I'm ashamed to say I don't know the first thing about budgeting

[Bitofnamechanging]

I'm early thirties with a husband and two children.
We're in 13k of credit card debt. We love beyond our means. We don't have much but just living makes us go over budget easily.

I pay the Bill's and dh pays for incidental (kind of but really we put stuff on the credit card).

My bills are roughly 1k per month including mortgage and we both have cars to run which are essential to our work.

I think a joint account would be best but I don't know whether to include food shop in that budget.

Our income is so variable that we cant say we have x coming in so much y on bills and z left over for spending money. Some months I'll earn £1500, other months I'll earn like £100. Dh is the same

We have been concerned, for many years, about trying to stick to a budget and have debt on credit cards. We both have a regular income which makes budgeting easier though. In the past I have tried to work freelance to help balance with child care, plus pursue work that I enjoyed. I had to stop this as I needed a regular income, plus needed the reassurance of having sick pay/pension. Everytime I tried to talk about having a budget or tackling the debt, my husband would just say it was impossible as we need more money, which was frustrating. On paper, our income looked like it should cover our out goings, but we alaways had overdrafts and if anything needed replacing or there was an unexpected bill, it went on the credit card. He is now more onboard and we have found small changes are making a difference. We have reviewed all our bills, got rid of anything we didn't really need and changed to cheaper tariffs where possible. We both pay in £100 each a month when we are paid into another account to cover unexpected bills or purchases. £200 a month quickly mounts up. . We recently needed a new fridge and were able to pay for it from this account, previously we would have used a credit card. I do all the grocery shopping and general day to day household spending, clothes for children, food for dog etc. Recently I have set myself a weekly spending budget for day to day costs. I take the cash out weekly and have to stick to this. It has made me focus on what I really need vs want, stopped frivolous spending on my debit card. For the first time in years, I don't have an overdraft, having previously thought it impossible to live within our means, despite it looking on paper that we could. We are no longer increasing debt on cards and can see a point where thet will be paid off. Just thought I would share what is working for us

I do have membership to ynab but find that my annual priorities make it really hard work.
It shouldn't do, that's one of its strengths. So I have categories for things like TV licence, insurances, road tax - stuff that I pay once a year, and then I allocate money to them each month, so when they roll around - voila: the money is there.

YNAB should work well for you with a variable income, as Lougle describes. You allocate the money you have to the things which have to be paid for before you next have money coming in, and any surplus can be assigned to a category called 'Buffer' so you can dip into it for anything unexpected, whilst you're learning what your true expenses are. (YNAB used to set the buffer up for you but alas no longer).

I'd get three months' worth of bank and credit card statements and plug them into YNAB so you can start to see things more clearly.

Incidentally, are your business finances under control? You're setting aside for VAT, corporation tax etc aren't you? (It sounds as if you are sole traders rather than limited companies but I wanted to check this).

I've read through and most of what I was going to say has been said.

it can be very easy to put bits on a credit card it soon mounts up, we are in the same boat this year however I'm determined to not add to it and pay off lots this year. so I'm not buying new clothes/shoes/homewear or toys for the girls unless it's essential. free sites/Facebook/charity shops are all great for clothes or toys when needed.

im continuing to EBay old things - made around £500 before Christmas with clothes/toys and some dvds which otherwise i would have charity shopped. spent around 1-2 hours a couple times a week listing and packing then used the drop and go service at the post office. that time I would normally have been watching rubbish tv or reading.

I'm also gluten and dairy free (other intolerances too) I tend to follow a naturally free from diet so potato/rice based meals. I like the a girl called Jack cookbook it's very easily adaptable and the meals are v cheap. she has a website too if you wanted to try a few out. I love my slow cooker for long days then come home to a pretty much cooked meal.

going to supermarkets close to closing is great, I stocked up my freezer for £7 the other day in co op - pack of duck breasts, lamb mince, chopped chicken breast, meatballs and pack of beefburgers. Lidl do a £1.50 box of vegetables/fruit with short day which is fantastic value (get there early as possible usually all gone by 930am here)

if you and DH drive alot you can visit different supermarkets for best value items - and sign up to all loyalty schemes. the last month I've had constant £12 of a £50 spend at Sainsbury's which is a great help (been topping up my tins/cat food when we didn't need much!) you can probably do your food shop (inc wash powder/toiletries etc) for around £60 a week shopping around and using deals.

loads of shops are selling off toiletries sets and snack type food - if these are things you use they are well worth buying to put by for use in the year. I've stocked up my soap and glory supply (my treat and free as I had advantage points) and sweets for days out/cinema trips (25p a tube in Tesco).

days out which I'm sure are a big spend out with children - look for free days/vouchers or offers. use Clubcard or nectar points for bigger days. always take drinks and a picnic . everywhere will refill bottles with water if you ask (I take a small bottle of squash as mine aren't fans of water to add to it)

Another couple of things that I have found helped were to set up " save the change" on my bank account. I did this last January and used what had accumalated on Christmas. Previously Christmas spending would increase my overdraft or go on credit cards. I now shop in Aldi and have improved my meal planning and really noticed that this has helped control my weekly spending. I am not rushing to the shops as I need to get something for tonight's meal or because things have run out. I think I am saving about £15-20 a week by shopping in Aldi, probably more as I am doing less top up shops. Hope these ideas are helpful

OP
When you have written down all your outgoings.... allocate another day where you won't be disturbed and dedicate yourself to whittling down those outgoings.
For example.... can you change your TV/ phone package? Your energy provider?

