Help my daughter please?

theoretica

downshifted wrote: »

Note - there is no room for fun in the budget and she is 26 and single!

Telephone (land line)................... 55
Mobile phone............................ 40
TV Licence.............................. 12
Groceries etc. ......................... 300 (£200 + of it, anyway)
Presents (birthday, christmas etc)...... 50
Haircuts................................ 18

Surely most of these are 'fun'? Or at least unnecessary to keep you alive. You need to decide how much pleasure you get from food, TV, talking on the phone whenever you want to as opposed to at cheap times etc and divide up your budget accordingly.

Deep_In_Debt

Agree with what others have said - use your savings to pay the debt.

I've reduced the amount I spend on presents - I spend a maximum of £5.00 on each of my friends and have managed to get some great presents for them which they love. It makes you shop around a lot more for suitable presents and bargains - they do the same with me and most of the things that they give me are better than many of the expensive presents I receive.

I'm on my own with a lodger and 2 cats and spend far less on groceries per month. I spend a maximum of £100pm and that includes cleaning products and cat food and I don't go without and eat very well as do the cats so you can definitely reduce your groceries.

Horace

Grocery wise - make a list of what you need and stick to it - don't go shopping when you are hungry as you end up buying stuff that you don't need.

There is no need for 2 V boxes from Virgin Media - have one and reduce to the small package, there's still plenty of telly to watch without having to pay enormous amounts.

When buying presents - look in charity shops, use BOGOFs to make hampers (see the special occasions board as they have lots of craft tips there), make what you can or do surveys to earn points that can be exchanged for gift vouchers.

It makes sense to use your savings to pay off your debts - I recently paid off a £5K credit card bill and I feel as though an enormous weight has been lifted off my shoulders and I have vowed to save £5K this year to make up for it.

Poosmate

I think I am probably the only one (if not one of the very few) who are not in favour of this lady using her grans money to pay off her debts.

I'm sure we all know that it's the financially savvy thing to do just as is paying off the debt with the highest interest rate. But sometimes, people are advised to pay off a lower interest rate debt because it can be motivational in an emotional kind of way.

Inherited money has a huge emotional attachment to it. Personally, I would feel ashamed that I'd have to use such a gift on debts, I'd also feel guilty that I hadn't been more careful in the first place. I feel a need to spend gifted money on something special that would be a permanent reminder of the person who gifted it to me. Inheritance is extremely personal and in it's very nature very emotional and it's easy to say "use it to pay off your debts" when it's not yours to spend even when it is the right thing to do in the cold light of day.

Downshifted's daughter can pay her debts as her budget is at the moment. It's very tight but she's doing it. But also, she's spending a lot of money on stuff she doesn't need to. She could easily knock at least £200 off her monthly spending without changing her lifestyle too much, even more if she did lower her lifestyle a little bit (ie phones, tv packages, presents, utility consumption).

I also believe she could learn a most valuable life lesson by NOT using the money her gran left her and paying off her debts the hard way. Yes it will cost her £600(and something) in the first year but that will reduce greatly as she learns to budget, to pay less, to get stuff free - the MSE way. If she uses her grans money to pay her debts she will lose the opportunity to learn one of the most life enhancing lessons. No-one can gain this experience by reading a book or reading a forum thread. You have to feel the pain, know what's at stake and what you can lose (ie grans inheritance in this instance) if you continue living the way you are. This young lady has woken up in time to realise this. Kudos to her for that.

I say (because I'm sentimental) keep the inheritance and gain from the pain.

Poo

diable

£137 for council tax seems a lot to me......

DVardysShadow

Poosmate wrote: »

I think I am probably the only one (if not one of the very few) who are not in favour of this lady using her grans money to pay off her debts.

I'm sure we all know that it's the financially savvy thing to do just as is paying off the debt with the highest interest rate. But sometimes, people are advised to pay off a lower interest rate debt because it can be motivational in an emotional kind of way.

....

I say (because I'm sentimental) keep the inheritance and gain from the pain.

Poo

That is sentimental. It's sentimental tosh. She has spent the money. Nan's inheritance is gone. Spent.

There is no point in punishing herself by paying £650 a year on the cards so she can keep some money in a savings account and pretend she still has Nan's inheritance. She might as well flagellate herself - it would be cheaper.

drewdrop

DVardysShadow wrote: »

That is sentimental. It's sentimental tosh. She has spent the money. Nan's inheritance is gone. Spent.

There is no point in punishing herself by paying £650 a year on the cards so she can keep some money in a savings account and pretend she still has Nan's inheritance. She might as well flagellate herself - it would be cheaper.

Hard but true

Mrs_Jojo

Hard but true, but I do agree with the idea of learning the lesson - I know I wish I had learned the lesson about 'living-within-your-means,-is-better-than-thinking-you-may-be-able-to-get-the-money-to-pay-back-the-overspend' rather earlier in my life :-)

It could be the case that paying back the money from her income will be a better lesson than paying it off from a legacy.

Of course, this depends entirely on the character of the person - it wouldn't help everyone :-)

margaretclare

The very best piece of financial advice I ever received was given to me by my DH not long after we first got together, in the late 1990s that was. He was horrified to find that I had been trying to save at the same time as paying interest on debts and incurring bank charges for late payments and the like.

That piece of advice was: 'Always, always, always pay off debts before savings'. Reason: you're always going to be paying more on debts than you gain in interest on savings.

If you have some savings then pay off the debts first, then re-start your budgeting. You could possibly reinstate the savings when you're in a better financial position. If I left anything to a grandchild I would NOT be happy to think of him/her just keeping it out of sentiment and still paying interest on debts.

Having said all that, it's true that some young people are finding it not the easiest thing in the world to live out there independently and pay their way successfully. We heard about this on Friday evening. My eldest GD confessed that she had no money for milk and bread, no money at all until she gets paid in 2 weeks' time. This is a worry. She pays her way, lives in a council flat and has a job, rent and council tax are taken at source because she works for the council, so she gets her 4-weekly salary minus rent, council tax and pension contribution (LGPS). The rest is hers to budget for herself and her Staffie bull terrier.

We gave her a little bit of money, couldn't see her starving for the next fortnight until pay-day!

johncarlton

Definately agree with everyone - pay off the unsecured debts ASAP!...

Try a cheeky attempt at doing a reduced settlement figure - on the condition it doesnt affect her credit rating, plus the debt is cleared in full and marked so on her credit record (if they agree get - make sure you get it in writting and when you send the payment make sure that the its paid by a 3rd party, i.e. you!)

Just say to the credit card companies that she has inherited some money, say about £3k, and she is willing to use this to split it fairly between all of the creditors to clear it in full.

You never know - it could work... A friend of mine recently got a 20% discount on his mortgage redemption figure (total of £20k). You will be surprised at how flexible a bank can be when it needs the cash on its balance sheets.