For the last few years, I’ve been taking a big chunk of money out of my pay cheque and putting it a savings account. I was earning a pretty decent wage at Student Money Saver, so could afford to put away at least £500 – or more if I wanted to.
The plan at one stage was to save 20k in one year (between me and the boyfriend) and we managed it, getting used to putting most our potential spending money away with the hope of buying a flat.
But it’s all gone wrong…
But here’s the problem. I lost my job the same day I bought a flat in London (I’m *almost* ready to write a post on this, eight months later). I went freelance, as in writing for papers and magazines from the comfort of my home – as well as spending most of my time on my blog.
And look – I’m making it work! I’ve got brands paying me to write articles, my blog is getting decent traffic (phew) – but my money situation is a mess right now.
Honestly, I didn’t even know what was coming in and going out till I tried out the Yolt money-management app (it’s free) recently and got a kick up the bum.
I’ve finally decided to quit saving
For now…
As it stands, and I’ve only properly been self-employed for six months. One month I’ll get in a ‘huge’ amount of money and assume I’m super rich, then the next just enough to cover my mortgage payment.
I got an exciting amount this month, but by the time I paid the mortgage, bills, and credit card bill (not even all of it) for the month – I’m skint again.
I know it’s not huge compared to a lot of people, but I managed to rack up my credit card bill to £1,500 over the last few months. I’ve had a credit card for years and would pay it off in full every month, so not being able to do that now is pretty stressful to me.
So this month, I was able to pay £500 off it then I put £500 into my savings (because you have to save right?!).
Well no, within 20 minutes, I’d thought about it and realised that I was better off putting it towards paying off my credit card rather than saving any money.
DO NOT TRY TO SAVE IF YOU HAVE DEBT TO PAY OFF. Look, I know there are going to be some of you out there who are like, ‘Well, if it’s a 0% credit card and you get XX% on your savings card etc.’ Well, yeah that’s fine if you have everything under control. But I don’t. The quickest way to get under control, and to make good financial decisions is to be in a non-debt state.
The plan
I need to be paying myself a wage. I’ve not decided what this is yet but I need to be putting money away for lean months and tax.
I also need to get back into the green with the credit card, so going to prioritise that and consider ditching the credit card altogether (it’s 0%) if it’s getting me into trouble (though not sure it is really).
It’s early days with my new business and I need to let my finances settle a bit. I’m super eager to get saving for an extension on the flt but I’m holding off for a bit.
The plan is to get saving again by September. I’ll keep you updated.
Any self-employed people out there got any money management tips? Let me know in the comments!
You know, I thought exactly the same thing yesterday. the amount in my savings was the same as my credit card balance, but i get afraid of seeing zero in the account! like, what if the bank all of a sudden cut off my credit card and im left with nothing in an emergency!
Thing is if they cut it off, they’re going to want the money back anyway. Maybe take your time with it, take a chunk of your savings out and leave some. Though, if you’re paying interest on your credit card – get that paid off asap. x
Put 20% of your self employed earnings aside for your January tax payment. Sage advice that I need to follow myself!
Hi,
I went self employed 14years ago, the best tip I can give you is to open a second bank account and transferred 20%of your payments from your income into this account to cover your Tax & Ni and accountancy bills at the year end.
I’m currently torn between saving and paying off my student overdraft! I have my wedding to save for, and I’m hoping to get a mortgage soon too – but at the same time, I see how deep I am into my overdraft and I panic! It is interest free at the moment, but that’s only for a limited time. It’s going to catch up with me one day, so I just think “why not pay it off now?”
My main self management tip for money is it WILL get better. You will adapt and you’re right not to save while you have some debt, also, get putting the tax money away as a priority. I accidentally under saved last year, only £1.5k but it reallllly annoyed me and knocked my motivation for a good month as I sulked about having to take money from savings.
It’s always going to be tough, going self-employed just after buying your first flat. Just know that it will get better, promise. Reckon you did the right thing trying to chip away at your credit card. Once the balance is shifted, I second squirrelling away 20% of income in a separate account ready to pay tax & NICs. Good luck going from strength to strength!
I must admit I have never understood people who save whilst having debt. All of your extra cash needs to go towards paying off your credit card, THEN you start saving, it’s a no brainer as far as I am concerned. I had an assistant a few years ago who proudly told us one day that she had almost £15K saved, great yeah, however she then explained that she still had a student loan and a credit card she was paying interest on. Her argument was she felt better with money in the bank! I encouraged her to pay off all her debt as quickly as possible and explained how much more she could save once debt free as her loan and credit card repayments could also be added to her savings once they were paid off. Wouldn’t mind but her total credit due was only a couple of grand over her savings, which she would be able to finally pay off in a few months! Truly madness as far as I am concerned!
For me, I think it’s wise to have an emergency fund saved up and then any spare cash once you’ve got that can go towards clearing your debt. You don’t want to be in a situation where your car/washing machine/fridge breaks down and you’re relying on credit to fix it.