To ask for budgeting advice

[Kitten678]

I am 35 and make around 28k a year including overtime.

I owe £1200 on a low-interest supermarket loan.
£750 on another loan.
£800 on a credit card.
£250 overdraft.

I earn £13.85 an hour for a 37-hour week and I do overtime as much as possible, the problem is it's capped so some weeks I won't get it. In September I'll restart tutoring to earn an extra £70 a week.

I'm not bothered about having £0 debt, but looking to just get it to under 30% utilisation if possible.

I live alone and pay £850 for mortgage and bills, the other expenses are braces £55 a month, yes they weren't essential but my teeth were horrific and braces have significantly improved my self esteem.

Otherwise I pay student loan repayments, no car, I have the cheap Netflix £5.99 subscription and honestly can't think of much else, my credit card debt was higher so I took the loan out as it was low interest.

I want to have the balance reduced in a year, I only have £100 in savings. Sensible suggestions only please I'm not selling my TV! I think buying my flat and being in low paid work has set me back financially but I have a couple of interviews lined up with better pay.

I shop in charity shops/Ebay
No eyebrows/eyelashes/nails treatments
I do get my hair cut every few months, but I colour my own hair
No luxury holidays or expensive hobbies
Shop at lower cost supermarkets
Don't really go to expensive restaurants
Don't drink alcohol or smoke

Confirm what your take home pay is, deduct all your necessary and non-negotiable expenses to show what's left.

Take home varies tbh, I'm on weekly pay, if I did no overtime I'd get £435 net a week, usually 4 weeks a month but occasionally a 5 week month which helps, all mortgage and bills about £850, then it's about £230 a month debt repayment, transport about £120 a month, then things like student loan, then obviously food, toiletries etc. And savings, then whatever is left

The issue is we can't guess what your student loan is. You need to tell us all your necessary costs - the non-negotiable ones.

Do things monthly, with your basic pay.

435 x 52 / 12 = £1885 per month.

1885 - 850 = £1035, after all mortgage and bills as you say.

• 120 transport = £915

Deduct all necessary expenses. We won't know what these are or how much these are for you. Leave out the debt repayment for now as ideally you'd be paying as much as you can towards your debts to get it all gone as quick as possible.

We need to know this information to know how much you have to play with after your necessary costs are paid each month.

You’re going a good job of breaking down your budgeting and living simply. Good for you.

I’ve got two areas of concern:

1. Your income is low. If you can get this up you’ll really be able to get ahead. In your position I’d be making this a priority
2. You haven’t got emergency savings. One horrible emergency (eg boiler dies/ whatever) will knock you off your feet.

In your shoes I would: Take on a second job - eg pulling pints to get your income up while you go hard on trying to get a better paid job. Save up a £1000 emergency fund Clear your debts

Now you can see your way clear.

Sending you good wishes.

You need to work on the basis of your basic pay with no overtime. Use that figure 1st anything else is a bonus.

So let’s say your basic take-home pay is 1800 use that to work out your budget.
Any extra, you are in in a month throw out your debt. Pick the debt with the highest interest rate and pay that off first.

Why are you talking about your student loan as if it’s an additional payment - does it not come straight off your wage? You do not make enough to be making additional voluntary payments towards it.

I have £455 arrears from when I lived abroad and no longer have payslips for some of that time, I did tell them I was abroad, but this was 7 years ago and im unable to get payslips now. SLC wouldn't accept only the contract, they wanted a payslip for every month and so I'm now paying the above arrears at £20 a month.

Right, now you need to list all your bills out for us, ie:
rent x
council tax y
electric z
Get last month’s bank statement out and list it all. We can’t help without this information.

This. Get it all on a spreadsheet so you know where you stand.

There’s a big point in reaching £0 debt as it will free up your income for other things in life - whether it’s essentials like food, or building your wealth like savings, pension, investments.

I find I'm an all or nothing kind of person, so the easiest way to control my spending is to spend "nothing".

Obviously there are some things you can't avoid, but when I'm saving, I set a time limit and don't buy and "stuff" at all during that period. Most of what we think we need we can manage without if need be. I also have a policy of absolutely no buying drinks or snacks out, always take it with me. It seems very tight, but makes a big difference without any real hardship.

Head to Moneysavingexpert - a great website and the forums are good too.

How much are you left with after all of your bills are paid? It’s tough living alone and managing all the bills that’s for sure.

OK, are you doing the obvious: minimum payments on the lowest APR debt and as much as you can afford on the highest APR?

The easiest savings I have made involved taking lunch to work, and not buying food at work.

It saves £5 per day. Instead you can make lunch easily at home for £1, using supermarket ingredients. Savings are £80 a month. Better tasting too, and only takes 10 minutes each evening.

That would wipe out your credit card debt in a year, on its own.

