Self employed and also Disposable income question

[pboreham]

Been having a mini crisis the last week or so. Was all brought to a head when I mentioned to my missus that I was going to be buying the rockband 3 kit (which is obviously nearly £200).

Anyway, she finally stood up to me and said I shouldn't really be thinking of getting it as I am always moaning about being skint. She was right and I realised it wasn't fair, that one moment I'd be really worried about paying our bills etc (and putting that worry on her) and then the next minute go and spend a load of money.

I said I would sell my drums to pay for the rock band gear, but then I realised that is just as bad... I just cannot wait and save for things! Always get myself into debt.

So it made me take a long look at myself and a bit of a wake up call. I have a fair bit of debt, absolutely no savings and don't own a house or anything.

So i have worked out a monthly budget that allows me to pay my bills, start to get my loans paid off properly, save some money and also have a strict monthly allowance for spending.

Great, I hear you say (though in reality, boredom kicked in 4 and a half paragraphs ago), what's the problem? Well, i own my own business and so do not have a regular income. Things are going quite well, but cash flow is a killer, so I cannot easily say how much I will be getting in each month.

So, the question is; firstly, is anyone else self employed and how do you handle it and secondly, what kind of 'free' money do you guys have for yourselves to spend how you like each month.

I've set myself a budget of free money, but discussing it lunch Time with my missus and her mate, they were both surprised with how much I'd set

 

[Carl]

You need to get a list together of your monthly outgoings.

Rent
Mobile Phone
Broadband
Cable TV / Sky
Pension fund
Car payments
Insurance Home and / or Car
Car tax
TV Licence
Telephone Line Rental
Grocery shopping

Anything else you have on DD or as a monthly bill, so right now you have to budget for all those things first. Set that amount aside each month to cover all those things, even if your cash flow isnt regular, so if you get paid for a job, make sure that 4 months of the above is covered, then work out how much 'free money' you have as such. Really though in times of plenty you should be saving for a rainy day.

Work on things, 'Do I really need this?' 'Do I really need this right now?' 'Can I wait for a price drop?' Overall from what I can tell, games drop in price pretty quickly, already Castlevania and Enslaved are down to 22-23 quid area.

Honestly Paul, essentials only and then for shits and giggles and treats you can save up and have some fun. Be that not buying anything for a couple of months, I know this time of year is killer, but listen to your missus. Was that tattoo necessary lad? Only joking.

I'm one of the worst person's ever to be saying this, I have been useless over the past few years in getting caught up in gaming hype for games, but have tried to change this summer onwards. I still have games from 2 years ago shrink wrapped. This winter I'm really going to try and wait for price drops this winter, I think there will be more price drops and bigger sales than ever before.

How much 'free money' had you set yourself?

I really try to limit myself to 200 max per month, now that is maximum, was very happy to have one CC bill this month with nothing on it! I have been selling stuff on ebay and forums recently too in order to get some funds into my paypal account to future fund new purchases. Maybe sell all your old RB stuff? Or games you really no longer play?

 

[pboreham]

Cheers dude!

I have got all that budgeted out. Basically I need around £1600 for all the bills listed below, which I count as shared bills so we half these. Then I have loans and credit card bills of around £350 a month, saving £100 and I budgeted myself £200 a month as well like you have. That is for everything though, games, clothes, drinking, footie etc. I felt £50 a week was reasonable, but as I say, was met with some surprise today?

I have all the accurate figures in a nifty app and that has really helped to actually see where the money is going.

As I mentioned, selling stuff is fine, I always do it, but it is more of a psychological problem with me that I cannot wait, and normally when I sell things, I usually end up getting them again down the line. Which is why I have had 2 ds's, 3 psps, 4 360s, 3 guitars etc.

I'm mentally ill!!!!

You need to get a list together of your monthly outgoings.

