Financial stability - Where to start?
Like most, I’ve never been educated in the finances department. Over the years I’ve took it upon myself to try to educate myself but always seem confused and never knowing where to start. I know many of you have made the same mistake I did by coming into SW, squandering a ton of money on crap and ending up with nothing.
Despite all the years I’ve been doing SW and earning decent income, that’s where I’m at now. Nothing. No savings, living not just pay check to pay check it’s worse than that it’s all daily income. I have zero assets or investments, zero pension. My debt is moderate 5 figure range which is being paid off. I’m in the U.K.
So where do I start?
I seem to attempt to do it all at once, do I focus on one thing or put a little bit of something into each thing?
e.g. Do I put 10% into pension, 10% into emergency savings etc. Or 100% into one thing then move onto the next.
I do have expenses due to medical issues that I pay for privately which is costly. And I do have limitations of how many hours I can work due to those medical issues.
Should I change how often I’m being paid? I feel like I need a new system that’s not to overwhelming. I’d be happy to hear anyone else’s way of doing things and where is a good starting point in terms of savings/investments/pension etc
Re: Financial stability - Where to start?
Hi Scarlet, I just saw you literally only just posted this but as I'm writing I'm looking at my own monthly budget and trying to cut back on a few things. There are lots of things you can do that can help but after personally having been in debt for years and only clearing it a few months ago, I would suggest starting with that.
Are you paying interest on it? If so, see what you can do to change that. Interest is money down the toilet if you can avoid it. If it's credit cards, switch to 0%. I think we can add links ok on here but I'm rubbish at that so a great site for all things money is moneysavingexpert. co. uk. So much useful stuff there. If debt is becoming a problem there are forms on that site to send to creditors to reduce payments and freeze interest. If you can overpay the debt and it's manageable, then overpay. Even if interest is zero, you get to a point of clearing it faster.
In terms of savings, it's always good to have some, so perhaps if you can zero any interest on your debts, then consider using some money to save as well. There's no point saving if debt interest is higher. If you can save, it'll give you a cushion and some peace of mind.
A couple of things I'd recommend googling - zero sum budgeting and the cash envelope system. Both are US based but work fine here, the principles are the same.
Also it might be worth a look at this book - https://www.amazon.co.uk/Early-Retir...6410622&sr=8-1
I've just started reading it and it seems pretty good, clear and easy to read.
Above all, I'd say the place to start is to KNOW how much you spend and where. Make an accurate budget and work from that. Without knowing how much you need, you can't move forward. And once you see it written down, it's so much easier to analyze and adjust it. You can see exactly where it goes and when you know all that, sometimes you find you have more than you thought, or that many things can be cut back on without and detriment to you.
I hope none of this is patronising, it's not meant to be and I don't know your exact circumstances. But maybe something might help! I'm UK too BTW. x
Re: Financial stability - Where to start?
scarletl, they used to have debt counsellors working for city councils when i lived in UK, if they still have that or the CAB etc, you should get really good advice about making a plan to not only pay off your debt, but also negotiate a right off of a good proportion of the debt, as long as you agree to a payment plan.
Re: Financial stability - Where to start?
Thank you all. I don’t really have any issues in the debt department of my finances. It’s only 3 debts. Two are falling off in 2020 and one is on a long term payment plan. 75% of the debt amount is from one single debt. There’s no interest or anything like that being added.
My main area of concern is A how I’m being paid. Daily pay. I feel like this perhaps isn’t good or best way to do things?
And B the fact I have nothing saved, I’m unsure of what is is a priority first. Because there’s emergency fund, 3 months worth of living expenses, long term savings, pension, investments etc. I don’t know in which order they should be saved or what’s important first.
Re: Financial stability - Where to start?
I think daily pay is really the same as the issues with credit card in terms of constantly chipping away at your money, doesnt seem like much day to day but after a few months/a year
the charges are actually adding up to significant sums of money, that you could have made good use of.
Re: Financial stability - Where to start?
Quote:
Originally Posted by
samuimoon
I think daily pay is really the same as the issues with credit card in terms of constantly chipping away at your money, doesnt seem like much day to day but after a few months/a year
the charges are actually adding up to significant sums of money, that you could have made good use of.
This is such good advice. Many of us don't think about the small amounts but when it's added up it's a lot. Things like contactless payments have a lot to answer for with this IMO. Perhaps add up the amount the Daily Pay costs you now and think what else you could do with that, it would be extra, money that at the moment you never see and probably get next to no benefit for it.
As an example, I just worked out how much difference it would make to me if I made a saving in one area of my bills of £30 a month and put that towards overpaying my mortgage. £30 doesn't sound like very much but it took two months off the end of my mortgage and saved me £107 in interest. No brainer for me!
