Using spreadsheets to budget

[happytalk13]

Does anyone else use spreadsheets to budget? Any tips/suggestions? I'm new to all of this (not very good with money) and I need a good system in place. Help me, please, before I give up and go back to just spending and getting no-where!

No credit cards, tribpot - no debt at all apart from mortgage (but I personally think we're overextended on it and it's an interest only - something the OH did before we met) so I'm planning on us seeing a financial advisor to see what the best thing to do is. OH has another property which he hopes will sell and pay off both mortgages when the time comes - I'm not too comfortable with that hope (I feel it's as tenuous as relying on dead men's shoes)

That's interesting (no pun intended) happy talk. We are also on an interest only mortgage because all of our capital was tied up in other property until recently. It didn't bother me unduly as there was no realistic possibility of the proceeds not covering the mortgage and I knew that one of the properties at least would certainly be sold during the mortgage term, which it now has (and the other is on the market).

However, our properties are unmortgaged. Unless you own some mega-pad in London but are living in a croft in the Highlands, I certainly don't think I'd be happy banking on one property paying off two mortgages. One is let out, presumably?

Yes - one is...and we make a loss on it and the management company have now dropped a bit of a financial bombshell that, when reading the management company's report and costing analysis, I can't see wasn't known about by the then managing company when the OH bought the property. I want rid of the thing, before it sinks us.

I feel exactly the same about the one we still have. It will sell at a loss (not catastrophic but not great) - and actually this year the loss would be beneficial as it will offset the capital gain on the other property. So I'm keen to off it before the end of the financial year. And ours is not mortgage.

In your shoes, I'd want shot of that second property as well. I just think: you never gamble with your own home. I've said to DH that I'm quite happy for us to use the leftover money from the sale of the second property to buy somewhere else to let out, but you secure your own home first, before you invest. And your second property sounds like a considerable drain, if it's not even covering its own day-to-day expenses. I take it you've not yet been hit by the fact there's now no relief on Council Tax for the first three months of the property being empty? That was a killer for us in the summer. (NB I'm not sure all councils have adopted this policy yet).

All in all I think it's easy to underestimate the cost of an investment property (which YNAB will help to illustrate). It's already running at a loss and once you're budgeting properly you'll be wanting to put money aside for things like Council Tax in the void period, the letting fees for your next tenancy, redecorating and repairs, etc.

Exactly. It's in London and seems to be doing well in gaining value - but I think it's crazy to expect it to be a sort of endowment policy to pay off both mortgages. I can't see it being viable.

Indeed. I think if he insists on holding it (DH has been very resistant to selling our second one for a number of reasons) it has to be isolated from your joint finances completely, i.e. it stands and falls on its own, although hopefully not literally!

And that means you can't be relying on it as an investment vehicle for your own home, which is going to hit the bottom line.

If you owned it outright I think it would be a different matter. Mine is underperforming as an asset, rents are falling in the area and so it's not working the money very hard. You can tell it's not in London :) Do you mostly own it or mostly not own it? (Please feel free to tell me to bog off if you'd rather not answer!) - I think my feelings on it would be different it was a 40% stake that the bank owned rather than a 70%, for example.

Can't get the ynab to download on my PC for some reason so excuse if this is a stupid question. Do you actually transfer sums of money into all the different t envelopes, or does it all stay in the bank account and you just record the spend as a "paper" transaction?

You can do either, dementedma, so you can have pretend accounts like 'Monthly Bills' and you could transfer money from your current account to that account if you wanted to, but then you won't be able to reconcile your current account with the real balance unless you mentally add them back up again.

So it's simpler just to leave the money in your current account (or wherever) and then as a transaction goes out, you assign it to a budget category, say 'Groceries'. That reduces the balance of the Groceries category by the amount you've spent, and then you can see the amount remaining in that category of your budget.

Maybe have a look at some of the videos whilst the download is sorting itself out. This is the one for Step-by-Step setup, the rest can be accessed about half way down this page.

Trippot - I have no idea really. I need to ask him. Am I right in thinking that the % owned by the bank is the amount owed expressed as a percentage of the total value of the property?

Yes, there's a thing called Loan To Value.

YNAB is down to 7.49 on Steam if you buy today