Rent
Mobile Phone
Broadband
Cable TV / Sky
Pension fund
Car payments
Insurance Home and / or Car
Car tax
TV Licence
Telephone Line Rental
Grocery shopping

Anything else you have on DD or as a monthly bill, so right now you have to budget for all those things first. Set that amount aside each month to cover all those things, even if your cash flow isnt regular, so if you get paid for a job, make sure that 4 months of the above is covered, then work out how much 'free money' you have as such. Really though in times of plenty you should be saving for a rainy day.

Work on things, 'Do I really need this?' 'Do I really need this right now?' 'Can I wait for a price drop?' Overall from what I can tell, games drop in price pretty quickly, already Castlevania and Enslaved are down to 22-23 quid area.

Honestly Paul, essentials only and then for shits and giggles and treats you can save up and have some fun. Be that not buying anything for a couple of months, I know this time of year is killer, but listen to your missus. Was that tattoo necessary lad? Only joking.

I'm one of the worst person's ever to be saying this, I have been useless over the past few years in getting caught up in gaming hype for games, but have tried to change this summer onwards. I still have games from 2 years ago shrink wrapped. This winter I'm really going to try and wait for price drops this winter, I think there will be more price drops and bigger sales than ever before.

How much 'free money' had you set yourself?

I really try to limit myself to 200 max per month, now that is maximum, was very happy to have one CC bill this month with nothing on it! I have been selling stuff on ebay and forums recently too in order to get some funds into my paypal account to future fund new purchases. Maybe sell all your old RB stuff? Or games you really no longer play?

 

[Carl]

I can see that lad, buying and then selling and rebuying always makes you end up worse off, cause your losing money along that line.

Well if you got given stares and wide eyed looks, maybe drop that down below £50 a week, see if you can take it down to £100 a month. I mean that's probably close to 3 games a month, if you wait for price drops; and enough for a few beers or a night out for a meal with the missus.

It may sound very hard though too, but really, that 'free money' is much better being used to pay of your debts. That way you can clear your debt quicker, get used to the way of saving for things and get away from the whole 'disposable income' side of things that runs round your head. Having one of my CC bills totally clean this month was great. Will probably end up buying Chrimbo presents on it, but still it clear is good news.

 

[pboreham]

I can see that lad, buying and then selling and rebuying always makes you end up worse off, cause your losing money along that line.

Well if you got given stares and wide eyed looks, maybe drop that down below £50 a week, see if you can take it down to £100 a month. I mean that's probably close to 3 games a month, if you wait for price drops; and enough for a few beers or a night out for a meal with the missus.

It may sound very hard though too, but really, that 'free money' is much better being used to pay of your debts. That way you can clear your debt quicker, get used to the way of saving for things and get away from the whole 'disposable income' side of things that runs round your head. Having one of my CC bills totally clean this month was great. Will probably end up buying Chrimbo presents on it, but still it clear is good news.

Yea,maybe you are right... I said to my missus though that the £200 isnt a 'challenge' (i.e. I would try to spend it all each month) and any that was left, i would use to pay off debts.

I think as its the first month of try this properly starting Monday, then I'll see how it goes with £200 and adjust from there.

Was interesting though to see you have the same 'limit'

Thanks for the advice!

 

[TikTikTikTikTik]

Just incase you missed it;

Eurogamer review of Rockband 3 (10/10, best rock band ever!):
http://www.eurogamer.net/articles/2010-10-28-rock-band-3-review

But seriously, you should switch your free money and savings around. Save 200 and spend 100. Also another good check is to see how much rent you will be paying on your loans and how much less that can be if you pay them back earlier. Could be worth it to go as low as 50pound free money just to save rent.

I have a fixed income every month so it's easier to sort out, but I save about 500pound vs spending about 100pound. Ofcourse I don't actually buy that much and I guess gaming and clothes are my biggest expenditure, but even those I tend to just order 3 or 4 "older" games to keep it cheap. I've got about 6 still unopened to play. And for clothes I tend to just have a binge every once in a while buying 6 new shirts in a month (70-90pound a shirt).

