Debt mutual support thread number 6 ....... start the new year with a clear purpose and keep moving forwards even by tiny steps

[TalkinPeace]

This thread follows on from the last five threads in the series, the most recent of which is here.
www.mumsnet.com/Talk/legal_money_matters/2193736-Debt-mutual-support-thread-number-5-the-light-at-the-end-of-the-tunnel-is-NOT-an-oncoming-train?

We live in a society that makes it horribly easy to get into debt but makes it incredibly hard to admit you have a problem and even harder to get out of debt.
The posters on threads, new and experienced, are here to help people get to where they want to be.

I am not in debt, any more.
Here is a link to some spreadsheets that might help
www.mumsnet.com/Talk/legal_money_matters/1987219-SPREADSHEETS-for-Debt-Control-Budgeting-Mortgages-etc

and lots of people use this
YouNeedABudget

The important things to remember are

• yesterday is as past as the Crimean War

( we will not judge how you got into debt, but we will support you on the way out )

• this is an anonymous forum

( we will not tell your employer, family or friends of the reality of your numbers and we are here day and night )

• this thread is about supporting people through the huge mindset changes needed to come out of debt

( feel free to offload all of the feelings that drive you to want to spend, that make it hard to save and that generally make life crap at times, including getting those closest to you to recognise the changes needed )

Join in, bare your soul and come out the other end.
Its worth it.
You are worth it
The long term results for you, your partner, your children, and your friends and family are worth it.

Just marking place as well for more leisurely reading later.

One good thing I can report: I paid off £8,000 debt in 2014. My unsecured debt now stands at £28,000 and I plan to halve that this year.

Also plan to build my £500 emergency fund up to £1000.

Ugh.
Saw some family yesterday at pils.
Very rich, very unhappy
She spoke to dh about becoming an executor for her will.
She intends to leave us and the boys some money - which is lovely - but good god we could use it now
They are selling their second home so will soon have £250k sitting in their bank account.
I sound so grabby I hate myself for it but they are the perfect example of how money does not make you happy
Sigh.

Can i join in ? Widowed with 3 kids - struggling to cover mortgage

Dragon...I am sorry for your loss x
I may be stating the obvious, but have you checked you are getting all the benefit entitlement you can claim?

I am joining this thread. I have never even visited this part of mumsnet before, but I decided a couple of weeks ago that I will get out of debt in 2015.

I think I'm about £15000 in cc debt. Talking about it with my husband isn't easy. We get emotional. But he's frugal and responsible, and I made most of the debt so I can do this.

I make pretty good money, self employed. It's not always steady, but I feel confident that I can earn at least £1000 a week on average. My overhead is £1000 a month. So pretax at least £3000 a month. DH is unemployed and not finding it easy to find a job. I think I'll hire him as a book keeper/assistant (which he already is) so that my limited company can pay him £10000 pa. That's a tax break.

Anyway, I am going to work long hours until the debt is paid off.

baddz - I am - I think but have been self employed and am making a loss at the moment but very scared what will happen re child tax credit's if i 'close' my business and am scared by universal credit as cant seam what to find out what is really going to happen in april especially as my buisness is not making any money at the moment ( has been very successful - just major problems with suppliers at the moment)

Why are my sad faces not working!?
I have no opportunity to find work in the near future....Dh has been on a pay freeze for the last 3 years and that doesn't look likely to change. So he only way to get out of debt is to pay it off/cut our outgoings :(
We have booked our holiday in the uk. £350 for the week as pils are coming too. Then we will just need spending money.
Ds1 needs another £65 for his school trip in June.

Dragon...could you get an appt with cab? I think you could use some professional advice wet your business...tip will be along soon! :)
I don't really understand the changes to benefits either as we do not qualify for any so I can't really be any help, sorry.

I was thinking earlier that something just doesn't seem to add up with my money - my spreadsheets say I should have plenty but I never seem to. I have sat down and added up everything on my bank statement and compared to my spreadsheet. My spreadsheet is fine, and bank statement is correct, so it is just my brain that isn't adding things up!

My head is finally in the right place to do this. YNAB is set up to help me track my spending - I think this will be key now.

This year will be tough as I have no savings to cover big expenses such as my car service due next month. I keep trying to save but there is a part of me that thinks this is pointless - I have a smallish balance on a CC at 10% interest - seems stupid to be saving where the interest rate is less than this. Feel like I would be better putting the 'savings' onto the CC debt, and then if an emergency arose I could use that - it isn't ideal but I think it makes better financial sense. Having cash in a savings account only serves to make me worry less as I feel like I can cope in an emergency.

