In a tricky situation - need help to plan for next year

Cointreau

Hello hello,

I'm not sure if i've put this in the right place but here goes - and many many apologies for the essay in advance.

I'm a student at a London university (UCL), but last year - my final year - I had to withdraw from my final exams due to ill health. I'm taking them next May, but this time round i'm living at my parent's &, obviously, my student loan has stopped coming. I had quite a few people to pay back & a small overdraft to clear, & because of my health i've only been working part time, BUT i've managed it. I've no debts, no overdraft, and am about £700 in credit. I've got 0 savings though, and since i'm due to take my exams again, i'll have to leave my job for a while so I view whatever I have now as safety net. Having to postpone my exams has really left me in limbo, but it couldn't be helped, so there we go.

The thing is, i'm planning to move in with my boyfriend & another friend when I finally graduate & get a job, but trying to plan this and see how much i'd realistically need to earn before doing so is very tricky.

This is my estimated (very basic!) SOA per year (based on household costs, except food & travel, divided between three people, living in North London):

Rent = £4680 (i've looked around the area we're thinking of - this is about average)
Bills (water, gas, leccy) = £1560
Council Tax = £500
Internet & phone = £80
Telly = £50
Food = £2600 (based on a rather generous £50 a week)
Travel = £1500 (Oystercard annual seasoncard)

=10970

Obviously, I haven't included clothes, or presents, or socialising, or even the deposit i'd need initially. I just don't know how to break this down at the moment.

What i'd like to know is if this sounds about right for one person renting & working in london? Have I omitted something glaringly obvious? Is there anything that seems just wrong?

I've been lurking the forums for a good while now on other boards, but i'm ready to get into the MSE spirit and start properly looking at my finances.

Any help would be amazing, thank you.

Cointreau

My god, that really is an essay. Sorry. Also, by "no debts", I mean no debts except my student loan. Obviously.

david_hellier

The real function of a budget is to prevent overspend. The encouragement of overspending by the banks is the main problem with the economy, and they will look for ways to perpetuate this, for example by the introduction of contactless cards. The complete elimination of paper money is their long term aim so we as consumers must pay hawkish attention to exactly how much is available to spend.

One of the best ways to tackle this is to use the weekly subtraction method. Firstly work out all your income. If your income is monthly then divide this by 4.33, this will give you your weekly income. Note it.

Then work out your monthly essential outgoings, but exclude food (more later). Divide this by 4.33 to give you your weekly out goings. Note it.

Take the outgoing figure from the incoming figure. This is the weekly Start amount available to spend on anything else including food.

Get any little notebook and write the Start figure in it at the start of the week. As you spend or withdraw cash deduct it as you go. Try to get to the end of the week with some left in it and carry this forward to the next week and add it to the new Start figure.

Using this method ensures you do not overspend. I suggest you include food in the Start figure because the amount we spend on it can vary widely. My personal experience shows allowing a specific amount for food is impractical, however, it's up to you.

This method also requires you to effectively ignore your bank balance, because it is meaningless on a day to day basis. What you should see is it increasing steadily.

Also remember to include any od charges, interest or other fees in the essential outgoing list, otherwise overspending will continue.

Other top tips: stop using credit cards for further spending and make FIXED repayments, never the minimum.

I have an excel spreadsheet which can work out the Start figure if you PM me with an email address.

Wishing you all a happy new, prosperous, debt free New Year.

Dave

Cointreau

Thanks David, there are some very useful tips there.

zcrat41

Hi Cointreau,

I was at UCL too - fab place! Don't forget to budget for things like haircuts, dentist the odd prescription etc. They are essential!

I'd also budget in for a bit of socialising. I know London can be done on the cheap but you still need to have a bit of a life.

I would also seriously look at living elsewhere - I live at St Neots - a 50 min commute to central London but I have bought a 2 bed house with a garden for less than what I could buy a studio flat for in a scabby area in London! Not just buying, rents are cheaper too. However, I did live in the really scabby parts of North London as a student so I'm a bit biased about it!!!

Enjoy the rest of your time at UCL!