Scarlet it's good you aren't paying interest on the debts. In terms of the order of the other things, I would start with putting aside what you can in an instant access account, decent interest if you can. Nothing compares to the peace of mind of having a bit of money aside. What it's for is up to you. I can't advise on investments and that's probably best as it's not really something many can advise on! But they are generally better for long term and what you could do with now is to have money aside that you 'could' use if you needed, for emergencies or bills. It's amazing how you won't want to touch it! Tying it up in investments won't help if you need that money fast.
Re: Financial stability - Where to start?
https://www.youtube.com/watch?v=Sr43f28mU0U
I've been following Dave Ramsey a lot.
I am working my own plan that I focus on one thing at a time until I can do more then one thing at a time. Mostly because of the irregular income I make and dealing with my disability. Hate to think about it might have to file bankruptcy again.
For budgeting I use www.everydollar.com you can make a free account it works on android and iphone. www.youneedabudget.com more advance budgeting software but whatever you do you need a budget.
Then it comes done to the baby steps. which does make sense to do one thing at a time but you also don't want to miss out on compound interest.
Wtih debt focus on the debt pay off date and make it happen as fast as possible, Don't worry that investing interest rates are different its media trying to confuse you.
Just like how they push buy a house, No you need a place to live, you can feel and safe and comfortable in.
Yes price goes up for everything - But you need Food, Shelter, Clean clothes and ability to move around when you want to, public transit or your own car
whatever it is that doesn't make you pull your hair out when you have to pay for the cost.
There is plenty of info on the internet to learn about personal finance so the fact that most of us didn't learn it in school or family. we gotta get over that now and take charge.
Dave Ramsey plan works for millions so you could follow him or be Dave-ish , now Dave would say being ish is a wish, but if you stick to your plan and are making progress and you can sleep at night and not have panic attacks then do what works.
Re: Financial stability - Where to start?
I started to really gain traction with my finances when I read the book Automatic Millionaire by David Bach.. I save a lil bit for different things.. I invest in business startups, REITS , real estate crowdfunding, SEP-IRA, CD's, Peer to Peer Lending, I also keep a large amount of cash waiting to come up with a down payment on a duplex. Getting started on these things doesn't require a lot of money. Just search for investment opportunities in the UK such as these. I know of one business start up company I was going to invest in , but it was only for UK Citizens not americans.. I can't remember the name of it.. Go on google and search for these things and read articles and books.. I advise investing, saving and paying off debt at the same time. If you are investing in your dreams you can pay off the debt with the money you make from that... Paying off debts first leads to zero money invested or saved and losing out on compound interest and all that.
Ok the business start up site is called crowdcube:
Here is a listing of the ones in the UK: https://crowdsourcingweek.com/blog/1...-platforms-uk/
Re: Financial stability - Where to start?
Have a look at Martin Lewis money saving expert, he has a Fab website all about finances.
Re: Financial stability - Where to start?
Quote:
Originally Posted by
Dahlia Fallon
Another great resource is reddit.com/r/ukpersonalfinance - the omg where do I start flowchart is here
https://ukpersonal.finance/flowchart/ Unfortunately the deadline for HTB ISAs just passed if home ownership is a long term goal but a lifetime ISA is still available and pays out a bonus when you purchase your first home.
I'm not great with money generally but am finally starting to get my ass in gear. Would definitely second the suggestion of a Lifetime ISA. It's really handy as forces you to save and if you don't use it for a home, you can use it as retirement savings and the bonus is much bigger that the help-to-by one. Just make sure you only put on what you can afford because you don't want to need to get to it and have to pay a fine!
Re: Financial stability - Where to start?
Quote:
Originally Posted by
miss cleo
Have a look at Martin Lewis money saving expert, he has a Fab website all about finances. ��
I mentioned it too, even though I have to say I find him a little smug at times (sorry Martin!) I do think he has some great ideas and he really knows his stuff. I've saved quite a bit from doing some of the things he suggests. Even when we were sick of PPI he did a show on it saying check it out and while I was looking for something else, I found an old loan I'd forgotten which had PPI and I easily claimed back and got £650! So cheers Mr Lewis. Sometimes it's what we need to be told just do it! Lol.
Re: Financial stability - Where to start?
I would say re: daily pay, work out if it's more or less fee to get paid direct, considering (and Im assuming here?) if we get paid in the UK from sites not in the uk theres fees
also re: health problems, have you looked into PIP? the assessments are awful, but it can be a nice chunk to help - just if they knock you back first time, appeal and say you'll take it to tribunal, they tend to reverse decisions before the tribunal cause they know theyll lose