# Trying to change our spending habits- advice needed



## ericsson (9 Nov 2014)

Age: 29
Spouse’s/Partner's age: 30

Annual gross income from employment or profession: 45k
Annual gross income of spouse: 39k

Monthly take-home pay: 3,700 (we get paid fortnightly so this is for two fortnights)

Type of employment: e.g. Civil Servant, self-employed: Both public sector workers 

In general are you:
(a) spending more than you earn, or
(b) saving?

We had been spending way above and beyond our means. Have recently been cutting back everywhere and just starting to try to save.

Rough estimate of value of home: 150,000
Amount outstanding on your mortgage: 190,000
What interest rate are you paying? Unsure. Our monthly payment is €900

Other borrowings – car loans/personal loans etc
Loan 1- 17,000 (credit union) paying €400 p/m
Loan 2- 17,000 (credit union) paying €400p/m
Loan 3- 6,000 (bank loan) paying €80p/m
Loan 4- 1,500 (store credit) paying €58 p/m
Loan 5- 500 (payday loan) paying €145 p/m
Credit card- 1,500 paying approx €50 p/m
Car- 3,000 paying €190 p/m


Do you pay off your full credit card balance each month? No
If not, what is the balance on your credit card? 1,500. Paying a little over minimum payment each month. Had fallen behind but have been paying religiously for past 6 months. Have cut up card.

Savings and investments: none

Do you have a pension scheme? Yes through work

Do you own any investment or other property? No

Ages of children: . Pay €200 maintenance per month

Life insurance: through mortgage

Extra monthly outgoings not including loans:
13.33 tv licence
15.50 bins
50.00 phones/internet
33.55 house insurance 
7.50 house tax
50.00 car insurance
20.00 UPC
7.99 netflix
50.00 esb
80.00 gas
150.00 petrol
25.00 car tax
120.00 food
Then after that we have car payments, mortgage, loan payments, credit card etc that are listed above.


What specific question do you have or what issues are of concern to you?
We had fallen into huge debt a few years back due to a number of personal factors. We are now trying to get our lives back together and get on top of this debt we have built up but find we are still living pay check to pay check. Have made cuts where possible, cheaper phone package, UPC, insurance, shopping in aldi, etc but still can't manage to get on top of our finances and start saving. Over the past couple of months we have been trying to save €200 per month but had to dip into this for Xmas for children. We can also never seem to budget for doctor/dentist/car service etc. Anyone have any ideas for us. I feel like we have been tryin so hard for the past year or so but only hitting the tip of the iceberg. Please be gentle...


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## Janet (9 Nov 2014)

If my quick sum was correct all that you have listed adds up to just about 3,050 per month. So the first question is where's the other 650 going? You mention also saving 200 per month so now, where's the other 450 going? If you haven't already (both of you) kept a spending diary, start one immediately. Write down everything you spend money on every day, especially small cash purchases. Even when doing this, you will probably start to spend a bit less, it's just what happens when you start to become aware of what you're doing.  Until you have an exact idea of what you're spending all of your money on, you can't figure out how to get on top of things. 

Have you set up a spreadsheet with your budget in it or gotten some kind of software app that you can use for that (a friend swears by YNAB, for example, but I downloaded the free trial and couldn't see what it offered me over my own spreadsheet - there are loads of options so you just need to find one that works for you). 

Add in a section for annual/irregular expenses, like going to the doctor, car service, dentist etc. Try to estimate how much you normally spend for that in a year and divide it by 12 and add that much as a line item to your budget. Don't forget to include birthdays and christmas, too. I used to think I had a decent budget set up because I was tracking all of my Laser card payments to make sure I didn't overdraw by accident - until I started going for counselling and had to make sure I had the money to pay for that every week and actually wrote down everything properly, estimating things like the phone bill. It soon became obvious why I never had any money and had a mountain of debt to boot.

The good news is that it is absolutely possible to get out of debt, especially when both of you are earning. The bad news is that it's a pain in the neck, won't happen in a few months and you might well be sick of it before you're halfway through. But all of that is set off by the comfort and thrill of taking control of your finances and knowing you're on your way to never having another stress-inducing "do I have money to buy xyz this week" moment.


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## RichInSpirit (9 Nov 2014)

The food bill seems very low for 2 or more people.


