Budgeting: The Great Big Tax Bill and Recurring Payment Hell
After the touch of reality reflected in the last post — how my over-spending and wastefulness was contributing to an unsteady financial future w/r/t buying a new house — I was already feeling a touch the poorer. So as you can imagine, when my accountant (well worth the spend) did my tax return for the ’15-16 tax year a couple of weeks ago, you could say that the paperwork hit me like a ton of bricks.
I knew the tax bill was incoming, but I’d been ignoring the potential size of it (especially since I blew my savings on a website) and holy shit was that a mistake. With tax owed, tax on account for the ’16-17 financial year and accountant fees I suddenly had just over two weeks to find £3,000. And here I am, a couple of days from the dreaded tax deadline, and I’m only able to pay off the back of a loan from my husband and a big credit card bill. (I am a responsible adult, honestly.)
So… up shit creek without a paddle I sat down and thought to myself: my ‘half’ of monthly expenditure (household bills, mortgage etc) is about £750. I make plenty more than that each month — certainly enough to live comfortably and be putting money aside for tax bills! — so why am I sat here in such a terrifying position? Where the hell is all my money going that I constantly in my overdraft and only have £9 in my ISA to pay my tax bill?
Wine and eating out and frivolities, yes… but that doesn’t eat through hundreds of pounds a month in income, surely? (Even with my wine consumption levels?!) To Excel!
I started adding up all of the yearly expenses that aren’t on my basic month-to-month budget. Hosting bills, domains (again!), WordPress plugins, memberships, magazines, software and SAAS ‘apps’. I’ve not finished logging and I’ve already totted up over £3,600 worth of yearly expenditure which totals over £300 per month. Start adding wine and eating out and frivolities to that and it’s not too hard to see where my income is going.
It’s an easy trap to fall into: pay off an expense in one lump sum, and forget it exists until next year. But it does exist, and it is chipping away at the money I could be using to pay off debt and my mortgage. It’s no wonder I’m up shit creek when I’m easily spending nearly £4k a year on things I don’t give a second thought to.
Am I the only one this disorganised? How many people actually have a handle on their irregular / yearly expenses? It’s probably about time I started using YNAB again…
Tiny May said:
On 29 Jan at 6:56 pm
I discovered the beauty of YNAB early this year and I’m hooked. My monthly expenses (including student loan debt) are eating up my salary and my bonus thanks to moving/relocating and on top of that I get huge deductions from my gross salary because I’m single, young and making >$50,000. :( However, once things start to stabilize I can probably try to save up a little bit of money… BUT then there goes my money on those yearly expenses on YNAB, hosting, and domain! And then I have an elopement/honeymoon I’m saving up for with a goal of $6000 by December. Urgh. This whole budgeting thing sucks and I just hope that I have enough self-control to not spend too much money on almost daily coffee-runs and random cravings.
Jem said:
On 30 Jan at 11:16 am
I used YNAB heavily when I kicked the ex out and needed to buckle down on my finances – it’s mostly laziness that’s stopped me from keeping that up.
Good luck with your savings goal (and not buying coffee) :D
Jenni said:
On 30 Jan at 10:14 am
Joe has had a similar thing, it’s a lot of money to find in one go. It’s worth asking your web host if they can do you a better deal, especially as a lot of them will offer you up to 3 months free if you say you’re leaving. What kind of magazines do you read? I’ve been using Readly – free trial and then they email you with a deal to continue.
Joe was putting aside 20% of every invoice for taxes, but we realised that wasn’t enough because he was always using that same money for any business costs that came up, so this year he’s separating out the two things.
Jem said:
On 30 Jan at 11:09 am
It IS a lot of money to find in one go, which I suppose is why they have the payment ‘on account’ thing, although it seems completely counter-productive to me to have the deadline for the previous years payment and the first ‘on account’ payment as the same date!
The hosting bill is lower than it used to be – just need to finish transferring stuff from an old webfaction account to my main reseller so that I’m not paying for 2 lots of hosting unnecessarily. The magazines aren’t even mine – it’s Izzy’s ‘Whizz Pop Bang’ (science mag) subscription, but that’s only just renewed so there’s no point me cancelling it even if I wanted to.
I just need to plan better so I don’t repeat this next year… (and not blow all my money on websites which I then completely fail to put any work into)
Vixx said:
On 30 Jan at 2:22 pm
Have been YNABing since Feb 2014 and it’s completely changed my outlook on money. We still don’t have a lot spare at the end of each month, but we’re essentially debt-free (besides a calculated credit card I took out ‘cos our credit report only had one negative, and that was no recent evidence of responsible debt management!). Besides that one card (which we can pay off now in one go if necessary), I haven’t added a penny to our debt since the day we started… and if you knew the mess we’d been in when we first got married, you’d realise how proud I am of this. :)
I think most people have to hit a low before they can find the high, and that was certainly the case with us. But I’m really proud of how we climbed out of that and I genuinely believe that if I could do that, *anyone* can. You sound very much like you’re completely on-track, and have merely suffered a set-back. Don’t let it get you down. Just make sure that today you learn the lessons of yesterday. I KNOW. DEEP STUFF. VIXX IS BEING PRETENTIOUS.
TL;DR: YNAB is amazing, get back to it! <3
Antoinette said:
On 30 Jan at 5:12 pm
I am still learning how to manage my income! Thank you for the tips!
Han said:
On 31 Jan at 2:29 pm
nope your not the only one! I was bad before I bought the house, got better just in time for my mortgage application XD, then bad again once I moved in, because furniture! I’m now getting back into the mustachian way! (mrmoneymustache.com) I’m determined to have some savings again so I can pay off a lump sum when I remortgage – 1 year and 6 months of savings to go!
I suppose it also helps that I’m paye so I dont have to worry about a tax bill at the end of the year but its still horrible seeing tax/pension/student loan on my paycheck each month :(