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  • FIRST POST
    • Sharon87
    • By Sharon87 4th Jan 18, 1:02 AM
    • 3,589Posts
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    Sharon87
    YNAB - 1 year of budgeting, I can see why I'm in debt now
    • #1
    • 4th Jan 18, 1:02 AM
    YNAB - 1 year of budgeting, I can see why I'm in debt now 4th Jan 18 at 1:02 AM
    I always start off with good intentions of getting my debt down, I make a budget, transfer what I need for savings and monthly spends into different bank accounts at the beginning of the month. But nearly every month I overspend.

    On YNAB I have my credit cards as 'off budget' accounts, I try not to spend on these if I can help it (doesn't always work though, I should have put on 0% spend card as a budget one - the card I got to book my holiday on).

    So now I've been budgeting for a year I can see what I've spent in certain categories. These are the big red categories where my spending needs to reduce:

    Restaurants/Takeaways (inc expensive lunches)
    Yearly: 999.95
    Monthly: 83.33
    (my new monthly budget is reduced to 30)

    Entertainment (pubs, DVDs, cinema, theatre, apps, special birthday meals/drinking)
    Yearly: 1409.88
    Monthly: 117.49
    (my new monthly budget for this is 50)

    Holidays (and holiday savings)
    Yearly: 1771.94
    Monthly: 147.66
    (I'm thinking of setting a new monthly budget of around 40)

    Taxis:
    Yearly: 206.56
    Monthly: 17.21
    (monthly budget of 0 - will only get one for holidays if necessary and will come under holiday budget)

    Total on 'indulgences' is 4388.33
    Total on future indulgences for the year: 1440
    What I could have saved: 2948.33

    Here's what I've paid towards my credit cards this year:
    3064.43
    However I have cheated and used my credit cards for things like clothes, new phone and holiday, so my debt is almost the exact same as last year, with the indulgences spent as it is, I could have paid almost 3 grand off (3k was the aim to pay off this year).

    I've done this to show how easy it is to spend so much money without realising (even when budgeting). I have made a vow to not get any takeaways or go to restaurants this month or next month. I have even gone to the extent of blocking the sites to make it a bit harder and to remind myself to just cook instead!

    I have a holiday next month (been saving and planning it for years and years!), which I've decided will be my last major holiday until my debt is paid off. I have set of a limit of 480 per year for holidays/festivals, which I will set so in line with my budget. Most people veto holidays whilst they're paying off debts, but I want this to be my one treat. I can forego DVDs and the pub if I can go on holiday.

    Taxis - I don't need to get a taxi except maybe for holiday, I get them sometimes because I don't want to wait for the bus! This is also getting cut out.

    Entertainment - I am cutting this right back, this past month I've not spent much on booze when out, so my aim is for when I do go out with friends is to drink more soft drinks than alcohol (or lots more water), so that way I don't spend 60 on a night out! The exception being a special occasion in which I've saved up for it in advance.

    It's quite disappointing to see my debt not going down, but doing this budget makes me see the reasons why and then I can change what I'm doing. I could be maybe 3000 less in debt than I am.

    The one positive is that this year my debt has not increased for the first time in 8 years. I am putting the brakes on and about to reverse my way out of this debt!

    Here's to a year where I actually stick to my budget and my debt goes down!

    This Forum tip was included in MoneySavingExpert.com's weekly email!
    Last edited by MSE Andrea; 09-01-2019 at 11:26 AM.
Page 1
    • tempus_fugit
    • By tempus_fugit 4th Jan 18, 4:49 AM
    • 558 Posts
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    tempus_fugit
    • #2
    • 4th Jan 18, 4:49 AM
    • #2
    • 4th Jan 18, 4:49 AM
    Well done on getting on top of your budget and making a plan for the future. It sounds like you are bing sensible about it and allowing for at least some fun money whilst cutting back generally.

    One thing I would say though is that your credit cards should really be "on budget" as all spending should ideally be budgeted for so that you accrue the funds for paying them off, or alternatively, you can build up the credit card funds from savings (if you have un-budgeted expenditure on the cards). But certainly, any cards you are using for spending should be on budget to get the best out of the way YNAB works with them.