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## Sandals (9 Nov 2014)

Xmas presents should be kept to a minimum, start early is the key, i start in new yr...my kids get  bits from charity shops, yes fab bits for few euro, sale items n needed things like underware, duvets, clothes, new toothbrush etc...iv family who think some items their kids wud freak but mine known no different....

im frugal as learnt it a long time ago, not needed now but I couldnt hand out huge money in toy shops.....in one last weekend and trolleys overflowing, crazy....


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## ericsson (9 Nov 2014)

Thank you do much for taking the time to reply to me. I have been feeling like I had no one to talk to besides my OH, and unfortunately for my sanity, I am the better one at dealin with money! (Better, not necessarily good). 

The payday loan is one of them high interest, short duration ones that we took out about a month ago when the gearbox went in the car and we couldn't afford the repairs ourself. We had one of these about a year ago but had cleared it and swore blind we wouldn't go down that route again, that was until the car broke down and we were stuck. It just feels like a cycle with us. 

The food amount is quite low but I have to say we budget the costs of our meals quite well. We are however terrible for eating out and getting take aways. A spending diary sounds like something that we really need to start doing. We just seem to go through money like there is no tomorrow on payday and then we are left almost two weeks with literally a few euro. There is money there, it's just that we are spending it wrongly!

Thanks again for all the advice. It's really helping me to see where we need to go.


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## Janet (9 Nov 2014)

ericsson said:


> We are however terrible for eating out and getting take aways.


Oh yeah, that one's always a killer. You can do something about that right now, actually. Go and find every single menu and leaflet for takeaways you have lying around the place and throw them all out. Whenever you get more, put them straight in the bin. You might know the phone numbers and even what meals you like off by heart but at least you won't have the visual reminders to tempt you.


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## emeralds (9 Nov 2014)

ericsson said:


> We are however terrible for eating out and getting take aways.



Get a jar right now. The next time you feel like eating out or getting a takeaway don't do it. Put the money in the jar instead. Then hopefully in a couple of months you will have enough emergency money to mean you never ever have to take out a payday loan again. 
Which is the next highest interest rate loan? Is it the store card? Once you have the payday loan paid off, direct that €145 per month to the store card. That will give you €203 per month to pay the store card with...

Also find out what interest rate your mortgage is. You need to have a firm grasp of all your financial affairs in order to understand where you are trying to get to.


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## Monbretia (9 Nov 2014)

I second the spending diary idea, it is essential to get an overview of where the money goes.   Simple diary or notebook will do or you can use a fancy app, everytime you buy something take the receipt and ask for one if you are not automatically given one.   Stuff them in pocket or bag and every night with a cup of tea/coffee write them in.  You could even go further and balance this every day, for example start the week with x amount of cash and balance up every night, if there are shortfalls you have a better chance of remembering them on the day than a week later.

Sounds like no fun but it can actually get very addictive, gives you great satisfaction to have control in this area rather than the spending controlling you.

I started this 30 yrs ago when I was broke, not in debt but unable to save anything, those days have gone thankfully but the habit remains and I still keep a spending diary every year, not as carefully as I used to but nonetheless still fairly accurate.  I just buy a cheap pound shop diary every year and throw the receipts in a drawer every day ready for writing in when I get a chance.


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## ericsson (9 Nov 2014)

The store credit is for furniture that I bought through a HP type agreement. It was spread over three years at 0%. I pay €58 per month to this by direct debit. I suppose the credit card is the next killer really. I had planned on paying the money that I'm currently paying to the payday loan off the credit card once the loan is cleared. I am currently trying to make a little more than the minimum payment each month. 

My mortgage is through Shared Ownership with Dublin City Council. When I took out the mortgage initially I had planned on changing over to 100% mortgage as quickly as possible but this never happened. That is another reason why I want to get the debt down also as ideally when it's cleared I want to go to buy out the councils share, but at present I imagine they wouldn't let me due to my outgoings. 

I've got a notebook now and have calculated that we have €79 to do us until next payday (Thursday week) Going to see if we can keep a log of this money and hopefully it will help us to spend it a little more wisely since we have to account for it.


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## emeralds (9 Nov 2014)

Have you food ingredients in your presses, fridge and freezer? Enough to make a number of meals with over the next 10 days?


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## ericsson (9 Nov 2014)

Yes I have food so really this money is for extras and for maybe bread and milk and the likes. During the week is when I, lazily, tend to opt for a take away instead of cooking from scratch. Fingers crossed!


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## emeralds (9 Nov 2014)

How much does a typical take away cost you?


