Help me to keep my new year's resolution!

stellar2011

Hello, (with apologies for length of this post)

I've been an admirer of these boards and the MSE site for some time now, and have found lots of helpful advice on many thing. Now, having made a new year's resolution for the third year in a row to get myself out of debt, I think it's about time to 'fess up and ask for your advice/support/smileyfaces to really keep it this time!

So I left university in 2008, with a student overdraft of £3,000, a student loan of well over £16,000 and no savings. Then I moved to London to start my job, and took a loan from the Bank of Dad to help with set-up costs (it took two months for my first paycheque to come in, and as well as living expenses I needed a deposit for my room, plus initial small furnishings etc).

I've made some progress since, despite having moved house twice in that time. I finished paying back my dad just before Christmas (£3,000 by the end, having moved again to an unfurnished flat!). I am much more disciplined about my one credit card, which I use occasionally to tide over spending or to book big things like car rental for holidays. I'm certainly not stinting myself, but I'm trying to be more sensible - reduced my monthly travel to rail only rather than a travelcard, as I don't really use the Tube; we're planning our meals each week and shopping accordingly; and I'm checking my online banking every couple of days now.

The problem to solve is now the overdraft. It's stayed at around £2.5-£3k since I graduated, and as I'm coming up to year 3 since graduation it will soon all be charged at 18.9%. It was all free for year 1, and then each year they start charging interest by £1k tranche. So it really isn't cheap any more and I need to deal with it.

Factors which don't help in this: I love new clothes and pretty things, I love going to the pub with friends, I love doing all the things you can do in London like the theatre etc, and I really love planning holidays!

I know I need to cut back and use some of my holiday savings to clear the overdraft. Here's my SOA for this month. (Note - I live in a flatshare, and we have a communal bank account for bills, so I've lumped in the bills of £75 with the rent of £400.) Please be strict and tell me what you think I should do!

Thank you! :j

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 1
Number of children in household.........
Number of cars owned....................

Monthly Income Details
Monthly income after tax................ 1450
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1450

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 475
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 0
Gas..................................... 0
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 25
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 150
Clothing................................ 50
Petrol/diesel........................... 0
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 90
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 5
Presents (birthday, christmas etc)...... 25
Haircuts................................ 0
Entertainment........................... 200
Holiday................................. 150
Emergency fund.......................... 0
Savings................................. 200
Total monthly expenses.................. 1370


Assets
Cash.................................... 600
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 600

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Overdraft......................2500......0.........18.9
Total unsecured debts..........2500......0.........-


Monthly Budget Summary
Total monthly income.................... 1,450
Expenses (including HP & secured debts). 1,370
Available for debt repayments........... 80
Monthly UNsecured debt repayments....... 0
Amount left after debt repayments....... 80

Personal Balance Sheet Summary
Total assets (things you own)........... 600
Total HP & Secured debt................. -0
Total Unsecured debt.................... -2,500
Net Assets.............................. -1,900

glittermonster

Could you maybe socialise a little at your place and cut down on your entertainment?

Give you some more pennies for debt. Likewise with clothes - be strict and treat yourself to something small when you've cleared £1k?

And put your savings towards your I'd for now?

Those 3 things would really help.

Good luck

stellar2011

Hi glittermonster! Thanks, those are good tips. Each time I went to the pub with friends before Christmas I felt a little bit guiltier, and so far in January that kind of spontaneous socialising hasn't happened - much better for my wallet!

Plus my OH took me out for cocktails last weekend so there was a free win

We have several new recipe books in the house since Christmas, and already have a few mini dinner parties in the diary. Challenge will be not to splurge lots on ingredients and cook tasty cheap food that still feels special!

Starting a diary to keep myself motivated now...

clang_uk

I've only had a chance to glance through your SOA, but £150 on groceries seems very high just for you. When I lived in London by myself I was paying £13-20pw for food. But then I was paying over £500 pm in rent!?

I would look at cutting down trips to the theatre (or do a group booking, 8 or more usually get a discount) - perhaps go out only once at weekends and once at weekdays.

The other thing is you appear to be saving and not tackling your debt - no savings account is going to give you more than the 18.9% you're paying for your overdraft!!

Hope this helps, and well done for posting before it becomes too much to handle!

bargainbetty

For social events, a mate of mine in Liverpool has come up with an absolute corker. She and three mates do 'Come Dine With Me' except spread over a month. Each week, one lass does dinner for the other three, and they all vote and the winner each month gets a box of chocs (£1 each loser). They have to do a two course meal, on a budget of £20 for the night (everyone brings a bottle). So, 3 x bottles equals about £18, plus your £20 for the meal. That's four nights out with dinners for under £40.

Good way to socialise cheaply, and if you spend less than £20, who's to know

stellar2011

clang_uk wrote: »

I've only had a chance to glance through your SOA, but £150 on groceries seems very high just for you. When I lived in London by myself I was paying £13-20pw for food. But then I was paying over £500 pm in rent!?

