What can I do to improve cash flow?

want2bmortgage3

My situation:

Outgoings (per month)

- Mortgage £104k/23yrs (Repayment, 2 bed flat value approx £160k) £620
- Council tax (single person) £94
- Building Insurance £12
- TV License £12.50
- Mobile internet £10
- Mobile phone £10
- Fuel for commuting £120
- Food/household shopping £120
- Gas, electricity, water, varies lets says £30 for all 3
Total £1030 (not including buying presents, clothes, car repairs, insurance, tax, going out and so on)

Income

- Basic £1000 a month occasionaly a little more (I work 7am-2pm mon-sat)

So as you can see I am not doing very well.

Any suggestions on how I can work things in my favour?

blushingbride_3

£120 a month for food seems quite a lot for a person on their own,
could you change brands or shops to save money?
Also you need to set a amount for going out and not go over that limit this will help.

If money is really tight have you thought about gettin a lodger? you can have £340 a month tax free which will boast ur income!:) might even help pay off more on the mortgage.

HTH
Katie

Newbird

W2BM3 - Have you looked at the Old School board and DFW boards? loads of useful tips in there, will keep you reading for hours... n hours.. ... lol

Half the battle is making the commitment, then having the self discipline to spend less, and you've taken the first step by asking here.

Heard of FreeCycle? and freeganism?...depends how far you wanna go with this..;) - anyways - Good Luck.

BB - What's this about a £340pm tax free lodger then?

Bargain_Rzl

Gosh, that's a big mortgage payment as a % of your salary :eek:

Your other costs seem to be pretty low already, except food & other groceries which I reckon you should be able to cut down to £80 without too much trouble (look at the Old Style board and join the Grocery Challenge ) and you MUST start budgeting properly for the running costs of your car or you'll get yourself into real trouble.

Are your utility costs really only £30/month? Mine are more like £60 and I'm on my own in a 1-bed flat with a water meter

Assuming you need the car to get to work (i.e. no viable public transport/cycling options) there isn't anything you can cut back, so your only choice is to increase your income. Second job/lodger/mystery shopping/online surveys/AQA/matched betting/selling on Ebay/car boot sales all come to mind. On the Debt-Free Wannabe board there's a great thread about bringing in extra cash.

want2bmortgage3

Hi thanks for the responses so far I'll answer the questions raised...
- the £120 food/household was what i spent last month. food is something i'm learning about and i enjoy cooking when i'm home from work. so yeah I could probably cut that down, once i know how to make a few things and find recipes i like.
- lodger is a great idea, i just need to finish decorating to get the place to a reasonable standard.
- ive read some old style advice, but to be honest, i hardly spend anything on cleaning anyway so using vinegar and stuff probably isnt worth doing.
- as for ebay etc, i really dont have anything to sell! i'm quite a minimal person anyway so i've not hoarded anything!
- car - my car is worth about £250, if anything major went wrong with it i'd buy another cheap car with mot. small repairs / servicing my dad can help with as hes a mechanic!
- commuting - i have been trying to get a transfer so that i would be able to cycle to work and wouldnt even need a car, but no luck so far. i work at royal mail and with all the changes they dont seem to be making it easy to move offices.

one other thing i thought of, was with the equity in my property, could i possibly buy a different house with another bedroom, then be able to rent out 2 bedrooms? coz that could cover my mortgage in itself (say 310/month per room)?? anyone know what kinda deposit you need currently to get a non salary based mortgage???

Bargain_Rzl

want2bmortgage3 wrote: »

Hi thanks for the responses so far I'll answer the questions raised...
- the £120 food/household was what i spent last month. food is something i'm learning about and i enjoy cooking when i'm home from work. so yeah I could probably cut that down, once i know how to make a few things and find recipes i like.

Good - that's a start

- lodger is a great idea, i just need to finish decorating to get the place to a reasonable standard.

How about setting yourself a timescale to get the work finished - I don't know where you live, but August/September is always a good time to find lodgers due to teachers/students/lecturers needing accommodation prior to the start of the academic year.

- ive read some old style advice, but to be honest, i hardly spend anything on cleaning anyway so using vinegar and stuff probably isnt worth doing.

Fair enough, I'm the same

- car - my car is worth about £250, if anything major went wrong with it i'd buy another cheap car with mot. small repairs / servicing my dad can help with as hes a mechanic!

Fair enough, but you still haven't budgeted for insurance or tax, which should be a priority... Plus, when you need to buy your next one, where will the money come from - there's no slack in your budget at all

one other thing i thought of, was with the equity in my property, could i possibly buy a different house with another bedroom, then be able to rent out 2 bedrooms? coz that could cover my mortgage in itself (say 310/month per room)??