I did that , and it saved me hundreds each month. I really thought I was doing things cheaply, but I wasnt. ie I switched TV package to streaming, asked insurance providers if they could reconsider monthly payments. I cancelled so many direct debits that had just lingered on my account.

Do you have online banking? Where you can check on your phone?
Game changer for me- I could check it regularly, and transfer cash when needed.
I forget if you are renting or own, but do you have the best mortgage?

You will find a system that is right for you....baby steps.

Was there a reason you paid off the loan first? Often the credit cards attract a higher interest rate and the loan is more controlled debt as you have to pay a fixed amount each month. When you get the next bulk of money do work out a budget for the next few months the. Pay any surplus off the card with the higher interest rate.

Good luck, with good planning you’ve got this 💐

Annual expenditure is easily sorted with YNAB. What I do is write the monthly amount in my description for the category. E.g. Water bill, quarterly, Nov, Feb, March, Aug £120, £10/mo. Then budget £10 per month so that each quarter you will have enough money for it.

You need to think of budgeting as a job in itself.
The main concepts are:
Maximise your income
Reduce your expenditure
Identify the difference between WANT and NEED..

1. Maximising your income.

Are you getting all your benefit entitlements? Can you earn more? (Second job like waitressing) Can you sell redundant stuff?

1. Reduce your expenditure.

Have you got the best deals on the utilities/phones/insurances etc? Would your water be cheaper on a meter? Can you spread the council tax over 12 months? Cancel direct debits for stuff you no longer need.

1. Identify the difference between WANT and NEED.

Do the kids, you or DH need a new thing -because they have grown out of/broken/etc or want- because the object of your/their desire is nice to have?

You need to do down a brand in the supermarket.
Have meat free days
Lentils, not ready made

ok to stock up your freezer but dont do this unless you are going to eat the food in there. there is still a limit as to how long meat can keep for.
meal plan

Using monzo has changed everything for us. It's an app based bank account. Super easy to set up, especially as a joint account .

Was going to suggest Monzo as well

The other thing you need to do is make yourself check the accounts daily. It’s amazing the things you ‘forgot’ you brought on a card, especially on the weekends when it takes a few days to come out.

So you learn to budget from day to day.

Also what helped is the first month you don’t spend and see what accumulated towards the end of the month. Save some spend some.

Think about things like kids shoes winter coats, my grandmother always brought ours as Christmas gifts.

Good luck. If you’re determined you can turn it around.

Without doubt we can afford our basic outgoing each month. We can also flex our income if we need more. It's unrealistic for either of us to earn nmw as dh needs to study this will totally be worth it and I need to look after the boys. I've taken on board comments though- I was going to put the youngest in he nursery on opposite days to ds1 so that ds1 can have some quality time with me and we can do some physical therapy type stuff but I can put them in together for three mornings and work during those hours.

Ds1 has a winter coat that cost £1.75 from a charity shop. It's brilliant. Ds2 is wearing a hand me down that my brother bought last christmas.

I've applied for a joint account and dh is on board. We've agreed our allowances. I'm trying to work out whether it's best to use the lump sum Dh will get soon to pay down a lump on the credit card or use it as monthly income. My calculations suggest we need that money to live on and that we should get a loan to pay off both cc. However dh thinks we can clear the 7k cc by the end of summer. I think it'll be like this summer and too financially tight and we will accrue debt again

I'll check out monzo. Thankyou

I think you said both cc are 0%? So don't get a loan to clear them. See which 0% deal ends first and how many months away that is. Divide the balance by that many months. Could you pay that amount every month to clear it within the 0% period? And what about for the second one?

Never clear a 0% credit card! Pay the minimim plus a little bit more.

The way I sorted out mine was (using everything I learned from MSE):

A. Go through past credit and bank statements to work out where it goes. Make a spreadsheet of categories. Past is best indicator of future. When you see it on paper its hard to ignore. IMHO you need to do this for both you and your partner.

Then work out what you can cut. For me it was coffee and snacks when out. Also ready meals and Amazon. Yours would be v different. Can you switch any bills to make savings etc.

1. Draw up an annual budget spreadsheet. This is helpful as it allows you to think of everything that might come up. Discuss with partner.

1. Pay off highest interest debt first

1. Build up some savings. Aim for 3 months living expenditure. This will get you out of the credit card trap.

1. IMHO you should cut up the credit card now or very soon. It is very difficult to get out of the trap without doing that.

