Ok, so here's a bit of planning for the coming month. A couple of these figures have changed since last month so I have updated them. They've only changed by around £10 or so but I want to record them.


Mortgage + buildings and contents insurance £632.70
Council Tax £129.00
Credit card 1 ~£165.00
Credit card 2 £ 23.27
Loan £189.08
Charity £ 18.00
Savings £ 5.00
National Insurance Contributions 2 £ 13.00
Interest payments on current accounts £22
Float of £10 in each current account £20
Sponsorship charity payments £10
Birthdays and anniversaries £50

Total £1277.05

Here are the foreseeable odds and ends that I need to cover by the end of the month which should be included above.

Current account 1 interest ~ £20 on 19th
Travel expenses for new job unknown
Sponsorship for family fund-raising efforts ~ £10 for Katy
My sister's birthday ~£15 first week in July
Anniversary present and card ~ £25.00


Now to income - the crucial part
Received:
Client PA - Deposit of £127.50 paid
Client SFS - £155 Paid up front
Billed:
Client NN - billed £100
Client AB - outstanding invoices $200 past due - chased
Client CS - billed £117.00
Client MC - billed £1150.00
Work in progress:
Client PA - £127.50
Client MG - £200.00
Salary - ~£1000 (should be around £1300 but on emergency tax code)

Of all of this, I know that the items highlighted in blue are ones I definitely will have before the end of the month.

Daily update + bill update 26th June

I've been so busy and tired I haven't blogged for the last few days. I seem to have hit a nice vein of freelance work at the moment. Unfortunately, it has also coincided with me starting work. Tres knackered.

I thought I'd do a stats update for this month as I'm sitting here working out my bill money for the end of the month. Hubby will once more have to lend me money but not so much this time thankfully.

Mortgage + buildings and contents insurance £631.77
Council Tax £125.00
Credit card 1 ~£165.00
Credit card 2 £ 11.75
Loan £189.08
Charity £ 18.00
Savings £ 5.00
National Insurance Contributions 2 £ 10.40 do not know if still paying due to new job
Interest payments on current accounts £22
Float of £10 in each current account £20
Sponsorship charity payments £10
Birthdays and anniversaries £50

Total £1258

I have £146.52 in current account 1 and need to transfer £300 from current account 2. This gives me £446.52/1258, so I am short £811.48 assuming the cheque from project 1 clears.

However, that does not take into account I have an overdraft facility which I use every month. Currently, I am not in my overdraft on Current Account 2, so I have a £200 facility to use there. As tempted as I am to say that now I'm out of it I should stay out of it, I am only on step 1 of Dave Ramsey's plan and need to accumulate an emergency account first, so I am going to continue using that account as normal.

That gives me £646.52/1258 and I am short £611.48.

Instead of asking for the full amount from hubby, I am going to take into account that my loan, which makes up £190 of that outstanding amount, is due on 15th July so technically I could wait another 10 days to see what money comes in and I might be able to pay that myself. If not, hubby will have had another two wage packets then and can give me it.

So, for now I need £421.48 from hubby. Call it £425.

This is the first time I have budgeted for forthcoming expenses in this way, which has made it all look a lot worse. I have yet to receive the £30 for the rock I sold on ebay, which is annoying me now as this could have been used to cover birthdays.

The Dave Ramsey plan

I've become a great fan of Dave Ramsey lately. Unlike many gurus this one actually makes sense. How rare is that.

He solved for me one of the great mysteries of paying off debt - everyone says there's no point having savings when you're paying off debt. But what happens when the car blows up. Or the boiler breaks down. How do you pay for emergencies? On credit? Then what's the point of paying off the debt in the first place?

Dave's plan makes a lot more sense.

Step 1 - First you start paying the minimum amounts on your credit cards. As quickly as you can you build up an emergency savings pot. Dave recommends $1000, although if you earn less than $20,000 drop this to $500. I'm working on worst-case scenario and assuming that I will bring in only part-time income for six months - which amounts to £16,200 before tax - so I intend to have an emergency account of about £500. If I earn any extra I will add my estimated self-employed tax payments (30% of my income) into this as an extra buffer. That means once business expenses are taken into account I should have some leftover at the end of the year and I can use it as an extra debt payment.

Step 2 - Then you take the smallest debt and pay that off. Once that's gone, you add what you used to pay onto the next debt. This starts a snowball. Dave suggests starting with the smallest debt so you get a quick win under your belt. Again, a lot of debt payment plans suggest paying the debts with the highest APR first, but for me that's the biggest debt. If I started by doing that I'll be paying that thing for months and months. I'm someone who needs a reward now and then, and Dave's way I would get a reward more often in the beginning when my debt-paying muscles are weak. By the time I get to the biggest, ugliest debt I'll be stronger and desperate to see it go. If you have an emergency, you use the money in the savings account. Then you go back to baby step 1 and minimum payments on the debts and build that emergency savings up again.

"When you pay off a nagging $52 medical bill or that $122 cell-phone bill from eight months ago, your life is not changed that much mathemetically yet. You have, however, begun a process that works, and you have seen it work, and you will keep doing it because you will be fired up about the fact that it works." Dave Ramsey

Step 3 - Once the debt is gone, you then start building up your savings to cover 3-6 months of living expenses, so if you lose your job or need money for medical expenses etc you can afford it.

Step 4 - Once that's done, you then increase your payments (or start paying) into your retirement plans. Dave suggests 15% of your income should be put into this in addition to what your employer pays in but exclude any State pension. Do not rely on this in any way, shape or form.