Afterthought I think I'm with you on that one, ive had a few hundred pounds sat in a savings account for a 'just in case' moment but have discovered that purchases on my credit card currently have a 0% ooffer - so unbelievably tempting so cut it up. Wondering if I should use the savings to reduce the balance slightly (total on it is about 4.5k would only be knocking down to about 4) buy for some reason every time I log into online banking I like to see that little savings account!! Argh!!!!

So sorry for your loss reddragon

We don't have any savings... We did but it seemed ridiculous having £500 in savings when the cc was at three times that (at the time). If you have access to a 0% interest card or have a good credit rating it is far better to pay off debt as much as possible and if necessary borrow it back at 0% if there is an emergency. I am a big fan of the Martin lewis money saving expert site and he always says never have savings when you have debt. It just doesn't make sense.

But I guess for some it feels better to look at a savings account and feel there is some money in there.

If we had an emergency or even for the car mot etc we will have to use the cc again but in the meantime there may be no emergency and the car mot in July may be relatively cheap (well you never know, last time our 10 year old car passed with only £100 all in all) so we will continue to throw all our spare money at bringing the card down.

My husband and I have just gone over the finances and it wasn't so awful! I mean, we didn't get upset. And the finances aren't so terrible, either. He's signing off with the job centre tomorrow as I have just employed him (paying him for what he's already doing.)

It's confusing trying to project taxes, etc. But I think we've got it figured out.

We'll be able to pay down the debts fairly fast. Probably less than two years.

A little progress here.

DH and I have just sat and went through everything. I've told him we have to do this no matter how much money we ever have - it needs to be managed.

So we have transferred a whopping 5.5k in cash from MBNA - 0% until Dec 2016 to pay off DH's overdraft. So now have 7 Credit Cards to pay every month - fucking 7 with a total of 28k. My previous total did not include DH's overdraft and the lovely 3k tax bill. We are now saving £300 per month from April to cover next years tax bill.

We have now paid for xmas overspend - very restricted this month. I have £200 to last with one weeks worth of food in (delighted DH is away as I can cook smaller meals for two days) 3/4 tank petrol in car (hoping this will do) DD will be back eating food at nursery three days per week also. But I have DS Birthday tomorrow to sort out cards and cake. His party is also booked (pre budget).

Next month I hope to be back to what my spreadsheet says we should have for food and petrol. I'm trying with my diet - low carbs and whole foods - so I need to buy plenty meat and other fancier veg (as opposed to broccoli and cabbage all the time) as it is easier to stick to. Lack of wine purchases should cover it.

Eh up, you lot have gone all chatty! Just catching up.

Hi there Reddragon
being awfully rude, how long ago were you widowed - have you settled your finances or is it still at the remembering to breathe stage?

Tax credits and self employment is an absolute bugger at the moment.
Quite rightly, HMRC have clamped down on hobby businesses being subsidised by unreal working tax credits.
But because they have done it in the middle of a stonking recession, real businesses fallen on hard times have been caught.

You need to sit down and look at your figures and see whether you can weather the storm and get back up to the UC limit which is already being unofficially applied by HMRC of net profit greater than 16 hours per week at NMW for a single person.

But remember, the UC rollout is probably going to be delayed and people like you with non PAYE earnings and potential tear jerk family situation will be pushed down the list to tackle well after the election.

Fabulassie Welcome also.
If yours is a limited company then yes, pay him a salary - not the £10,000 as then you hit a total of 29% NI - the ideal in 2014/15 is £7955

A quick thought for all on savings buffers

TBH with interest rates as offensively low as they are at the moment I cannot see the point of having a couple of hundred pounds rotting in an account paying diddly squat when folks have accounts charging 100 times as much in interest.

As you all get better at budgeting and planning, try a virtual savings account.

eg :
if you have a credit card that is being paid down, mentally block off £1000 of the credit limit never to be spent unless the excrement really interacts with the ventilation device

or
if you have an overdraft limit, only allow yourself to use half of it - the other half is the rainy day fund

that way you get to throw all available cash at the debt that is charging you interest of up to 20%
effectively getting that saving rate on your buffer

BUT
You have to be strict with yourself and NOT SPEND THE BUFFER ON TRIVIAL TAT

TiP lecture over for now

anilec and richard well done on the progress being made.
And on starting to think things through BEFORE committing the expenditure.

Baddz
I was looking at property porn last night as I have an elderly obnoxious and generally miserable relative who could set me up in my dream house.
But I did not save the search terms as its not good for my head.
You have to put all thoughts of that money out of your head till it clears into your bank.

andsmile
I'm really glad that you are turning the ship around and your DH is starting to understand that being well off involves spending less than you earn, no matter how much you earn.

fairylea Have you done that application yet

"If yours is a limited company then yes, pay him a salary - not the £10,000 as then you hit a total of 29% NI - the ideal in 2014/15 is £7955"

Oh, dear... I'm not sure how this will play out.

