Plugging the leaks!

PurplePlantPot

Hello!

In the last couple of days I've finally had the 'lightbulb' moment with regards to our debt and spending habits - although it was definitely more of a "oh !!!!!!" moment. For years, I'd probably say well over a decade, I've just been playing the money shuffle game and made any debts a tomorrow problem and while I haven't reached end point in terms of options, the debt is now just !!!!!! massive quite frankly.

Everything is being paid, I've never missed a payment and it's manageable, for now. However, despite many half arsed "we really should try and cut back our spending" moments, we keep adding to the debt, this year, to the tune of almost £1.3k a month - and I cannot - despite knowing exactly what we've spent every month for the past 5 years - honestly tell you what on.

It's incredibly embarrassing to write that down.

Tackling the debt is part 2 of the plan. As I said, it's all being paid. We have a couple of loans, some 0% credit cards and a 2nd charge mortgage (the result of previous consolidation attempt that clearly didn't work!), the debt repayments add up to £1k a month, so even without the debt we'd still be overspending. I also really didn't want to write that down but in the interests of full disclosure.

So part 1 of the plan - live within our means. It sounds really simple but also feels like a brand new concept! Here's what we've done starting from the 1st November.

1. Moved from credit cards to cash

All day-to-day spending has previously been on credit cards. We started doing this for the 'perks' but ultimately it's gotten far to easy to just stick something on the credit card and forget about it, leading to a build up in balance.

Luckily we had enough in savings (thanks to a tax rebate, not because we're good at saving!) to have a cash advance for the month, so we've opened up a monzo joint account and I've used the pots to budget for the month (i've put that at the bottom). We also have got Christmas savings (husband gets 13 paydays so we put aside the extra pay for Christmas presents) and a bit extra to cover the cars MOT & service in December so that we don't start in the red.

I've paid the credit cards as normal this month and will move any outstanding balances to 0% asap.

2. Defined the budget!

I sat down with my husband with the averages of everything we'd spent this year and we've had to find £1.3k to save. I'm operating on no savings right now as we do still have a small amount of savings. Also my husband is going to trial upping his hours at work, so any extra from that will go into savings for now.

So the budget. It only covers the discretionary spending, debt, utilities, mortgage etc are all covered with the rest of the income. I feel like it seems realistic, even generous at points, but again we are absolute novices at actually sticking to a budget. I think we've just gone from two adults with fulltime salaries to a 4 person house with 1.5 salaries and not really adjusted our spending as a result. Literally lifestyle creep combined with cost of living increases, combined with being a spendthrift!

There's 4 of us, me and my husband and 2 kids (7 and 2). I work full time, husband works just over 16 hours and has smallest for the rest of the time. We use the 30 hours free childcare stretched over the year and that covers smallests childminder. No other childcare.

Budget - this is how i've organised the Monzo pots:

• Food: 660 - to cover the monthly shops and any top ups. Husband works for Asda so we get a decent staff discount there.
• Work: 150 - I'm only in the office once or twice a month but it's quite far away. This covers train, parking any hotel stays and food (although I take a pack-up recently).
• Eating out: 100
• Kids: 230 - covers kids activities, clothes and any random bits.
• Cars: 180 - insurance, service, mot & petrol. We have 2 cars, 1 electric and 1 petrol. Trying to use the petrol car less - it's the smallest one so we tend to just jump in it more often.
• Hair: 60 - for both me and eldest.
• House: 75 - for any DIY or stuff for the house
• Presents: 50 - mostly kids parties! But also any birthday presents through the year, not many.
• Fun stuff: 50 - entertainment budget for us or the kids e.g. cinema tickets, entry prices to stuff.
• Toiletries: 25 - mainly a me thing, working on cutting this to the bare minimum.
• Other: 120 - !!!!!! and bits that don't neatly fit into another category.

I want to use this diary for my own accountability really. It's ridiculous that seems radical to me but it does.

Thanks for making it this far if you did!

subjecttocontract

What about bills ? council tax, electric, gas, phone, internet, water, sewerage, tv licence, subscriptions, house insurance, other insurances, any regular monthly payments, mobile phones ?......and Christmas is coming, energy bills are due to rise and we haven't mentioned holidays or income taxes.

PurplePlantPot

Bills are covered by the rest of our salaries. £1.7 is what we have left after all the bills, including mortgage, utilities, council tax, internet, some TV, all the debt and phones.

I forgot the £100 in holiday savings because it's in savings rather than the monzo pots. My parents live abroad so we only need to fund flights. Any additional holidays will be funded from my annual bonus.

We already have Christmas savings for presents thanks to my husbands 13 paydays (we only budget for 12 and use the 13th for christmas).

twopenny

Well done for getting it sorted!

Most of what I do isn't applicable to your life but I have some small things I held on to.

