I have massively fucked up our finances

[Skintorama]

I've just been scooting along with my eyes shut for ages. I bit the bullet and sat down with DH to go through stuff a couple of months back and we were 14k into the credit cards, and paying interest.

We have a 13k bank loan which we took out to clear the last lot of credit card debt, there are still three years on that.

I also have a car loan that was around 14k, I think that's down to 12.5k now, 4.5 years to go. I am looking into selling the car back to the garage next month and buying a cheaper, smaller car (needed a 7 seater for work but don't anymore).

We then took out a new 0% cc and shifted stuff around, so we're not paying any interest now, but having totted up all the balances today we are now £16k into the cards. I know some of that is fees, but it's also that we've managed to piss £800 away over our budget in the last two months, and we have paid the balance of our holiday (£700).

It's completely unsustainable. About 6k of the debt was court fees, and 5k was our kitchen overspend. The rest is just spending.

Help me. Please give me all your best advice and tips. I seem to just be failing miserably at this. We have over 4k a month coming in and I don't understand how we overspend every single month, it's nuts.

Cut back on food.

Jacket potatoes and beans

Omelette and salad

Fishfingers and mash

Veggie soup and hm bread

Roast chicken with veg

Chicken risotto

Dhal with rice

Cheap fruit and veg....basics is fine.

No wine. No treats for first week. Just basics.

Packed lunches:

Ham sandwich
Apple
Homemade cake
Orange squash

Keep it simple and they won't notice.

£600 per month seems a lot for food- how many of you are there? Have you considered batch cooking? Switching to cheaper cuts of meat? Switch to aldi too- that knocked £100 a month off our food bill (which was already pretty good as we meal plan and make lists)

You need to write down every little thing you are spending. Do it for a month and I swear you will be amazed where you are spending recklessly. We were spending a fortune on "treats" from the local co-op on an evening.

Next, you need to figure out which debt has the highest interest. If the cards are all 0% can you just pay the minimum and then throw all your spare cash at the higher interest debts. This will cut the length of time you have them for and also save £££ in interest.

Well done on facing up to this, and loads of fab advice here.

I just wonder if now is the time to career change, or if you really need that £800pcm until you've got your debts cleared?

I guess it's a balance between whether your spending is linked with compensating for the current work you're doing?

Basically, every month you can stick with childminding should be an extra £800 off your debt - that certainly bears some serious thinking about.

Create budgets, monthly, weekly. Get used to saving up for things you want to buy, avoid impulse buys.

I will go against the grain and say to avoid cash. If you pay using credit card or debit card you are far more likely to get a receipt. Every week go through those receipts and allocate them against the budget, so you know what you have really spent on things.
If using cash, write the purchase down. Get used to documenting every purchase, just as you would have done when childminding.

Set your self goals. At first start with a goal that you can achieve quickly, say in a week, then set a new goal a bit harder and continue like that. Human brain likes to feel rewarded for achievements. Keep rewards low cost but something you all like - so a trip out perhaps, a meal out, a takeaway to have at home. A on-demand movie rental.

Step1 I feel is to know exactly what you are spending money on, so get a notebook and record all purchases and keep all receipts. Create a budget and stick to it.

All my cm contracts are ending at the end of term and there's no guarantee I would be earning the same with new contracts anyway.

And yes, a lot of the spends are associated with cming, I'm at home all day or out with the little ones, it's easy to rack up silly spends. And the 600 food bill includes food for the mindees, lunch, dinner and snacks.

I write lots of this off as expenses for tax, which makes my actual income more like 10k pa, but I'm still spending it if you see what I mean, and I find it makes more sense to count it all as income.

Have a box of snacks in the car for days out.

Cups
Juice
Crisps
Biscuits
Take cold water every day.

No need to buy stuff.

You are doing brilliantly to face up to this as that is always hard to do!

You need to stop the days out, eating out (even the MacDonalds) and perhaps also consider cancelling your holiday if that doesn't leave you too out of pocket. Could you sell the car and get the money back on that? You also need to take your own food and drink out with you (I do this and it has made a huge difference) and also try to eat meat/fish infrequently as a treat.

The suggestion that others have made about cutting back on all subscriptions, tv packages etc also made a difference to us.

It may be worth looking at The Utilities Warehouse to see if they can provide you with cheaper gas, electic, mobileV and home phone package. GEnuine company and will help pay you out of existing contracts if you switch. No hard sell if they're not cheaper and which recommended for the last 6 years (no I don't work for them!)

www.utilitywarehouse.co.uk/

There's some excellent advice here skint.

We both have the same problem. The payslip says we are well off so we spend like we are.

I need to get it into my head that i'm poor until the debts are gone no matter how much money is actually coming in.

