Taking control of my finances

[mummyof4kids]

Hi all
I'm usually really crap with money, I've a few debts that are being paid off. Today is payday and I've finished paying off one debt and almost cleared another.
I've transferred money into my monzo account which was previously empty and put money into my pots (Christmas, savings, car)
I feel like I'm finally taking control of my money.
I think I need a thread so I can keep updating and hopefully some of you will join me.
To everyone who has their finances under control please join and spur me on 😊

Well done. Keep it up.

I'm finally credit card debt free and down to my last personal loan. I'm trying to decide whether one should be stockpiling cash instead of paying off debts because of the current economic climate.

That is fantastic. Being intentional about money can change your life.

Have you heard of Dave Ramsey? I followed his Baby Steps plan to get out of debt and I now listen to many financial podcasts (UK and US based) and learn lots about growing my wealth.

@ViewsAreMine that's fab! I can't wait to be free of credit card debts. I owe around £600 in cc debt but I've been paying more than my minimum payment so it clears quicker.
I had a loan, I paid my last payment on that today so now I can focus on credit cards and catalogue.
I think stockpiling money could be a good idea in this climate, who knows what else this year will throw at us, it's good to have money aside just in case

@nannynick yes I've heard of him, I think I'm in a Facebook group but I haven't been following it, maybe I should start

@mummyof4kids Start listening to the podcast or watching the youtube show. It is also available via Spotify. If you have not tried podcasts before it can take a little while to get used to how your tech works but you will soon get hooked on it. I find the Dave Ramsey Show downloads to my phone overnight so I can listen whenever I get some time. When I was doing a housekeeper work role, I listened while doing housework.

Facebook group: there are a few UK based support groups for those following the Dave Ramsey plan. I'm in a couple of them.

Catalogue debt: Be careful about that as some are made up of a number of different Buy Now Pay Later loans. Look at your account and if you have BNPL then setup your minimum payments such that they will clear each BNPL before the deferred period expires.

@nannynick thanks for that I'll take a look now

Yes, I follow Dave Ramsey so I'm still on baby step 2. He is really good!!
I am still focused on paying off this loan (£11,433.74). Admittedly, working from home has had a good impact on my cash flow so I'm just taking advantage of it until we're required to return to the office.

Does anyone have the 'stockpile cash' versus 'payoff debt' mental debate?

@mummyof4kids The other thing about stockpiling is the interest rates are rubbish now.

@ViewsAreMine yeah they are rubbish at the minute.
I've just checked and I am in a Dave Ramsey group so I'll be following that I think. With the emergency sinking fund do I still add to my pots on monzo or throw everything at building the sinking fund?
I know of people who have managed to save thousands during lockdown, I wish I could have.
I'm NHS so worked all the way through although I'm only part time at the moment, youngest DD starts school in September so will be looking to make extra £££

Well done! We paid off the last of our debt (car loan) other than mortgage and my student loan last month and it feels really good. We have an emergency fund in place of 3 to 6 months of expenses so it's not immediate panic stations if one of us lost our job, you never know in this economic climate.

The next step for us is we want to build up a Christmas and holidays fund which we keep at a set level and top up as soon as we can once we've spent from it just so I know that we have money in the bank for Christmas and if we want to book a trip away. Then anything above that we're planning on paying off the mortgage.

I really like the Meaningful Money podcast and I also find the UK Personal Finance forum on Reddit a useful source of info, they've got a good flowchart on there for handling your finances.

DH and I have always been crap with money and we finally took control 18 months ago. We are still paying off some debt but it is consolidated and much more manageable - we have even been able to make some extra payments.

It is so nice to get to payday and still have a little bit of money left, not counting down the days to payday. We have also started saving which is the first time in ages - it's a small amount as we are trying to get the debt cleared first.

I cannot tell you what a weight it has lifted - we constantly kick ourselves for not getting it sorted years ago.

Well done for getting yours sorted - as @nannynick says, it really does change your life.

@mummyof4kids Follow the baby steps.

So be current on all bills and do not have an overdraft... that is Four Walls, often referred to as Baby Step 0 in DR facebook groups.
Then have your £1000 starter emergency fund (Baby Step 1) so you avoid taking out debt again. It breaks the debt cycle.
Baby Step 2 is then paying off the debt, smallest to largest irrelevant of the interest rate. Known as the Debt Snowball method.
Sinking funds are something to be used when in Baby Step 3 and beyond in my view, with the exception of a small sinking fund for Christmas and a small fund for Children's School Clothing / School Outings. Those two categories of sinking fund can be done in any step as they are harder to cash flow. You will hear of people doing sinking funds for car insurance but in the early steps you can do monthly payment for that, the insurance companies don't often have huge interest rates, though shop around. Car repairs which are unexpected would come out of the emergency fund. Car maintenance which is routine would be cash flowed from monthly budget or possibly have a small sinking fund over a couple of months... so if service was due in November, some of October and November budgets would get allocated to that.

@Pepperwand I like the Meaningful Money podcast too. Pete is great at explaining hard to understand concepts. I like it so much that I am a moderator of the associated Facebook group. Have learnt a lot over the last 3 years from listening to that podcast and also others, such as Maven Money.

@nannynick thanks for that, I'm already up to date on all bills and I got rid of my overdraft a few months back so that's baby step 0 done already 👍
Smallest debt is a cc debt, I think it's about £73, do I aim to pay it in one go or bit by bit?
Looking forward to this!

Credit card companies tend to be very flexible with payments, so may accept as little as £5. However look at your budget and allocate as big a chunk as you can towards paying off debt. You need to focus on the baby step you are on and be very intentional with your money. Plan for the month ahead, so do September budget now. Pay the debt off as early in the month as possible so you do not have money sitting in your bank account waiting to be spent... too easy for it to be spent on something else.
Remember: Those that save what is left at the end of the month rarely save anything... the money just goes. Be intentional, tell your money what to do.

Great stuff!
So do I make minimum payments while I'm saving the emergency fund? Sorry for all the questions haha

Yes, make all minimum payments. You want to honour all credit agreements. Where a lender does not impose a minimum payment, such as some catalogue companies who do BNPL, then impose your own minimum payment, so if you have a BNPL of £1000 with 10 months left to pay, then minimum of £100 monthly.

My biggest tip is to try and put money aside for the yearly purchases (car tax, Christmas, birthdays, MOT and service costs) and incidentals (dentist, car repairs, new tyres). I've found a lot of people struggle because they're managing well but suddenly there's £200 on a car service they hadn't factored in, then next month its a £60 hygienist appointment at the dentist, and a new pair of school shoes. It spirals quite quickly and its very hard to get yourself out of the hole.

Thanks, my catalogue isn't BNPL so I'll just make my minimum payments on it as well as my credit cards

@kissmysass yes that's what I've started doing, I've got pots in my monzo account that are for Christmas, car expenses etc.
Really wish I'd started this ages ago, I've paid everything out that I need to and now I know exactly how much I have for the month.
I feel more in control already

I think nannynick's advice of being intentional is spot on - it's very easy to spend small amounts without thinking and it does all add up. If you can control your spending you're well on way to being financially secure.

Moneysavingexpert.com is a great source of information - that's where I started.