February Income and Expenses – HMRCs final bite

So, it’s that time again where we look back over the last month and see what happened, was I good or not? Well as the title gives it away, the tax bill continues to hurt, but hopefully the last time!

Income

So as always I had my steady Salary drop into my bank account, always nice.  I don’t include any of my personal ISA dividends in my income statement, that’s just part of the growth of those portfolios. The income thrown off by my other half is included, however this is an incredibly small amount at present (less than 1% of income) so it is more of a statistical error! Always nice to see the cash flow in, but makes me realise just how much I need to ensure I increase my passive income stream to replace the main income stream.

So, steady as she goes on income – very slowly creeping up, never as fast as I would like of course, but it is still going up.

Expenses

Item Notes Amount
Things I choose not to avoid* Mortgage, Insurance, shared bills etc. – yes, we could move somewhere cheaper, not have insurance, reduce our bills a bit and so on, but we are where we are. 43%
Groceries All the food and other stuff needed for home 4%
Alcohol for home Home alcohol consumption only 18%
Bicycles / Car / travel (non holiday) related Any costs related to either the bikes or the car 1%
Alcohol Out Generally, its the pub…. 1%
Eating Out I include purchased lunches in this as well as meals out etc. 1%
Other My catch all for anything I may have missed…. 1%
Holidays Any spending related to holidays, flights etc. 0%
Savings Anything left over! This includes money into ISAs, mortgage payments and non relief pension contributions. My company pension comes out before it hits my bank account so isn’t included, nor do I include the “top up” of money when my money goes into my personal pension (i.e. I put in £100, I register it as £100, not the £125 that gets credited in my pension) 30%

 

So on first view, ignoring the rounding error that means the totals only go up to 99%, a savings rate of 30%. Not too bad! But wait… it’s not quite that good sadly. HMRC are still taking bites out of me, which drops my savings rate to 15%. Whilst this is really depressing after trying so hard to keep things under control, it does mean I won’t let myself fall for that problem again. Next time I get a bonus it will be going straight into my pension rather than topping up my emergency reserve. All told it wasn’t too bad overall, but definitely room for improvement.

So for the eagle eyed, you may wonder just how I managed to spend 18% of my income on alcohol for home…. the answer is worryingly easily! It was a combination of factors unfortunately (or fortunately), and something I really do need to keep an eye on. If I don’t buy any more alcohol for another 3 or 4 months then on average that won’t be too bad, but who knows what the future holds! So where did the money go?

  • I met up with my favourite independent vintners. This is always high risk  as I do inevitably end up buying something (or more than 1 really..) but it is worth it, the wines are always great
  • There was an offer in one of the supermarkets for a really good value wine, so I couldn’t really pass that up. Having added a number of bottles of that, I also noticed they had a couple of rather reasonable priced bottles of whisky which didn’t help
  • One of the chain wine merchants near us also had an offer on a particular wine – good value and a corker, so I bought that as well
  • There was a new Congac that I was introduced to so I bought a bottle of that as well to see… as yet I have resisted opening it – if I can resist for another 6 months then I will be content
  • It’s the 6 nations – I needed beer for that after all I can’t be expected to watch the rugby without drinking beer surely?

Guess that means I need to make sure that I don’t drink too much over the next few months! I would say that despite all the purchases, I have not drunk all of them (yet!)

So how am I doing with my dry runs?

Dry run 1: Savings.

Each month I will aim to put into my current ISA the same amount that I plan to put into the Go T’ Pub ISA and see if it is realistic. With some holiday booked and a few other challenges I am already aware of this is going to be a real challenge, but its important to setup for success as best I can

Fail. Even without the HMRC bill, I would have still failed. Even if I had my regular slush fund part of my emergency fund, I would have failed. This was all due to the amount I spent on alcohol this month. It may be that this will balance out, but for this month not good

Dry run 2: Reduce my alcohol expenses.

This needs to average out over the months, as I tend to buy when the offers are on so it comes in peaks and troughs. I am going to aim to reduce my “Alcohol at home” budget by 25%. This really is going to be a challenge as the whisky collection has been hit hard over the Christmas break and so I do need to buy some more soon(ish) which will hurt.

Fail. Really quite a big fail this month, however I did purchase a lot. Provided I don’t buy any more alcohol until I think May then I will average out ok however I suspect this will be unlikely.

Dry run 3: Reduce my “Other” expenses.

This is going to be a lot tougher one as these really are other things (e.g. the Weekend FT, a taxi home from town etc.).

Conceded Fail. So if I were to ignore the HMRC bill then I would be very happy with such a low amount of “other” items in there, but given the HMRC bill takes its final bite out of me, I have to accept this was a fail. Without it, so far it would be good, so lets see.

* This covers a number of things that I would class as essential for me. Yes, I could move to somewhere cheaper to reduce the mortgage (which in turn would reduce the insurance I have to pay), yes I could reduce my bills by switching energy supplier etc. but it comes down to what I am happy with. There are a few other things in there that are classified as essential that others may object, and so I have just lumped it into there.

So how was your February? Did you manage to save hard or let your guard down after a hunkered down January?

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Author: fireinlondon

Fighting the high cost of living in London

6 thoughts on “February Income and Expenses – HMRCs final bite”

  1. 15% savings rate is still great – imagine if you had spent all your income (like many people) and then HMRC had come knocking…

    Haha, I had a big chuckle when I saw that 18% alcohol expense! Still, you’re obviously a wine connoisseur, know what you’re buying and enjoy what you buy. I’m evidently not such a fussy drinker – I agree that beer is needed to watch the 6 nations but I’ve been quite happy with my home brew! I forgot to mention in my update that I’ve spent zero on alcohol so far but like you say, who knows what the future holds!

    Three fails on your goals but hey, it’s early days yet and you know what’s needed for improvements!

    Liked by 1 person

    1. Hi Weenie,

      I am always glad I dont spend everything and have some spare cash to cope with these things – I know of one person who did also get caught by HMRC and had no spare cash so they had a mad panic. At least for me it was irritating but not catastrophic!

      I can just imagine, I know I went a bit overboard on the alcohol, but the wine in the supermarket was on offer at £5.95 so why not – I admit that the wine and cognac was a bit more expensive, but they are rather good!

      Congratulations on the zero spend on alcohol – seems it’s a better for home brew these days than when I first tried it, but as I hve said before, no space so I have to buy it.

      Yes three fails, but so far if I don’t spend anything on alcohol this month, then the average cost will be down to 6% so a bit better!

      Cheers,
      FiL

      Like

  2. Lol at the 18% on booze. That’s some going 🙂
    It does highlight its important not to crap yourself about such lumpy Expenses though as it will average itself down over the year. Same with things like holidays etc.

    I think it would be worse if you just trickled in say 8% per month, not looking out for offers and just spending unintentionally on it.

    Now the key point is making it last 3 months, we used to buy in bulk but found it just meant we ended up drinking more so if you manage that you are a better man than I 😉

    Like

    1. Hi TFS,

      Haha yeah it was a bit of an expensive month, but it is far better to do this way I have found than buy when you want it, this way its a lot cheaper. That’s the way I keep telling myself anyway 😉

      Yes, this has always been my challenge to make it last, but so far with nothing spent in January, and almost through March it is shaping up ok… but lets see 🙂

      Hope the marathon training is going well 😉

      FiL

      Like

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