There's a thread on here about toiletries and pampering Buying unnecessary toiletries and another on bargains for entertainment, offers at supermarkets etc. a whole wealth of information for saving money. Use it. Get the kids involved in finding these, great for them to learn how to look after their lives as well as taking the pressure off you.

A colleague said that home made sandwiches were much nicer than shop bought and that changed my view.

Friends pay half the price I do for haircuts and they look great by using hairdressers that work from home. I'm plucking up courage to do that.

I now carry tinned coffee and snacks in the car, bought when they are on offer, and only use a cafe when it's with friends.

I buy at a local farm shop. Only a little more but I go home with what I came for - unlike the supermarket so no fridge stuffed with random purchases. I recently went round the supermarket for one item and found I had several. I put them back on the shelves. How about all of you having the same shopping list and getting the kids involved in trying to only come out with what is on the list.

All small stuff but it's amazing how quickly it makes a difference to what is left over in the bank.

YBR

It is worth putting your bills on here too, and the good forumites will suggest where you can reduce costs.

PurplePlantPot

https://forums.moneysavingexpert.com/discussion/comment/82191679#Comment_82191679

Thank you for this. I'll admit to not searching for things or looking for bargains. Convenience has been king for pretty much every decision i've made.

I have started using my travel mug for teas when out - I don't drink coffee so paying 2-3 quid for a cup of tea each time. And we need to get better at making sure we always have something for the kids. We are very guilty of just buying things for the kids and not really thinking about it and it obviously massively adds up. Eldest for example has probably never been to a day out type event without having an ice cream! So there's room to make changes.

Toiletries I've already made changes to, I got into the habit of expensive skincare after my second child to make myself feel better but have now switched back to my cheaper (and actually better) stuff. It's just working my way through the rest to figure out what's actually important to me vs what am I buying just because.

And yes we're both terrible at top up shops. DH will go to the shop for milk and come out with 10 other things. I have a habit of changing my mind for lunches and then doing a mini weekly shop on a saturday for £40 or £50. It's just mindless sometimes - which is what needs to improve I guess!

PurplePlantPot

https://forums.moneysavingexpert.com/discussion/comment/82191724#Comment_82191724

Absolutely and when we move onto the next phase of sorting the debt out and working out the best plan for that I absolutely will. But right now I just want to focus on staying within a budget.

Plus most of the bills are in fixes, I suppose the only ones with any movement available are the credit card payments - I've got them set at a fixed amount rather than just the minimum payments (the fixed amount is the minimum payment at the start of the balance transfer) and a couple of things like netflix and nowtv. My phone is in a contract and due to location i'm limited to 1 network anyway - despite living fairly urban, we're in a signal black hole unless you use O2! I've tried some of the companies that use the O2 signal but honestly it's crap and as we don't have a house phone it's really necessary to be able to hear phone calls :D

PurplePlantPot

I've already been twitching to spend in the past 4 days since we moved to this new budget. I think I'm going to write them down every time I manage to resist (or not)!

Todays twitch - I really wanted to buy some Christmas themed bottles for December. We all use water bottles during the day, and the overwhelming urge to buy some christmas themed ones took over. The bottles I would've bought were about £16 per bottle so that's £64 I didn't spend.

And it's all becoming clear where the money was going!

ArtyJ931

health costs, unexpected but expected costs - MOT, annual bills, white goods breaking down, household maintenance, emergency fund. Those things spring to mind. Good luck :)

twopenny

Christmas stickers to go on the water bottles? £1 😉

Good idea to write it down. I'd suggest a pretty notebook but that would mean buying it 😆 you could stick the list on the fridge where you see it all the time. Ask for a pretty note book for Christmas. It's easy enough for the family to cope with.

Yes to the toiletries. I replaced my expensive moisturiser with aqueous cream, few drops of lavender or rose oil. Cheered me the same. Just cut open 3 almost used hand creams and what was left filled a small tub. Enough for a couple of months. I was just going to buy more 🙄

To be honest I feel sorry for people today because the constant stream of advertising gives you the mindset to spend and cards and phones the ability to get instant reward . The belief that you must spend hundreds on Christmas day - one day. Tell someone you're having sausage and mash because that's what you love and they're horrified 😄

I'm struggling and I didn't grow up with this.

Do you do an online shop so you only get what you want? What I picked up the other day and put back was stuff I use but it was on offer so 'to store it '. It's a minefield of battles to resist the big corporations and work out what suits you. Ditto fuel fixing at al.

PurplePlantPot

https://forums.moneysavingexpert.com/discussion/comment/82191806#Comment_82191806

Good shout on the health costs, we don't have any regular type costs but do need to factor in dentist visits twice a year. I am trying to get into an NHS dentist but no luck in 6 years so far.

I think the rest is covered, we have the house pot and car pot. The house itself is only 15 years old so no major maintenance work looking likely.

How much emergency fund? We'll have just under 1k in the savings account depending on how much the MOT and service (and any repairs!) is in December. I wasn't going to allocate anything else to that for now.