We have the same budget for our regular bills, around 1700pound. But have built in that 200 pound of it gets saved automatically. So any household bills or end of year taxes can easily be paid without going in to your own stash.

Thinking about it, I guess I'm the opposite as I don't like spending money (cheap git! ). You set up a plan (excell is your friend!) to see how much you can spend and how much you can save on your loans if you speed it up.

 

[Carl]

Well depending on what your earning each month makes your limit vary of course. I get paid quarterly, so I have to be able to work out things in advance. I dont go out at weekends that much anymore, so I guess I should bring that limit down, but there has been part of me goes, well you aint boozing it away or going out to the movies. Every person is different of course. My pay packet varies too as I get paid per hour, but I do try to put some money every year into a savings account. The interest rates are shite though. Last year and this year though I've been saving to put a new bathroom in my house, so my normal money I would be putting in an Mini ISA is going there. If I can save more after that's finished I will put it in a Mini ISA before the deadline date at the start of April.

 

[pboreham]

This is all good advice guys, cheers!

I will probably look at lowering my free cash then and putting the difference on debts. As you say though tik, those pro instruments aren't gonna buy themselves?! maybe I'll lower it starting from December eh?

But seriously, it makes sense and the sooner I pay off my debts, then the sooner I will have more free money anyway.

Out of interest, I haven't got *that* much debt...

Credit cards, £4k (just ordered a new egg card this week with 0% balance transfer for a year)
Student development loan: £500 (paying this off in one go today, putting the monthly payments I normally pay into my credit cards)
Store loans for tv and sofa around £1000

And I also have an overdraft that I live in of £1500, but I don't count that as debt really, though I will get out of it.

Oh, also have my car loan at around £10,000. Not much I can do with this, but once my other loans are paid, I will start saving up a separate account to pay this off earlier.

I cannot even think about the car loan being 'debt' though as it's too much to bear!! Lol

 

[TikTikTikTikTik]

I would check your interest rate on the overdraft, it might be one of the worst if it's a crappy account.

I'm very fortunate that I don't have any student loans or any debt so I won't be the best person for advise. However I did always learn to save for things and not get it on credit which has really helped.

Besides you car I would try to get rid of as much of the debt as soon as possible. Not sure what your rates are but it is an interesting calculation to make to see how much you are losing a month on nothing but debt.

Another interesting one is to look how much you spend on small stuff, like a baguette at lunchtime or things like that. At one point at Uni I was spending 40euro a week on sandwiches, they were really nice in my defense, but still that's a ridiculous amount when you think about it. Quickly stopped that when I realised, but they are such small amounts per day that you don't think of them as meaningfull expenditures.

 

[pboreham]

I would check your interest rate on the overdraft, it might be one of the worst if it's a crappy account.

I'm very fortunate that I don't have any student loans or any debt so I won't be the best person for advise. However I did always learn to save for things and not get it on credit which has really helped.

Besides you car I would try to get rid of as much of the debt as soon as possible. Not sure what your rates are but it is an interesting calculation to make to see how much you are losing a month on nothing but debt.

Another interesting one is to look how much you spend on small stuff, like a baguette at lunchtime or things like that. At one point at Uni I was spending 40euro a week on sandwiches, they were really nice in my defense, but still that's a ridiculous amount when you think about it. Quickly stopped that when I realised, but they are such small amounts per day that you don't think of them as meaningfull expenditures.

Cheers Tik, the interest on the overdraft is not very much at all as I have one of the top Barclays accounts.

But yea, saving is the future!

 

[Dar]

You should look into maybe getting a restructure from your bank on some of your debts. They may not be too happy to take on the other companies debts (the finance purchases or other institutions Credit Card debts) but they would look at the overdraft and existing loands you have with them.
Even leaving the car loan seperate, you could possibly clear a lot of your debt with a new loan and therefore reduce your outgoings monthly and also consolidate the debt making it easier for you to manage and plan also.

Worth a thought anyway.