    Anyway, whatever you do, good luck with the budgeting.
    Retired at age 56 after having "light bulb moment" due to reading MSE and its forums. Have been converted to the "budget to zero" concept and use YNAB for all monthly budgeting and long term goals.
    • enthusiasticsaver
    • By enthusiasticsaver 4th Jan 18, 6:12 AM
    • 7,665 Posts
    • 17,069 Thanks
    enthusiasticsaver
    • #3
    • 4th Jan 18, 6:12 AM
    • #3
    • 4th Jan 18, 6:12 AM
    You have discovered the holy grail of budgeting in that it all works only if you keep within the budget. Ideally you would have been looking at this monthly and realising you were over budget on those categories and either upping the budget or borrowing from other categories. Credit cards should be in the budget. I don't use YNAB but do use clear checkbook which has envelope system for categories.
    Early retired in December 2017

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages and Endowments, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • Sharon87
    • By Sharon87 4th Jan 18, 9:37 AM
    • 3,589 Posts
    • 3,070 Thanks
    Sharon87
    • #4
    • 4th Jan 18, 9:37 AM
    • #4
    • 4th Jan 18, 9:37 AM
    Most of my credit cards I don't spend on, they are balance transfer cards at 0%. So to make my budget each month read 0 they are under the off budget category, it also means I have a way of tracking payments made toward them.

    My spend card I should have put on budget and will do that from now on.

    One thing I've also started doing last year is to put money away into a savings account for annual expenses like TV licence, contents insurance and my tax bill. Which means in January when most of these are due I can pay them without worrying! This was one thing I never did properly and probably the reason I spent money on other things and then had to use credit.

    I am just debating the best way to pay off my cards, whether to save it in my 3% current account that I use as savings or pay it off straight away (all debt is on 0%) to remove the temptation of spending that money. On most cards I pay over the minimum amount so I can clear the cards quicker, and so I can pay almost 300 a month off of my debts a month, so that's also an option is to increase that. I change my direct debit to a fixed amount.

    My next mission is to find a job for when I come back from holiday. I work short term contracts and there's plenty of work around so I'm not worried. I'm also doing extra work transcribing from home which is mostly how I've paid for my holiday! Another reason for no big holidays is to find a job I really want to do and not just pick anything that fits in around holidays just because I need the money,
    • Sharon87
    • By Sharon87 30th Mar 18, 2:40 PM
    • 3,589 Posts
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    Sharon87
    • #5
    • 30th Mar 18, 2:40 PM
    • #5
    • 30th Mar 18, 2:40 PM
    3 months into the year. I've paid 626 off my debt so far. Could have been a bit more, but I did do a couple of balance transfers so the fees added to the debt.

    I have reduced my entertainment spend, not quite to 50 a month, it's averaging at 73 at the moment, but still less than before.
    Restaurants is average of 53, more than the 30, but less than the 83 a month average from before
    taxis - completely cut out. I have taken 1 taxi (barring holiday) since then, but that was for work and can claim the money back!

    I've also opened a HTB ISA, I know I can't think about buying a house until my debt is gone, but I've put 130 into it so far. Even if I don't use it to buy a house it's long term savings at an ok interest rate.

    This month's challenge is surviving on 3 weeks wages instead of a whole months as I've just changed jobs, had 2 weeks off after my holiday looking for a new one (I work contracts). So my budget for April shows -200, so need to look to see where I can make savings, whether that's walking to/from work - it takes about 80 minutes to walk (20 minutes on tube/walking), or spending less on food or not put anything towards the annual things like Christmas/large purchases, but really don't want to do that.

    I might try and ebay a few things to get a bit of extra cash and try and take on some extra transcribing work.

