New and hoping for your help ... SOA

withinlimits

Hello there,

I absolutely love this website, and particularly these forums! I have been reading for about a month now, and with some trepidation decided to bite the bullet and post!

Basics:
Live out of my overdraft. No credit card or other debt, but just no money of my own!

Lightbulb moment happened in December 2011...used this website and did a lot of the easy wins, like sort out gas and electricity supply, mobile phone tariffs and sold my car!

Then unfortunately Christmas happened and set me back a month!

I would really like some advice on living a bit more cheaply. I live in London, on my own, and have a pretty well paid job. Having used the budget planner and trying to keep a spending diary I do know pretty much all my "spare" money goes on eating out / socialising/ visitng friends in other cities. I understand this has to change - and I am committed to getting out of my overdraft once and for all!

I've had a go at the SOA recommended by you guys below, comments gratefully received!

Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 1
Number of children in household......... 0
Number of cars owned.................... 0

Monthly Income Details
Monthly income after tax................ 2206.55
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 40 (This is repayment from a family member I have previously loaned to - they've nearly paid off)
Total monthly income.................... 2246.55

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 855
Management charge (leasehold property).. 0
Council tax............................. 71
Electricity............................. 15
Gas..................................... 10
Oil..................................... 0
Water rates............................. 32.3
Telephone (land line)................... 0
Mobile phone............................ 23.51
TV Licence.............................. 12.12
Satellite/Cable TV...................... 35.4 (this is Virgin package of internet and tv and landline)
Internet Services....................... 0
Groceries etc. ......................... 80
Clothing................................ 15 (Honestly don't buy clothes - ask for them for pressies, so it is quite a rare thing)
Petrol/diesel........................... 0
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 150 (This is London transport and travelling to other places for weekends with family/friends)
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 (This is annual bike insurance)
Presents (birthday, christmas etc)...... 140 (skewed slightly by Christmas!)
Haircuts................................ 10
Entertainment........................... 25
Holiday................................. 160 (I looked over last year and averaged out - but I don't plan to go on holiday this year until more sorted financially)
Emergency fund.......................... 300 (put this away each month)
Professional Fees....................... 27.25 (Have to be paid as I am a registered professional)
WW...................................... 9.95 (Trying to lose weight!)
Charity................................. 12
Eating Out.............................. 175 (Ridiculous given I spend the above on WW ...I know!!!)
Total monthly expenses.................. 2163.53

Assets
Cash.................................... 600 (this is what is in the emergency fund)
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......................2300......31.96.....0 (The monthly payment is what I pay in Bank/Overdraft charges on my account)
Total unsecured debts..........2300......31.96.....-

Monthly Budget Summary
Total monthly income.................... 2,246.55
Expenses (including HP & secured debts). 2,163.53
Available for debt repayments........... 83.02
Monthly UNsecured debt repayments....... 31.96
Amount left after debt repayments....... 51.06

Personal Balance Sheet Summary
Total assets (things you own)........... 600
Total HP & Secured debt................. -0
Total Unsecured debt.................... -2,300
Net Assets.............................. -1,700
Created using the SOA calculator. Reproduced on Moneysavingexpert with permission, using IE browser.

I think this is pretty accurate- I do just come within my salary each month - but I just never make any inroads into the overdraft!!

The "Emergency Fund" is just an online saver - and I standing order into it each month. Last yrs lot got consumed in various of family holidays and just overspends. This year I'm earmarking it to pay off the OD - The reason I don't leave it in the main account is I don't have the discipline not to spend it if it's there to be honest. Shameful.

Just on the travel - I know it is high but I've tried to base it on what I spent last yr. However, I did more travelling due to family illness and weddings than I intend to this yr.
Additionally, I do ride my bike to work, so London travel I don't think is really quite as much as has appeared, but I've based on decemeber when I was injured and had to bus it.

So there it is! Any tips will be welcomed!

Thanks so much in advance

Creasey29

It's good that you have worked everything out but you are not in that bad a situation, if you paid the 600 into your overdraft (and lowered your overdraft by that amount) then you would only have £1700 to pay off, it would take you 3.5 months to do this if you used your 300 emergency fund and 175 eating out bill. If you then saved this 475 a month after you paid your od off you would have 3800 saved by December to go crazy with!!

BlushingRose

Could you perhaps use some of the emergency fund to bring the OD back down to a level where you don't get charged?

spikeybunny

I'm sorry, i can't offered advice but wanted to say hello and well done! X

nikkiuk

Could you perhaps open a 2nd bank account without an overdraft facility. In the first account keep enough money to pay all the bills, s/o and D/D and a designated amount towards paying off the overdraft. Then transfer the rest over to your 2nd account and use it for your groceries and entertainment- this way it is easy to see how much money you have to eat out, etc.
Make sure that you don't touch the 1st account at all except for the bills etc that you have already factored in and you should be able to reduce the overdraft every month!

beanielou

You are in a great situation.
You only have your OD & you are committed to getting rid of it.
If you could cut down your eating out by £25 a month even & pop it away.
Then use £150 of the emmergency fund & pop it away too.
Set yourself a wee challange to see what you can save in a month.
Pop it away too.
Then at the end of a month pay down your OD by what you have.
That will motivate you to keep going!

withinlimits

Thanks for taking the time to look at my posting

The way you've written it out there it seems kind of obvious, and yes maybe not that bad I guess my main problem is I'm afraid I'll just spend the money if I put it back into my main account...but maybe I just need to employ some will power! I do like the idea of a second bank account, but I was worried my current bank my get twitchy if I don't have as much 'activity' - I was worried they might just recall the OD? Then I'd really be up the creek with out a paddle as I literally have nothing to pay it with!

I think I get charged for use of my overdraft regardless of how far into it I am.....but I'm not actually sure, so I'll definately try and find out if that's the case. I've had my head in the sand about my overspending for a long time and have avoided reading letters and statements etc

I really appreciate your advice everyone!

nic_santorini

Your water bill seems high, how can that be more than your electricity and gas, do you sit in the dark and cold in evenings!! Think the answer is already supplied by others, cut back on going out for 3 months - takes you up until May when the weather is better, make in roads into that overdraft with this and your £300 and you should be sorted out level by May and then you should be able to breath a bit for the summer.

redpete

If you reduce the holiday and present items (which you say are skewed by previous spending rather than a true reflection of what you spend now) you will be in an even better situation.

You've also said you broke into the 'emergency fund' last year - so keeping it there is not necessarily 'safe'. You could put it back into the current account maybe every 3 months and ask the bank to reduce your overdraft limit each time - that way you won't be tempted to spend the money.

withinlimits

"Your water bill seems high, how can that be more than your electricity and gas, do you sit in the dark and cold in evenings!! "

Hee hee, I guess this is a reflection of the fact that I am out a lot! And I am pretty stingy with the heating, but my flat is teeny so it doesn't take much to heat it! Is the water rate high? Did wonder about a meter, but scared it'll be more per month....and I know once you've got one you can't go back! Don't really have a good concept of what this should be!

My gas used to be a lot higher, but when I got organised and submitted readings etc I found that I'd been massively overpaying - the account is £400 in credit, so they reduced the direct debit right down to £10.

I think the reducing the OD limit slowly is probably the way to go, so this "spare" money isn't there to dip into. :doh:

tropicaltopaz

This is Martin's article on water meter v bills
http://www.moneysavingexpert.com/utilities/cut-water-bills#two

Basically he says "If there are more bedrooms in your house than people, you should check out getting a meter", and a quick way to check is to compare on uswitch.

Good luck, I wish my debts could be paid off so quickly!