Could you tell me about that? Give me a link?

I wonder if it makes sense for it to be on my salary or not? I'm paying myself £2000 a month. We're not comfortable with dividends, yet. Perhaps in future we'll both take minimum but I'd rather get more money in monthly income now and see how things go. I know that dividends are tricky. However, I will have to take some eventually. My plan at the moment is to keep extra cash in the business account and let it build up as there's no hurry to take the dividends and I want to be damn sure there's enough for any tax surprises. One idea we have is to pay him a bonus at the end of march that will make up the difference he could have made to the minimum for the previous year when he was mostly unemployed. That will probably be a couple thousand and we'll throw it directly at the CC debt.

"As you all get better at budgeting and planning, try a virtual savings account."

I was thinking the exact same thing when I read her post! Having a line of credit for dire emergencies is good if you have the discipline. And having a bit of cash lying around for the same is great but not if you're paying a lot of debt. It comes down the that person's discipline with credit and debt.

We are going to build up a cash reserve in my business account so that our wages can be paid if I'm unable to work (my job is stressful and sometimes I need a break and sometimes work slows down.) But we're going to consider our credit emergency cover.

fabulassie
Oh my goodness, you are paying SO MUCH MORE tax than you need to.
You can vote a monthly dividend. HMRC do not like it but stuff 'em, its legal.
EES NI is 12% of wages, ERS NI is 13.8% of wages.
all of which can be legally and sensibly avoided by paying the basic wage and then extracting the balance as dividends.

Do you have an accountant?
You need one.
They will save you more than their fee in the first month.

Money in the business account will have been taxed at 20% so there is absolutely no point at all at all not extracting it from the company, tax paid, to use up your basic rate band and clear your debts.

I don't mind paying some taxes at this point. I need to show an income for getting a lease when we move in a year or so and having a regular employer with pay stubs is easier than saying I'm sort of self employed and taking dividends.

Also, I need to know exactly what my monthly income is. We were just sort of spending some money, paying myself the minimum, and covering overheads but now it's in a muddle. I am paid in cash and so it's easy to fudge but I don't want to fudge like I did in the past. I mean, get £200 in my hand and then go spend it without reporting it as income is very easy to do when you feel like you're always short of cash. Paying a straightforward wage will make doing things right easier for me. I think my DH was sort of into fudging, as well. I put a stop to some of that - benefits he was claiming because we separated temporarily but really the household income was greater than assumed while he was unemployed. (Up until now, we've found it difficult to talk about money and he still gets sort of stammery about it and exasperated when I ask him to explain the exact difference in tax.)

I'm still not sure how the corporate taxes will work and that makes me nervous. So I want to pay out a chunk in wages and have less business money to worry about. Somehow, that makes more sense to me.

I could probably pay myself £3000 a month but I can't be sure so I'll leave the extra in the business and let that be dividends after the taxes are paid.

I have thought about getting an accountant. I need a very specific sort, though, due to my industry. I know some that deal with this stuff and I'm thinking of calling one.

My wage will cover my household outgoings and dipping into company money for same may trigger investigation by HMRC. At this point, I really do not want that as my industry is one viewed as dodgy to begin with. (Not illegal, but people assume the worst.) I want to do everything as above-board as possible and not attract any notice at all.

I have known other people to be investigated and it's pretty brutal - HMRC is said to come in from the POV that we make MUCH more money than we do based on assumptions from advertised rates and how much work we actually get. It would be possibly up to me to prove that I am NOT earning £140,000 a year (it's more like £50,000 a year). I really don't want to attract that sort of trouble.

Now that I have a better idea of expected income I just want to declare it, pay my taxes (something I am happy to do as an immigrant), and move forward.

Fabulassie
You need an accountant. Fast.
Get yourself over onto this forum www.ukbusinessforums.co.uk/forums/accounts-finance.55/
and find one.

I've been through lots of inspections - I've been an accountant for 25 years - its all about having your ducks lined up and then they cannot touch you. Baiting HMRC is one of my joys in life.

PS I'm an immigrant too. Hence why I dislike seeing gorgeous Gideon Wallpaper wasting money I can spend better myself.

No way in Hell am I baiting HMRC! Not at this time, anyway. But I can get an accountant through my industry contacts - there are several that specialise in it. I don't need the book keeping done, but I wouldn't mind some sensible tax advice. Even if I just do it in the future when I feel like I have a better handle on my cash flow and expenses.