 

[Tim7]

Bloody hell I read your first post Paul and it was like reading something that I had written, all up to the bit about being self employed. I am exactly the same as you, must have the latest gadget or game.

Something that has helped me is the app iXpenseIt. It's genius. You can put in everything in there, all your direct debits and then it gives you a budget for each period you set. The period I set is 4 weeks as I get paid every 4 weeks. I'm kind of like you in that I don't get the same amount each month because of expenses I get back and because of different amounts of overtime I do. The only bloody trouble I have is sticking to the budget I set each month .

I don't have loads of loans or anything like that, all I've got is a credit card with about £600 that needs paying off, and I live in my overdraft of about 2k which I also want to get paid off and get back into the positive.

I really do need to get my self sorted out because me and the missus want to get a house next year so I'll need to be proper on the ball for that.

Definitely give that app a look though, it's brilliant.

 

[Jumbo_]

Yeah but Tim you live with your mum.

 

[pboreham]

Bloody hell I read your first post Paul and it was like reading something that I had written, all up to the bit about being self employed. I am exactly the same as you, must have the latest gadget or game.

Something that has helped me is the app iXpenseIt. It's genius. You can put in everything in there, all your direct debits and then it gives you a budget for each period you set. The period I set is 4 weeks as I get paid every 4 weeks. I'm kind of like you in that I don't get the same amount each month because of expenses I get back and because of different amounts of overtime I do. The only bloody trouble I have is sticking to the budget I set each month .

I don't have loads of loans or anything like that, all I've got is a credit card with about £600 that needs paying off, and I live in my overdraft of about 2k which I also want to get paid off and get back into the positive.

I really do need to get my self sorted out because me and the missus want to get a house next year so I'll need to be proper on the ball for that.

Definitely give that app a look though, it's brilliant.

Cheers Tim, I got one on the iPad called 'iCompta' after looking for ages. It's really good too and you can set up timed budgets for multiple categories, so gonna give it a proper go from the 1st. Liking how it is making me be more organised already though.

From all I have read, especially if you are self employed with irregular income, it's best to set a fixed budget for everything and NEVER go over it every month. If you are under, the save it or put it on a loan.

Managed to pay a loan off Friday and also opened an ISA, so starting to turn things around.

So much 'want' in that rock band keyboard could go and get it right now and even though I haven't even got the game yet, it's the sort of thing I would definitely have done a month ago. But I am determined to wait until I get payments in from clients in the next few weeks and all the important stuff is covered first.

Bloody hard though

We are looking for a house next year too, so another thing that prompted this change.

 

[Rob92]

I'm only 18 and don't have all the bills etc. to worry about, but I really don't understand how you can complain about being short of money when you are wasting so much on what are practically toys - games consoles, video games, smartphones, iPads and all the other gadgets... All unnecessary luxuries.

My income obviously hasn't been huge, so I only purchase what I can afford;

My phone cost £20 (Orange Vegas) and it has done the job for nearly a year - do you really need quick mobile browsing and all the other stuff your expensive phone does over my £20 phone?... I doubt it.

I've bought two video games in the last 6 months - Skate 3 and PES 2011... When money is short don't just waste your money on flops and hype-fuelled shite. Gaming can be very expensive these days and in the grand scheme of things it is just a time wasting activity that accomplishes nothing in your life, that's not to say that I don't enjoy it .

My laptop cost under £400, I have freeview TV which I watch on a 24" screen, I'm on O2 broadband, I don't buy expensive designer clothes etc etc... You get the point, I save most of my money, yet it's not like I'm worse off than my friends or lack anything that I really wish I had...

As I said I'm only 18 so don't have first hand experience of your situation, but my advice would be simple, don't buy what you can't afford...

 

[pboreham]

I'm only 18 and don't have all the bills etc. to worry about, but I really don't understand how you can complain about being short of money when you are wasting so much on what are practically toys - games consoles, video games, smartphones, iPads and all the other gadgets... All unnecessary luxuries.