Much easier said than done. Firstly, you'd have to raise the costs of moving, legal costs, stamp duty etc; secondly, you may well find in a falling market that nobody wants to buy your current flat unless you drop the price drastically (and why would you want to trade up now anyway, when in a couple of years' time the difference between your flat and the next step up the ladder is likely to be thousands of pounds less?); thirdly, if you were making £620 out of lodgers then the portion above £340 would be subject to income tax. Don't forget you'd also lose your single person council tax discount, and your utility usage would be higher so your bills would go up too, which would have to be deducted from your takings.

Couple of other points: Is your mortgage on a fixed rate? How long for? If it is due to expire any time soon, you will be looking at a higher rate after that.

Your outgoings don't mention home contents insurance, or any kind of mortgage payment insurance/loss of income insurance. Do you have these?

You also don't mention any debt repayments/overdraft interest. It sounds as though you're spending more than you're bringing in at the moment, so is there anything here you need to account for?

And I still think you are under-estimating the cost of your utilities, especially with further price rises expected later in the year...

EssexHebridean

want2bmortgage3 wrote: »

My situation:

Outgoings (per month)

- Mortgage £104k/23yrs (Repayment, 2 bed flat value approx £160k) £620

Hi w2bm3 - I notice you've got 25 years on your mortgage.....is this on a deal that is due to come to an end shortly? If so remember you need to consider the fact that those payments could rise when your deal ends. You are stretched worryingly thin aren't you.....

Your plus point looks to be that with your working hours you have the scope to do something else to bring in some more income. I don't suppose there is the opportunity for you to extend your hours in your current job is there?

blushingbride_3

£340pcm tax free is from the rent a room scheme,

If you want to get a student you dont need to worry too much about decoration etc and you can do it once they are there so long as their room is ready!:)

If you want students try www.accomodationforstudents.com where you can advertise for free or www.gumtree.com which is fab as well!:) you can also sell stuff on there for free etc.
Just be carefull with lodgers, type an agreement and get a deposit upfront, also make sure they know the room needs to be left cleaned when they leave to get their deposit returned ( i have learnt the hard way with this one)

HTH

Katie

Sarahsaver

I would have said lodger too.
your outgoings are not that huge really but you should be able to get food down to at least £20 a week.
Do you not have any other insurance policies you have to pay as well?
you would deffo need contents if you had a lodger just to be on the safe side!

want2bmortgage3

Thanks for the replies. I'll respond to all the queries:

- The properyy should be ready for a lodger within the next few weeks, I am having carpets laid in the bedroom next week and then it just a case of finishing touches. If I am letting a bedroom, should I furnish it, or let the lodger bring their own furniture?

- Mortgage is fixed at 4.89% for another 3 years (luckily), so I know the monthly payment wont change for 3 years...

- I have no contents insurance as I've not needed it really, I dont have any valuables really. I have a computer worth about £150, and a new oven/hob cost £229 but thats about it! Everything else is pretty worthless (old tv, fridge etc)

- I have been working on my finances the last few months and have paid off all credit cards so I have no other debts other than the mortgage!!

- No uni near me so students wouldnt really be possible, but I'm on a bus route and there are amenities in walking distance.

- Utilities are more than what I said but I dont have an exact figure to go by until I get my next bill and work out the average. I just suggested a low figure to show you that even under budgeting and missing out a lot of expenses I am still in the red!

I spoke to the manager at work today and found out I will be able to transfer to my local delivery office around October time. This means I could ditch the car and just use a bike!!!!

Bargain_Rzl

want2bmortgage3 wrote: »

Thanks for the replies. I'll respond to all the queries:

- The properyy should be ready for a lodger within the next few weeks, I am having carpets laid in the bedroom next week and then it just a case of finishing touches. If I am letting a bedroom, should I furnish it, or let the lodger bring their own furniture?

Lodgings are generally let furnished. You might have trouble finding a tenant if you don't furnish the room. Freecycle should sort you out for the furniture

- I have no contents insurance as I've not needed it really, I dont have any valuables really. I have a computer worth about £150, and a new oven/hob cost £229 but thats about it! Everything else is pretty worthless (old tv, fridge etc)

Valuables aren't really the point - what would you do if there was a fire?

I spoke to the manager at work today and found out I will be able to transfer to my local delivery office around October time. This means I could ditch the car and just use a bike!!!!

Excellent news.