"I don't count on an inept government for my dignity at retirement, and you shouldn't either. Getting older is going to happen. You must invest now if you want to spend your golden years in dignity." Dave Ramsey

Hubby has a pension at work he has been paying into for the last 16 years. It's not a lot, but it's a start (I have to check what he pays and what his employer pays). I don't have one but will need to sort something out when I start work next week otherwise I will be enrolled into the company's scheme. As the job is only a six-month contract, I think that would be a waste to leave the money sat there after I go so I've got to sort out a stakeholder pension. I will be putting in 3.75% every month and the company will be putting in 7.5%.

Step 5 - The next part of the plan won't apply to us - college funding for your children. We have decided not to have children. We can't rule out the possibility that one of us may go back to university, but at the moment I can't see that happening unless hubby is twiddling his fingers when he retires.

Step 6 - Pay off your mortgage early. We are already paying extra this off to the tune of £150 a month. We are breaking with Dave's plan on this point and carrying on doing it all the way through. We've been doing it for nearly four years.

Step 7 - Build wealth and give. This is a long time in the future ad I can't right now even imagine what this would look like.

I want us to have paid the debt off and be working on baby step 3 within 3 years.

I want us to be at baby step 6 within 5 years.

We have life insurance so if anything happens to one of us the mortgage is covered. We have wills, although I'm not 100% happy with how they have been written so I need to check and see if they are fully legal.

Planning ahead

Hubby and I have been forced for the first time to think ahead and plan our finances. I believe in the real world this is called a budget ;-)) As Dave Ramsey says, your first budget is a mathematical confirmation of your suspicions. LOL.

I know that I have some expenses coming up that we will find tough to cover if hubby has to once more cover shortfall at the end of the month so I'm planning now. We are determined we will NOT default on anything at the end of the month.

We split our expenses pretty simply - I pay the fixed costs (the mortgage, buildings and contents insurance and the council tax) plus my debt payments and hubby pays all the irregular expenses, which is pretty much everything else. It all evens out at the end of the month, but it means I get to pay the fixed expenses so I know what I have to pay and by when. I simply couldn't face juggling all the little bits and pieces throughout the month with an irregular income.

My expenses look pretty simple:

Mortgage + buildings and contents insurance £631.77
Council Tax £125.00
Credit card 1 ~£165.00
Credit card 2 £ 11.75
Loan £189.08
Private health insurance £ 23.87
Charity £ 18.00
Savings £ 5.00
National Insurance Contributions 2 £ 10.40

Total £1169.72

This morning I canceled my health insurance policy as the new job will provide me with that so I can strike 23.87 off my budget, and I intend to cancel my charity contribution. There's no point giving to charity if it tips me into an unauthorised overdraft or is rejected by the bank and I end up charged. That means my expenses are reduced by £41.87 to £1127.85.

I only realised last night that life would be sweeter and I would only need to work part-time if I had no debt payments, hence the LBM. My essential expenses are £756.77. My debt payments are £371.08. That's 33% of my income. I have become a stupid goober, as Dave Ramsey might say.

Over the next two weeks until the end of the month I have the following expenses cropping up:

Current account 1 interest ~ £20 on 19th PAID
Father's day ~£10 - card and present on 19th
Brother-in-law's birthday card due 18th
Travel expenses for new job unknown but due next week
My mother's birthday ~£20 due on 26th
Sponsorship for family fund-raising efforts ~ £20 payable after 27th
My sister's birthday ~£15 first week in July


Tonight I transferred the only £20 I have in a pathetic savings account to current account 1 as there is not enough to cover this interest payment. It's just pure luck I haven't looked in here for four months and ravaged this already. That's one bank charge averted.

Next, Father's Day. I currently have a few pennies around the house I will scrape together and I usually get lucky when I raid hubby's trouser pockets before washing them ;-)) However, I have a feeling my father is going to ask me buy him a book or DVD from amazon, which will entail a card transaction. A potential disaster looms. I intend to head this off with a bottle of wine or horribly lie and tell him the book or DVD is out of stock. Doesn't debt force you to make horrible decisions...

To cover the next thing due - my travel expenses next week which I would usually 'charge' - I put a set of rockery stones on ebay tonight which I'm positive will go for at least £30 - they are very old and of historical interest. I have plenty more sets where they came from so for a while I have some money for travel. The tentative plan is that hubby will be taking me in with him very early (6am) on Monday, Tuesday and Wednesday next week and I will sit in the car and read until I have to leave and walk to the office nearby. My friend works in the same office so I will try and get a lift home. If I cannot, I will use the money from the rockery stones I sell on ebay.

As for the sponsorship money and mother's birthday...more thought required. I have more than two weeks for the former and a week for the latter.

Now to income - the crucial part

Client 1 - outstanding invoice £200 PAID TODAY!
Client 2 - outstanding invoice £337
Client 3 - outstanding invoices $200 past due
Client 4 - £100 deposit being transferred by BACS now

Client 4 - work to start when deposit clears to be billed £100
Client 5 - work in progress to be billed £1150
Client 6 - work in progress to be billed £200

That's around £737 if the money from the US client comes in leaving me short £390.85. I cannot say whether the clients who have work in progress will pay anything promptly if I bill before the end of the month.

I have no idea if I will be paid at the end of June for the three days I do next week or whether my first salary will be at the end of July. If it's next week, I could be looking at about £250 according to this nifty little salary calculator, making me short around £140.

Of course the word is IF. And this planning doesn't include taking 30% for taxes and class 4 NICs, which should be £221. I simply can't do that this month.