    I have spent more on clothes than I intended, but most things were necessary (my bras are expensive!), I've spent 5 months of budget in 3 months. So no money will be spent on clothes until June at the earliest!
  • archived user
    • #6
    • 30th Mar 18, 3:19 PM
    • #6
    • 30th Mar 18, 3:19 PM
    I am just debating the best way to pay off my cards, whether to save it in my 3% current account that I use as savings or pay it off straight away (all debt is on 0%) to remove the temptation of spending that money. On most cards I pay over the minimum amount so I can clear the cards quicker, and so I can pay almost 300 a month off of my debts a month, so that's also an option is to increase that. I change my direct debit to a fixed amount.
    ,
    Originally posted by Sharon87
    Sounds like you have a great plan now. How about a spare treat pot that you give yourself an occasional indulgence - and so you don't feel too deprived as you ease out of old habits?

    Also a question from me - which current account is giving you 3% interest - thanks!
    • Mnd
    • By Mnd 30th Mar 18, 6:20 PM
    • 923 Posts
    • 1,200 Thanks
    Mnd
    • #7
    • 30th Mar 18, 6:20 PM
    • #7
    • 30th Mar 18, 6:20 PM
    Answer to ramble ham, I think Tsb and tesco pay 3% on current account
    • Sharon87
    • By Sharon87 30th Mar 18, 9:02 PM
    • 3,589 Posts
    • 3,070 Thanks
    Sharon87
    • #8
    • 30th Mar 18, 9:02 PM
    • #8
    • 30th Mar 18, 9:02 PM
    Answer to ramble ham, I think Tsb and tesco pay 3% on current account
    Originally posted by Mnd
    Tesco current account. I got it before you needed direct debits set up. My HTB ISA is at 2%, which is pretty decent at the moment!
    • stoozie1
    • By stoozie1 31st Mar 18, 3:07 AM
    • 613 Posts
    • 575 Thanks
    stoozie1
    • #9
    • 31st Mar 18, 3:07 AM
    • #9
    • 31st Mar 18, 3:07 AM
    You can get 5% interest on a nationwide current account for a year, if that helps.
    Save 12 k in 2018 challenge member #79
    Target 2018: 24k Jan 2018- 560 April 2670
  • archived user
    Thanks all. Wow 5% need to look into That!!
    • tori.k
    • By tori.k 1st Apr 18, 8:23 AM
    • 3,382 Posts
    • 9,010 Thanks
    tori.k
    The Statement of affairs really is the key, it took us 6 months of rejigging each category to finally find the right balance.
    We are on similar paths and our process has been the same, we complete on our house on Tuesday so it's back to the debt busting for us also.
    You will get there and sooner than you think, just got to keep on trucking
    Good luck
    Debit to Credit (stage 1) 3652.34 completed 15/10/16
    Debit to Credit (stage 2) 6299.09 completed 25/06/17
    Mortgage Free (stage 3) 134,157
    GC 3227.86
    • datlex
    • By datlex 1st Apr 18, 12:14 PM
    • 1,911 Posts
    • 2,078 Thanks
    datlex
    Cutting back is good but be careful about cutting back too far. It needs to be sustainable in the long term. Your taxi use seems low in the first place given your entertainment budget. How do you get to the pub for example? Is it viable to get home via public transport after an evening out (i.e. does not involve a walk- personally safety is important) or does someone chose to drive?

    What may still trip you up is things like spending unbudgeted money on clothes or a new phone or other items.

    Are you going to put aside extra money for your debts or pay the additional amount on pay day so that you then don't have it available.
    • Fireflyaway
    • By Fireflyaway 2nd Apr 18, 8:37 AM
    • 2,173 Posts
    • 2,543 Thanks
    Fireflyaway
    Budgeting is like dieting, you think that little chocolate doesn't count! Its only a 5 purchase, its only 10 out the cash machine etc! I've realised I'm wasting at least 60 a month on meal deals. Oh its only 3 a day ... Yeah but thats 60 a month on a soggy sandwich I didn't even enjoy. Plus I've put on weight as I grab chocolate too!
    Keeping a record is a great idea. Most of us don't actually know how much we truly spend.
    • Cakeguts
    • By Cakeguts 2nd Apr 18, 11:43 AM
    • 5,444 Posts
    • 8,311 Thanks
    Cakeguts
    The problem I think is all those little it is only so much a month things. They usually end in .99. So 9.99 per month for example which is actually nearer to 10 than it is to 9. You only need a few of these and you are spending a lot more than you think.
    • Sharon87
    • By Sharon87 2nd Apr 18, 12:21 PM
    • 3,589 Posts
    • 3,070 Thanks
    Sharon87
    Cutting back is good but be careful about cutting back too far. It needs to be sustainable in the long term. Your taxi use seems low in the first place given your entertainment budget. How do you get to the pub for example? Is it viable to get home via public transport after an evening out (i.e. does not involve a walk- personally safety is important) or does someone chose to drive?