My income obviously hasn't been huge, so I only purchase what I can afford;

My phone cost £20 (Orange Vegas) and it has done the job for nearly a year - do you really need quick mobile browsing and all the other stuff your expensive phone does over my £20 phone?... I doubt it.

I've bought two video games in the last 6 months - Skate 3 and PES 2011... When money is short don't just waste your money on flops and hype-fuelled shite. Gaming can be very expensive these days and in the grand scheme of things it is just a time wasting activity that accomplishes nothing in your life, that's not to say that I don't enjoy it .

My laptop cost under £400, I have freeview TV which I watch on a 24" screen, I'm on O2 broadband, I don't buy expensive designer clothes etc etc... You get the point, I save most of my money, yet it's not like I'm worse off than my friends or lack anything that I really wish I had...

As I said I'm only 18 so don't have first hand experience of your situation, but my advice would be simple, don't buy what you can't afford...

Yea, if only it was that easy! I'm old enough to be your dad, that's a sobering thought, but by that I mean you have a lot to go through in the coming years and (in my situation) spending money is a bit of an outlet or release to every day stresses and strains.

Sometimes you have to reward yourself and again in my situation I do need that. I have a lot of stress being self employed and often work 14-16 hour days, 6-7 days a week at periods. So treating yourself is one of the little things to keep you motivated.

Once you let that get out of control though, that's when the trouble starts. It's quite literally a drug... An addiction.

Some of what you say is certainly true and if you can be that level headed at 18 then fair play to you - try to stay that way.

As you get older, start earning more, move out of home (if you haven't already) get bills and become responsible for a he'll of a lot, you grow up amazingly fast and very quickly. It's then that you might find it harder to resist the lures of a better tv, a nicer car, a new sofa etc.

 

[Rob92]

Yeah, as I said I havn't been through what you have so I'm in no place to judge or advise (sorry if I came across a little harsh), and from the short time I've been in work (got a job at the end of September) on a £6 an hour job usually 30+ hours a week I can understand how people get stressed out from work - getting blamed for other people's fuck ups, being asked to do a million things at once etc.
This is obviously nothing compared to your job, which sounds very tough .

Last week I went and got membership at the sports centre in town, I've been going there most evenings when I have nothing planned and I find going in the gym or going swimming for an hour takes my mind off of work and I actually enjoy it, plus it's obviously healthy and good for my fitness. It's £27 a month for me (usually £42 but I used the "Passport to Leisure" thing) - you could easily spend that on one night out, or one video game, maybe something to consider as an alternative to gaming?

I don't really spend much of my money these days - all of my proper mates have gone to uni so I don't go out that much.
I give 1/3 of my income to my parents as board (I still live at home), I save 1/3 and have the remaining 1/3 to spend, might learn to drive .

 

[RuneEdge]

I have a lot of stress being self employed and often work 14-16 hour days, 6-7 days a week at periods. So treating yourself is one of the little things to keep you motivated.

I take it you're older than me too cuz I'm 24, so I kinda feel like I dont have the right to be giving you advice seeing how you've probably had a better experience of the working life.
But when you say you work that many hours and then struggle the way you do, the first thing I'd wonder is whether you're in the right business. Life should be a lot more rewarding for you if you work that much.

 

[pboreham]

I take it you're older than me too cuz I'm 24, so I kinda feel like I dont have the right to be giving you advice seeing how you've probably had a better experience of the working life.
But when you say you work that many hours and then struggle the way you do, the first thing I'd wonder is whether you're in the right business. Life should be a lot more rewarding for you if you work that much.

I'm a web developer. I always aimed to work 4 days if I went self employed, but 2 years on and it hasn't worked out like that.

Guess I should be pleased!

 

[kevano22]

I moved out 8 months ago and life is now stress free (funny how I have lots to pay for but no hassle from parents and I prefer this)

Im doing a pretty damn easy job from home, although I've recently been promoted so i'll be working from an office within the next few weeks..But i'm doing 40-50 hour weeks and no matter what the job is, or how easy it is, it's still work at the end of the day and isn't really something we want to be doing.