Thanks clang. You're quite right. My partner and I spend around £65 per week on Tesco online, so per month my share works out to around £140. It is a fair bit - we like cooking though, and try to get the best possible meat etc while saving on the basics. I'll look at the options more closely this week and try to identify ways to save.

As to the savings vs overdraft, it's frustrating - I find it so much easier to save up £1,000 in a separate account and then transfer back to clear the overdraft, but I know it makes no sense on the interest rates! Psychological boost probably not worth it. I shall review...

Fantastic Come Dine With Me idea! Will definitely have a go at that one

Many thanks all, this is very motivating.

londoner1998

stellar2011 wrote: »

Thanks clang. You're quite right. My partner and I spend around £65 per week on Tesco online, so per month my share works out to around £140. It is a fair bit - we like cooking though, and try to get the best possible meat etc while saving on the basics. I'll look at the options more closely this week and try to identify ways to save.

As to the savings vs overdraft, it's frustrating - I find it so much easier to save up £1,000 in a separate account and then transfer back to clear the overdraft, but I know it makes no sense on the interest rates! Psychological boost probably not worth it. I shall review...

Fantastic Come Dine With Me idea! Will definitely have a go at that one

Many thanks all, this is very motivating.

Hi Stellar

yes, the food bill is too big! OH and I do it on 100 a moth... and that includes tha every day pack lunch. And belive me when I tell you he is like a hoover with food, and we do like good food too (I am Basque, after all).

We have a Waitrose very near and when we run out of milk or thinks like that, we do down there and scout the 'red sticker'- check out the meat counter towards the end of the day, because it goes for pennies!! And still the same quality. Same for the bread- this happens as well in Morrisons and it is dead cheap and quality is the same. I think Waitrose don't do it in all the stores, but good to keep an eye on those items approaching the 'sell by date' just in case you stumble upon them.
What we also do is to put one online order a month and that's it- do one, not four. After the second time you get to know how much you need, and it is great to have food in the house and not to have to worry about runnign out. Fruit and veg is bought in the market each each- weekend- fresher, cheaper and tastier, aroudn 10 pounds, for the two of us. We don't buy lunch at work unless there is something special happening (training, or big meeting , or soemthing like that) and that saves tons of money...

I

GeorgieFTB

stellar2011 wrote: »

Thanks clang. You're quite right. My partner and I spend around £65 per week on Tesco online, so per month my share works out to around £140. It is a fair bit - we like cooking though, and try to get the best possible meat etc while saving on the basics. I'll look at the options more closely this week and try to identify ways to save.

As to the savings vs overdraft, it's frustrating - I find it so much easier to save up £1,000 in a separate account and then transfer back to clear the overdraft, but I know it makes no sense on the interest rates! Psychological boost probably not worth it. I shall review...

Fantastic Come Dine With Me idea! Will definitely have a go at that one

Many thanks all, this is very motivating.

Stellar

Don't worry about having to save up the grand in another account, I had to do that with my student overdraft, you get so used to your accout looking like that that I needed to make sure I didn't spend the money, if you pay it off like this, not the most MSE way in the short term but in the long term will get rid of your OD. Make sure you reduce your OD by the grand with the bank otherwise you will spend it again. I had to remove my own OD facility for a few years as I was so conditioned to look at the available balance. I've only just allowed myself to have an OD again recently!

G

stellar2011

Thank you Londoner - it will need some discussion with the OH, and some experimenting with cheaper alternatives for e.g. branded cereal and that sort of thing. We've just started to plan meals each week, so I'm hoping the bill will reduce a little, but will look on the next order how drastic I could be. On fruit and veg, would be great to find a market - I used to live in France and loved them! - haven't searched hard round here, we're very low on supermarkets that are bigger than cornershops, so it's not been easy to find decent choice aside from online (which is less good because you can't pick your own!). Time to look around the local backstreets methinks!

Georgie - that's exactly it, I know I don't spend it if it's in a separate account! When I've paid off tranche 1 this month, I'll go into my branch and ask about reducing the limit.

Now back to work... thanks for all the help!

londoner1998

stellar2011 wrote: »

Thank you Londoner - it will need some discussion with the OH, and some experimenting with cheaper alternatives for e.g. branded cereal and that sort of thing. We've just started to plan meals each week, so I'm hoping the bill will reduce a little, but will look on the next order how drastic I could be. On fruit and veg, would be great to find a market - I used to live in France and loved them! - haven't searched hard round here, we're very low on supermarkets that are bigger than cornershops, so it's not been easy to find decent choice aside from online (which is less good because you can't pick your own!). Time to look around the local backstreets methinks!

Georgie - that's exactly it, I know I don't spend it if it's in a separate account! When I've paid off tranche 1 this month, I'll go into my branch and ask about reducing the limit.

Now back to work... thanks for all the help!

If you are a bit of a foodie and you like to experiemnt, try the palces where the natives go: ie, Chinatown for chinese ingredients, asian shops for indian, etc... We do this and it is unbelievable how much cheaper it is, not to mention that there are things you just can't find in a regular supermarket.
Where in London you live? I am fortunate to live in West London and we have a fantastic place just round the corner, where you can find almost anything from anywhere in the world, including toiletirs and things like that