    What may still trip you up is things like spending unbudgeted money on clothes or a new phone or other items.

    Are you going to put aside extra money for your debts or pay the additional amount on pay day so that you then don't have it available.
    Originally posted by datlex
    I live in London, so have access to great public transport any time of the day, which is why taxis are not really needed, unless I'm being lazy! I always get the tube/bus home after a night out (only ever got a taxi a couple times when it was shared with others). No matter how drunk I am I always get home!

    I have a budget for 'large purchases', I need to put more than the 20-30 a month in, but at the moment that's what I can afford. I tend not to want the latest phone. The last phone I bought was an iPhone SE, I put it on a 0% deal and worked out how much a month I need to pay towards it to pay it off before the 0% ends. I have about 100ish still to pay towards it. I plan to keep this phone another few years with just a battery replacement when needed. I may need a new laptop in a couple years, so will try to put money towards saving for that.

    I work out my budget at the beginning of the month and put any extra towards debt or just up my direct debit if I want to make it a regular thing. Same with savings, if I'm saving for the HTB ISA or holiday I put that amount into savings as soon as I'm paid.
    • Sharon87
    • By Sharon87 6th Jan 19, 1:15 AM
    • 3,589 Posts
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    Sharon87
    Another year, another report.

    I've had a good year in relation to my money and debt. I've got a pay rise and my new work contract now finishes in September! (my longest ever job in this industry!).

    My debt has gone down for the first time in years by over 2k.

    Here's my indulgent spends compared to last year:

    Restaurants/Takeaways (inc expensive lunches)
    2018:
    Yearly: 999.95
    Monthly: 83.33
    (my new monthly budget is reduced to 30)
    2019
    Yearly: 1254.43
    Monthly: 104.53
    Increase on last year, but I have added the sandwiches from 'Pret' for work lunches and any other work lunches that aren't cheap stuff from tesco! This is my biggest thing I need to work on!

    Entertainment (pubs, DVDs, cinema, theatre, apps, special birthday meals/drinking)
    2018
    Yearly: 1409.88
    Monthly: 117.49
    (my new monthly budget for this is 50)
    2019
    Yearly: 1201.68
    Monthly: 100.14
    Lower spend than last year, probably a realistic budget is 100/month. I think me trying 50 a month was never going to work!

    Holidays (and holiday savings)
    2018
    Yearly: 1771.94
    Monthly: 147.66
    (I'm thinking of setting a new monthly budget of around 40)
    2019
    Yearly: 2160.27
    Monthly: 180.02
    An increase, but I did have a really expensive holiday at the beginning of the year - which I did save up for, but then spent a little bit more on. 500 of this was paid for from winning a NASCAR fantasy thing (I didn't wage any money, Premier Sports sponsored the prize). This is a category I will probably continue to spend 100 or more in a month.

    Taxis:
    2018
    Yearly: 206.56
    Monthly: 17.21
    (monthly budget of 0 - will only get one for holidays if necessary and will come under holiday budget)
    2019
    Yearly: 118.63
    Monthly: 9.88
    A reduction of taxi use - always a good thing. I've been less lazy this year!

    I've paid off 2022 of debt this year - another 13k to go!

