaughter

I think she includes home maintenance in housing as well. 

EssexHebridean

Ultimately it's a straightforward question isn't it - perhaps worth adopting as part of the money mantras that apply when you're in debt. 

"What do I want more, time freedom and financial independence, or this thing I'm looking at spending money on right now - where will my money serve me better". 

It's pretty much the way we worked when we were getting shot of the mortgage. 

ruby_eskimo

Finally tracked down your new diary @savingholmes and have to say I'm right there with you on the random spending.  Will definitely be heeding @EssexHebridean's advice as we move into the new year.

beanielou

EH is on the button. 

We are all guilty of it to a degree. 

WelshmansDaughter

Be kind to yourself. Bear in mind that your brain works how it works and sometimes your wheels are going to be spinning in the air. Fritter spending can be a useful fidget if you are struggling on an emotional level.