I still have it so in an emergency I could buy shopping online at the end of the month but this stops me mindlessly spending on it when I am out.

If you don't already have it, you need a separate account for bills/mortgage account. Only bills and mortgage go through this account. Again cut the card in half for this one, you do not need it.

Ps good luck and well done.

Any credit card debt, transfer to a zero interest balance transfer.

Cut up credit cards.

Do moneysavingexpert budget planner. It makes you think about weekly, monthly, yearly expenditure, such as haircuts.

Realise you won’t pay the debt off overnight. Set up a sensible payment plan, that will allow you enough money to get by.

Look through direct debits, cancel any not using.

Christmas obvupioisly comes once a year. Do a quick estimate of how much it cost you this year, exclude frivolous expenditure, and start a saving plan for next year. Even £59-100 per month saved can help.

Similarly, set up a saving fund for a cheap summer holiday.

I know the last two are counter productive to reducing the debt, but Christmas still exists so better to account for it, and plan, rather than ignore it.

6k is on 0%. I don't qualify for another 0% credit card but am able to get a loan.

It's hard to work out how much to pay monthly but we are currently able to pay off 2k x3 per year. And then incidental amounts. This is why it's so hard to budget it. Dh is going to do a.couple of "solid weeks" after his exams in jan and will put all of that to the cc. That will be another 1400.

I need to convince him to hold some of the 1400 back as I think that is the route of our problems. He expects to be able to use all of his money for that without forgetting that I work pt and have the kids ft and cant pay Bills, food and petrol on my own.

I've downloaded monzo. It looks like I can use that as a joint account also. I'm wondering if that will work better than a random high street bank

I’d advise sticking to one type of account, from what I’ve seen of the mono - it should work well for you

My only suggestion is to hold back enough for 3 months emergency money - in cash and In envelopes. This money can be used for food on the table and fuel for work.

I say 3 months as it seems your work and cash flow seems to be in 3 month waves so hold back £800 pounds in cash as emergency fund to not touch bank accounts for daily living in the baron months

I guess what I’m saying is use the cash in envelops as you used to use your credit card.

When you’re having flush months replace the money in the envelopes

I can tell you straight away that you are already in trouble and need to act now.
Cut the credit cards up today.
You need to list all of your fixed bills on a piece of paper or excel spreadsheet, mortgage, rent, bills, debt repayments.
What you have left if anything is for food, petrol and non fixed costs.
Your rent/mortgage and council tax are your two priorities.
If you have a deficit you need to go and see a debt councellor with a view to getting your credit card repayments reduced for a fixed term.
Think of ways to reduce the food bill, Lidl, bulk buy, menu planning, pound shops.
i got into credit card debt for the first time to pay for my divorce and then lost my job. I've had to move 300 miles to a cheaper area to find a job and downsize dramatically to start again.
It's such a relief to be out of debt with a steady job.
It went tits up in just a month when I lost my job, then I missed repayments and was charged massive fees for unpaid DD's and I was lucky I sold my house really quickly so I could start again, any delay and I would have lost the lot.
I do a monthly budget now and credit cards are not even a consideration even for emergencies.
Any money I have left over goes into savings not treats.
i didn't do Christmas this year, I felt going into debt for it wasn't an option.

He expects to be able to use all of his money for that without forgetting that I work pt and have the kids ft and cant pay Bills, food and petrol on my own.

It sounds like you're starting to home in on an important part of the problem - lack of communication and teamwork where money is concerned. The way you've split the bills is extremely odd given you both have such variable incomes - more than most couples you need to move to the idea of a shared pot of money from which all living costs (including incidentals like shoes, birthday presents, family days out) are paid. Who contributes what to the budget may change radically from one month to the next, but the budget needs to be a shared agreement on your priorities and commitments.

As ivykaty says, a key priority is to break the dependence on credit cards to smooth out the bumps in the road. I'd set a goal of not using the cards at all in the next 3 months, building up a surplus to meet the unexpected, rather than a 'boom and bust' approach where you're paying more off the credit cards than you can really afford, then having to borrow it again later.

It's come about quite organically. We've been married for 5 years. Dh moved into my house (he matched my equity and went on the deeds). I could comfortably pay the bills alone and my own spends. He would then pay for larger items, house refurbishment, treats for both of us, etc. Now we have a one year old and a two year old things are a bit different. He did a nmw job for a while after closing his business. We struggled with that as he wasn't earning enough. He now works on his business pt and studies ft. On paper it's enough but we haven't cut our cloth accordingly. Plus we've had a few horrific expenses recently which have shot up the second cc.

I'm optimistic we can make it work as we can easily save during our boom months but in fact only increase our spending. If we stick to budget I think we should be ok.

I'm going to push dh to sign up for a monzo account tonight

Go down to the library and get out 'The Barefoot Investor' book by Scott Pape. This will get you straight. Good luck.