    I hope this year I stick to paying more off. My aim is to pay off 4k this year, 4-5k next year then the rest the year after that. Hopefully with my pay rise and strict budgeting - especially when it comes to eating out it can be achieved. In 2022 I want to go travelling around Europe for a few months, so really want all my debt gone and got some savings for this!
    • Chandelier.
    • By Chandelier. 6th Jan 19, 10:20 AM
    • 870 Posts
    • 2,428 Thanks
    Chandelier.
    Your plan sounds good and you're right to be realistic about your budgets. I overestimate my entertainment budget and what's left over at the end of the month gets transferred into savings. Every little helps.

    And well done on the job!
    Chandelier.
    Current Debt Repaid:
    0/619.

    Check out my Diary
    • getmore4less
    • By getmore4less 7th Jan 19, 7:33 AM
    • 34,142 Posts
    • 20,700 Thanks
    getmore4less
    To work properly budget(which is the plan) need to be at least a year ahead.
    Month to month tweaks for cashflow and reminders of where each category is can hep keep on track.

    Another thing that caught my eye was not having the CC debt in the plan, they should be there or you won't have the cash flow(min payments) and the net worth getting tracked.
    I guess you could track net worth away from the plan and just have the min payment entries in the plan.
    If you can make a plan that has the min payments on 0% cards included that is debt reduction.

    Once you have an annual plan in place you can prioritize better.

    A fully populated SOA using annual numbers and your target debt reduction should be easy to put together balance and track.

    Given the last 2 years spendings I think you are still too aggressive on your target spend for this year, you are setting yourself up to fail.

    Have a really good think about your priorities and what you could use the money for

    You might want to analyse your total food spends that has room to adjust.
    I break down into 4 categories
    Home.
    Take out
    Eat out.(just because, that will include the lunches, and any eat out because can't be bothered to eat at home )
    Eat out (special, proper planned eats, some are in your ent. category )

    With all these take outs and other food the home spends should be low.
    what I like to do is look at the options for the money(you can only spend it once).

    I use this example a lot,
    We used to have a regular weekly takeout(20+-, great Indian near work), decided to cut back and spend the money on another holiday.

    Takeout stopped being a habit, got enjoyed a lot more when we had them (ever 4-6 weeks) and we took that extra holiday.

    I think you may benefit from looking at the takeways and "just because" eat outs, that money could buy you some really nice stuff to eat at home and home make lunches, leaving some for the special eat outs in the ent. cat.

    What we have at home is a number of easy to make options to substitute that too easy option of get a takeaway.
    Most of them take less time to prepare than a takeaway order.
    pimped up frozen Piza ready in 15 mins
    Noodle soups 10-15 mins
    Stir frys(meat prepared in advance marinaded and frozen in portions) <30mins
    Slow cooker, so ready when we get home

    Even a full from scratch oven dinner can be done with 10-15mins prep and 40mins in the oven while you do something else.
    • Mnd
    • By Mnd 7th Jan 19, 1:54 PM
    • 923 Posts
    • 1,200 Thanks
    Mnd
    The one thing that sticks out a bit for me is your target budget of 40 for holidays Inc spending.
    You appear to be like us and enjoy your holidays but are you sure that less than 500 a year will give you the breaks you want.
    Apart from that you seem to have a good grasp on your budgetting.congratulations and good luck
    • Sharon87
    • By Sharon87 7th Jan 19, 11:37 PM
    • 3,589 Posts
    • 3,070 Thanks
    Sharon87
    40 a month was my last year's unrealistic budget. As has been evidenced by 2019! 100/month seems to be a realistic budget for holidays.

    I do have a plan with all my money. This is just those spends I could cut back on. I have the best gas/electric/utlities/phone bills.

    I put a minimum of 300 a month towards my cards. Some of them on minimum payments, others just above. (all on 0% deals) I would like to put another 100/month towards the credit cards to clear it faster.

    I've started budgeting yearly for the annual or long term spends like insurance, tv licence, glasses and now I'm putting money aside for a new laptop when mine breaks, it's getting a little old now!

    My food bill is high and I do like eating out. I have cut back a lot on actual takeaways at home, it's just those trips to Nandos/Five Guys.etc I need to cut back on now and being more disciplined with lunches at work.
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