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## vandriver (10 Nov 2014)

You spend so little on food,that its no wonder you order takeaways!
(There must be some advice hidden in that smart comment)


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## vandriver (10 Nov 2014)

A thought just struck me.What do you do with the third wage packet for both of you every six months?


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## Ihana (10 Nov 2014)

Having got myself into a similar fix a few years ago this is my advice but I have no mortgage or children.  

1.  I  would rather drive an old car than take out a loan for one again.  
2. I do not have a TV as I am too stingy to pay for license plus UPC.  If you have children maybe this isn't a goer, but we rely on netflix alone
3.  My phone is 3 years old and I am on a payg contract (it suits me best).  I would never get into a long phone contract again.  
4.  I never eat takeaways, if I want a nice meal I would rather eat once in a restaurant than five takeaways.  We always cook fresh food, from the butcher.  Aldi is great too.  Big shop at the weekend and plan the meals for the week.
5.  My money goes into two savings accounts at the start of the month, one for short term expenses, one for long term.  But you should pay off your loans first.  Also build up an emergency fund.  somehow, you need this in place and to be able to replenish it monthly. 

Honestly, I think you are going to need to consolidate those loans, they are fairly hefty outgoings, is it possible to renegotiate with the credit union?
Also clear that payday loan asap.  

Try and get debt free somehow, then you will have some breathing space.  Not having loans is pretty cool.  Its like being back in control.


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## Ihana (10 Nov 2014)

Also, despite being in a reasonable financial position we are absolutely minimising the christmas spend this year.  The nieces and nephews will get an outing and our time but no material presents. Kris kindle means one 50 euro present for each of the immediate families.  The reason for this is that we have a wedding to pay for next year, and do not want to dip into our growing deposit for a house to pay for it.  

But! you have a house with probably a low mortgage interest rate, and two pensionable jobs, you're laughing! With a bit of prudence you can easily turn this around.


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## michaelm (10 Nov 2014)

It sounds like a spending diary is essential for you.  If you don't bring lunch to work, you should start doing so.  Do you really need Netflix?  You house insurance seems a tad expensive and perhaps your car insurance too.

If your mortgage payment date could be moved to the end of the month that might free up some cash to pay off the payday loan.  If you thought you could control your credit card then you could start clearing it each month and spending it back up (having got a replacement card) with food, petrol etc. (only within budget) ..  you could therefore not view it as one of your debts but rather part of you money management.

You'll just have to keep plugging away.  If you can eliminate the payday loan and nullify the credit card you can then ramp-up efforts to pay off the store credit & car loan.  I'd be inclined to try to pay off loans in the order of how achievable it is rather than which has the higher rate, because I think it's important to feel you are making progress.


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## Janet (10 Nov 2014)

michaelm said:


> If you thought you could control your credit card then you could start clearing it each month and spending it back up (having got a replacement card) with food, petrol etc. (only within budget) ..  you could therefore not view it as one of your debts but rather part of you money management.



I'd be very, very careful of adopting this as a strategy - in my opinion, and in my experience, "if you thought you could control your credit card" just isn't enough. Yes, credit cards can be a useful tool in managing your finances. However, if you've gotten into difficulties using one before and are still in a bad financial situation, this is a very risky strategy.


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## ericsson (10 Nov 2014)

A typical take away is generally about €15. We tend to usually make dinner etc but then later on in the evening fly down and get a bag of chips or a tray of chicken wings etc. it's not too expensive but it does add up. 

I just realised that the house and car insurance are only paid 10 times a year (I think) so the true monthly cost is actually less. I shopped around for both at the time. Also we have cut our UPC back to a basic package. We have changed phone providers and gone from €90-€55 per month. 

The extra pay check every  6 months seems to be gone before we get it. We had a wedding the time of the last one, new tyres on the car the time before etc. Even now I know I have another wedding coming up for the next three pay month in January. 

Payday loan should be clear the start of January, going to start trying to tackle the credit card then. Also started the spending diary today. Thanks again for all the encouragement, it really helps.


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## Gorbashow (9 Dec 2014)

For the phone, Tesco mobile Pay as you go is great.
For €15 you get  unlimited calls in Ireland for 30 days + this €15 is still on your  account and does not vanish after 30 days period is over.
So you can easily spend €15 for two months and if you shop at Tesco you can use 500points to change it for €15 top-up.

Haven't spend a dime since 5 months on my phone ;-)


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