You need to set up a spreadsheet that tracks all your fixed outgoings, including the bank loans, and you need to split up the rest of your money - make a budget for everything - we do this, and have separate budgets for food, petrol, dh's and my allowances and the boys' pocket money, dinner money, pet costs, clothes, and family fun (essentially discretionary spend). All standing orders and direct debits are tracked month by month.

The spreadsheet dh has set up also forecasts forward for 12 months, and he updates and adjusts that monthly - and this forward planning lets him put in estimated costs for things like the cars' services and MOTs, and budget those in - of course we can still get a nasty surprise when the cars are services, but even so, a portion of the cost has already been factored in, so we aren't having to find the full amount of an unexpectedly big bill.

Set an amount for each of the variable budgets and stick to it - we've had to do this as we need to find upwards of £9K a year for 6 years (rising to 11K a year by the end) starting last year, for university maintenance.

You ought to be able to find money each month, over and above the minimum repayments, to pay off the credit cards as these are the most expensive credit you have.

It might also be worth selling the new car, paying off a chunk of that loan, and buying something older - we are currently running 2 estate cars that are 15 and 16 years old, but were good quality models that have been (and still are) dealer maintained so have good running costs, and neither cost us over £2k.

Ah, I see why it makes sense to change career at this point. Good luck finding a suitable other job - I know it can be tough finding something right now.

Also, I do appreciate that childminding is certainly not an easy job!

At least you are taking charge of it now. If I can drive a £1k car anyone can. Also no need for holidays if you can't afford them. Make sure the new car you buy does not cost more than £1k. Use all the proceeds of the one you sell back to the garage to pay off the £16k of debt. Look at whether a remortgage of the house (if you have your own house) would be cheaper than the credit card debt. No more house extensions/new kitchens etc.

Wow, you can't live on £2k a month !? (after bills etc)

We live just on £1200 a month. That's two of us with a baby. There is nothing left over for anything really. That's £1200 for all the bills - the mortgage alone is £600. We've had to cut the food down to £50 a week, and that includes nappies etc for the baby.

If we had £2k a month spare, I'd save £1500 of it a month and still be having a whale of a time

Great thread though - picked up a few ideas to help us save even more pennies so thanks everyone!

I know, it's embarrassing and I feel completely shit about it.

It all changes from now.

Good for you Seriously, you could give yourself £500 a month to have 'fun' with and honestly, still have fun.

Get those debts cleared off. Think how fab you'll feel then. AND rich! You'll then have money to play with properly

Anyway. I'm a big believer if you have it, you should enjoy it. So hurry up, you can clear those debts pretty quickly imo with such a large income. Then you can go back to enjoying things within your means!

Were you trying to keep up with the Jones?!

Think positive-there are worse problems to have but at least you are tackling yours. Good luck!

Couldn't agree more about the car. But I suppose you're tied into a deal where all you can do is upgrade or downgrade? I would just lose it and buy a 2nd zafira if you still need seven seats, you can get one for about 2500 i think.

I must admit i would reiterate my advice to make a massive effort to make a big dent in it quickly. You will feel so great and it will give you momentum to keep going.

Well done you for facing up to this.

I totally know where you are coming from re getting carried away on the spending, tis easy done.

I am finding that our food bill has shot up by loads. Two teenage boys who eat shed loads and one of them finished school on the 10th May, just going in for revision and exams. My food bills are topping £150/170 a week and I am , but DS1 constantly has his head in the fridge.

We have just changed our mortgage over to capital and repayment and we will have paid it off in 12 years, actually less than that because we are overpaying, but it does feel good to know we will be getting rid of it.

Don't forget you can always come and chat....

Budgeting is key - but it's hard. I used to have a print-off from whatsthecost snowball calculator showing each debts monthly repayment until dfd and i put a line through every month after paying that month.

I also used to budget for possible expenditure eg haircuts/clothes/car running costs/ unexpected and weekly pin money spends - the last i used to withdraw in cash once a month and split into 4 or 5 little money bags.

Are you calculating your income as your net ie post-tax income? Or are you basing your spending on what comes in every month - which is a very different thing.

I find it staggering that you could budget £5k for a kitchen refit and then overspend by £5k - making your kitchen refit equivalent to what you have just said is your net annual income (£10k). Or did I misunderstand that?

Sorry that isn't very helpful.

I suppose what I mean is perhaps an over-inflated sense of what you are both earning is contributing, as well as a lack of awareness around your spending?

It sounds as though the boundaries between your work and personal finances are blurred. Understandable in a business like childminding. But I think you need to conduct a thorough reappraisal of your business costs and then adjust accordingly. It sounds as though you're basically subsiding the childminding work.

OP have a look at this thread for lots of moneysaving ideas in addition to those given here.

Good luck!