Assuming we are taking money management - having three account system is the best- a spending account where I transfer say £500 a month (on the first)for non direct debit expenses. Then the salary and a direct debits keep ticking over. and add a savings account for n emergency fund.

Its tricky with weekly pay but at the end of the month (the day before the 1st) reconvene and see how much you have a pay of a Chunk of debt.

Before you start to erode the debt save an emergency fund of 1k.
Then pay of the smallest debt first
For spending write down evething you need now and for the rest of the year- hair cuts, clothes, gifts, trips, shoes, costs, birthdays, pets, travel, home essentials, maintenance, holidays prescription or medicines.

Set it up using your base salary.
Use a take home pay calculator to work this out.

Also should add that new style bank account like starling has saving pots to help you budget. So I would open one of those for a spending account

I use to get paid weekly and varibly as a supply teacher but it is harder
To manage but this system makes the lean times not so lean!

I managed to get rid of my debt by consolidating it onto one credit card, I just took out the lowest interest one I could get. After a while of paying each month I qualified for a lower interest one, and then again. I now have a 0% card which I handle as below-

i transfer any ‘cash’ (so direct debit/standing orders and actual cash I need for the month out of my current account and then I pay the rest of my wages onto my credit card. Which I then use for the month.

someone will likely be along shortly to tell me that this is TERRIBLE advice but I’m just passing on what worked for me

might not work for others but it had for me. Gone from about £8k debt to £1k a month on my credit card (but I’m a want it buy it kind of person 😆 so this doesn’t bother me)

Op grab a pen and paper, go on your internet banking and write down everything that's come out of your account in the last month. Bills (including all debts, subscriptions, food and nescacerries -i know that's not spelt right but I'm in a hurry and autocorrect isn't doing it's job 😂) itemized in 1 section. All other stuff in another section, I.e eating out etc. You need all of it but in order to help you we need the bills and other stuff plus net pay (ignore overtime as it's not Guaranteed, we need a guaranteed starting line). Are you paid weekly, monthly or luna? Xx

Do you only have one bedroom? If you have a spare room that could act as a bedroom renting it out is how I paid off my mortgage. My tenant was lovely and stayed for 7 years!

Take a few months to log every penny of income and outgoings. Only then, you can budget and plan. Look at the patterns and see where you can make small incremental savings.

You have a tight budget with not much wiggle room so may have to be creative.

Can you get a consideration loan at a low interest rate to move all the other debts, then you have one payment?

You really should aim to clear your debts completely. It’s very worrying that having debt has become so normalised to some people that you’re not even that bothered by it. I find it bizarre that someone would aim for debt to be a certain percentage of their income, rather than seeing it as a problem to be got rid of. Being blunt you will never sort your finances without a massive shift in your fundamental attitude. Step one being: stop expecting to be in significant debt and seeing that as unproblematic.

Try the (free and very simple) rebel finance school course, it changes lives.

You need to know where your money is going in order to save.

Set up a spreadsheet and mirror your bank account in it, then analyse the expenditure.
If you use cash, stop & put everything on your card - it's easier to track when it goes through your bank account.

Then really look at your expenditure; maybe you do a big supermarket shop but then pop in and pick up a few bits every 2/3/4 days and it's £20 each time, maybe lunch is costing you more than you realised - make it at home & take it in, maybe that odd coffee is actually a toasties, a cake & a coffee & its 2 or 3 times a week - that's £50

There are 3 types of expenditure

• necessary - make sure you've got the best rates possible for energy, phone, broadband insurances, etc. Meal plan/bulk cook & freeze to avoid waste
• nice - cancel any old/little used subscriptions, allow yourself £x per week for yourself
• luxury - dont spend in this category until you've got some debt down & got some savings..

Once the debt is gone treat saving as a necessary expense.

Oh, & dont give up paying into your pension - you'll always regret that down the line.

If you have access to credit, i.e. a higher limit on a credit card or overdraft facility than the balance owed, then I suggest you don't save up an 'emergency' fund first before paying debt - the credit card or overdraft will do for emergencies.
Instead, pay the card(s)/overdraft down ASAP. The more unused credit limit you have, the safer you will be in case of emergency.

I shop in charity shops/Ebay
No eyebrows/eyelashes/nails treatments
I do get my hair cut every few months, but I colour my own hair
No luxury holidays or expensive hobbies
Shop at lower cost supermarkets
Don't really go to expensive restaurants
Don't drink alcohol or smoke

You are already living quite cheaply. The answer is to increase your income.

Meanwhile, watch the pennies and don't go 'shopping' for leisure, and always got into a supermarket with a list and a meal plan - every single thing you buy should be pre-planned, never on impulse.
If you see something you want, wait three days then if you still want it go back and get it. If it is gone, never mind, just tell yourself you won't miss what you never had.

Could you take out a 0% credit card and use it to consolidate your loans?