Wow, first post of 2018 and it’s already March. I apologise to anyone who follows this tracking every month for the large gap in networth and post updates so far this year. I’ve had alot going on which caused a big disruption to my finances and so I didn’t think it worthwhile to post any income/expenses for December & Jan as the figures would be spiking around all over the place. On a personal level I was quite ill in December with bronchitis which totally sapped my energy for much of the holiday season. I felt like I couldn’t keep juggling all the various plates at the same time while ill so decided to focus on the matched betting side of things as that was the most profitable of all side-hustles. I’m feeling much better now so it’s time for a mega update.

Taxes Taxes Taxes

Most of my recent money worries stem back almost 2 years. Around the end of 2015 I began working towards a couple of side hustles in an attempt to increase my income. Up until that point the focus had very much been on cutting out expenses and just sticking to the main 9-5 job. Instead I worked with my friend Huw from Financially Free By 40 to start up a small Kindle Publishing side business I could work on in the evenings/weekends. As luck would have it, I found an extremely profitable but short-lived niche which I managed to exploit to the tune of about £10k worth of profits being paid out starting around January 2016 till around the end of that year.

Things were great, money was pouring in from the Kindle business and I could begin looking forwards to the wedding and life after that. To be honest, during this time I totally took my eye off the ball financially and before I knew it was the year was 2017 and I’d just returned from my honeymoon. Flying back into a cold and wet UK morning following 3 weeks in the Florida sun has a way of putting a bit of a downer on your thoughts.. but not as much of a downer as when I realised I’d need to sort out my tax liability.

At this point i have to hold my hands up and admit I’d ****ed up royally. I’d gotten carried away with other things in life during that time and totally missed the fact that my kindle payments for Jan – March 2016 were in an earlier tax year. Basically they should have been declared and paid for at the end of January 2017, which I hadn’t done. I panicked massively and done possibly the worst thing you could imagine.. started reading HMRC pages on undeclared income and the possible ramifications of such. Let me tell you.. forget scary bedtime stories or horror movies. If you ever want the living crap scared out of you go read indepth about HMRC’s investigative and penalty rights.

Panicking further, I stumbled across the HMRC undeclared income self-declaration scheme and registered for it hoping that by being proactive in my approach to them they would look upon the situation more favorably than if they had started an investigation off their own backs. While waiting for the declaration forms to come through I contacted an accountant to help me sort out the whole mess of a situation. He was fantastic, spoke to HMRC and came to the agreement with them that I would just have to pay the tax owned on the undeclared income as if it had been in the following tax year without penalty. Awesome.

Well not so awesome, as this now meant I had a tax bill for income earned years ago which had already been spent towards such things as the wedding. Even worse, the first year you register with for self assessment they charge you half the predicted tax of the following year up front. So essentially I had a tax bill for 150% of the amount owed on the income made from Jan 2016 – March 2017.. PLUS I’d gone into the higher tax bracket AND had student loan added on top. Of that £10k kindle earnings the tax bill was going to be almost 10k!

I spoke with my accountant and explained to him that the kindle earnings were not a true representation of on-going business earnings. They were a one-off and the kindle business had pretty much stopped since. He spoke to HMRC and thankfully it was agreed to almost entirely wipe off that required 50% up-front tax payment. Still, the eventual bill still came to about £6k and I decided to take the opportunity to just pay off the remainder of my student loan at the same time as well to be rid of that debt once and for all.

The good news is that it’s all sorted now. Debts to HMRC are paid off in full and I’ve structured all of my business accounts so all incomes and expenses come & go from a single bank account. I’ve been collecting all of my FY17/18 business income into that account so when it comes to calculate the tax due it should be much easier and I’ll have that separate lump sum sat ready in the account and not included in my overall networth until I trasnfer the remainder out after paying taxes.

Finances

I finally got round to transferring my investment ISA at last. I’ve been with Hargreaves Lansdown for many years ever since I first started investing. I picked them initially because they were one of the biggest and well known companies with excellent customer services which was of value to a brand new beginner investor like me! Since then I’ve become much more aware about investing and the need to cut costs. H&L may have an excellent service but they’re damn expensive! I’ve been considering leaving them for awhile now but the final trigger was Vanguard Investor opening up their UK ISA account with rock bottom fees. All of my ISA is invested in the Vanguard Lifestrategy 80 Acc fund so it was a no-brainer to switch over and save myself on the fees. Even H&L’s account closure fee will be saved within a year of the reduced vanguard management fee.

I also chucked a large amount of cash into mortgage overpayments. While investments might return a greater amount, I like to spread the risk by making mortgage overpayments at the same time. Our current mortgage allows for 10% overpayment each year so I try to fill that each time.

Income/Networth

From Matched Betting I made £2,602.14 in February. I’ve spent alot of time working on the Matched Betting Guy website and the various affiliate schemes used to support it. As always I go into more detail of what bets I’ve done to make that profit on Matched Betting Guy Blog.

Affiliate income paid at the end of February was £287.53. This is all income from recommending the Matched Betting guide sites I use like Profit Accumulator.

On to the report:

Income

Salary: £2261.28

Pension Contributions: £608.40

Matched Betting: £2,602.14

Affiliates: £287.53

Total: £5,759.35 (+26.4%)

Networth

House Equity: £87,506.74

Cash in bank: £7,890.73

Cash in betting accounts: £28,606.47

ISA Investments: £18,583.23

Other Investments: £3,083.47

Pension 1: £20,144.10

Pension 2: £11,962

Pension 3: £12,157.17

Total Networth: £189,933.91