I agree as you get older you want to treat yourself more and buy more things you dont really need, but you really want...but you do have to call a limit on that at times.

I got the HTC Desire when it first came out paid £400...I think back now and I would never spend that amount of money on a phone. Sure it's great and does super cool things and I couldn't live without it...but I dont think anything is worth that amount. I had the money and I spent it because I felt I needed that phone so bad.

I'd have rather put that into savings now and get a less good phone for half or even a third of the price.

Thats just one example of wasting cash I could have saved for rainy days...or troubled times.

I got a savings account a few months back and have started putting little bits and bobs in each week and month. I suggest you do the same, every little helps.

Every friday I check the last 3 digits of my bank account and put them into my savings - this way you wont miss this little ( anything between 0.01 and 9.99 a week) and you're building up your savings. I just wish I had of done this since I was 16...

Money saving expert has loads of similar people in your scenario too im sure you will have checked it out already though.

Robs point is the most obvious though, don't spend what you can't afford.

EDIT: I also have 4 money accounts which I think helps keep things easier to see.

HSBC - for all monies to be paid into.

A+L - has all my bills coming out of it, so I transfer a set amount from HSBC to here every month to cover every bill I have.

Credit Card - only a £500 limit for bigger buys online (again only spending what I can afford but having a little longer to pay it off)

Savings account with ING - pay into this monthly from HSBC and also last 3 digits of HSBC acc every friday.


Whatever i'm left with in HSBC I get to spend at will

EDITEDIT: I also am starting to sell things I never use - sold my Ds Lite the other day - £50 I can use for better things - gumtree is your friend

 

[pboreham]

I moved out 8 months ago and life is now stress free (funny how I have lots to pay for but no hassle from parents and I prefer this)

Im doing a pretty damn easy job from home, although I've recently been promoted so i'll be working from an office within the next few weeks..But i'm doing 40-50 hour weeks and no matter what the job is, or how easy it is, it's still work at the end of the day and isn't really something we want to be doing.

I agree as you get older you want to treat yourself more and buy more things you dont really need, but you really want...but you do have to call a limit on that at times.

I got the HTC Desire when it first came out paid £400...I think back now and I would never spend that amount of money on a phone. Sure it's great and does super cool things and I couldn't live without it...but I dont think anything is worth that amount. I had the money and I spent it because I felt I needed that phone so bad.

I'd have rather put that into savings now and get a less good phone for half or even a third of the price.

Thats just one example of wasting cash I could have saved for rainy days...or troubled times.

I got a savings account a few months back and have started putting little bits and bobs in each week and month. I suggest you do the same, every little helps.

Every friday I check the last 3 digits of my bank account and put them into my savings - this way you wont miss this little ( anything between 0.01 and 9.99 a week) and you're building up your savings. I just wish I had of done this since I was 16...

Money saving expert has loads of similar people in your scenario too im sure you will have checked it out already though.

Robs point is the most obvious though, don't spend what you can't afford.

EDIT: I also have 4 money accounts which I think helps keep things easier to see.

HSBC - for all monies to be paid into.

A+L - has all my bills coming out of it, so I transfer a set amount from HSBC to here every month to cover every bill I have.

Credit Card - only a £500 limit for bigger buys online (again only spending what I can afford but having a little longer to pay it off)

Savings account with ING - pay into this monthly from HSBC and also last 3 digits of HSBC acc every friday.


Whatever i'm left with in HSBC I get to spend at will

EDITEDIT: I also am starting to sell things I never use - sold my Ds Lite the other day - £50 I can use for better things - gumtree is your friend

Cheers Kev, all good advice there too, most of which I've started to do over the last week or so.

Feels a lot better to be more 'in control' already.

 

[kevano22]

Cheers Kev, all good advice there too, most of which I've started to do over the last week or so.

Feels a lot better to be more 'in control' already.

It really is a good feeling knowing exactly where everything is going - and knowing that there is a little savings pot building up too