Newbies SoA - Any Advice?

MrsBull_2

Hello!

First day as a MSE Forum member! I always come here if I'm looking for advice and read your posts and I have now decided to get serious about becoming debt free and join myself. It's kinda scary so thank you all for taking the time to consider my position and offer any advice.

My husband and I are both 28 and have just started 'proper' jobs in the last 1/2 years. Before that we were in uni, travelling and working part time. We moved to the UK nearly 3 years ago and have been getting set up since. We are 'Celtic Tiger' children of Ireland and grew up in Ireland when money was no object, all we know how to do is spend, spend, spend and we have both decided we need to change that! We are always so impressed with the value that English people put on a pound and we want to become more like that. We live pay check to pay check and there always seems to be some reason for spending money. Today we calculated that in the past month we have spent £850 on groceries/eating out and takeaways and we were shocked. We don't spend a lot on clothes etc. but we do like to go out - pub, cinema, restaurants etc.. We also have been going to Ireland a lot for different events but have decided that will have to stop because it is costing us so much. Already this year I have booked flights for a friends hen party and wedding that I can't miss and even with cheap flights the expenses all add up.

Any help or guidance you can give will be really appreciated! We are looking forward to taking part in the challenges and learning how to save! Thanks x x

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 0
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 1300
Partners monthly income after tax....... 1300
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 2600

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 600
Management charge (leasehold property).. 0
Council tax............................. 100
Electricity............................. 45
Gas..................................... 45
Oil..................................... 0
Water rates............................. 40
Telephone (land line)................... 20
Mobile phone............................ 60
TV Licence.............................. 12
Satellite/Cable TV...................... 0
Internet Services....................... 15
Groceries etc. ......................... 500
Clothing................................ 0
Petrol/diesel........................... 80
Road tax................................ 10
Car Insurance........................... 80
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
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......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 0
Entertainment........................... 300
Holiday................................. 200
Emergency fund.......................... 0
Total monthly expenses.................. 2107


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 500
Other assets............................ 0
Total Assets............................ 500

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Wedding Loan ..................12100.....320.......15
Total unsecured debts..........12100.....320.......-


Monthly Budget Summary
Total monthly income.................... 2,600
Expenses (including HP & secured debts). 2,107
Available for debt repayments........... 493
Monthly UNsecured debt repayments....... 320
Amount left after debt repayments....... 173

Personal Balance Sheet Summary
Total assets (things you own)........... 500
Total HP & Secured debt................. -0
Total Unsecured debt.................... -12,100
Net Assets.............................. -11,600

theoretica

MrsBull wrote: »

Groceries etc. ......................... 500
Entertainment........................... 300
Holiday................................. 200

Amount left after debt repayments....... 173

If from this lot you take out 'necessary' groceries - people can easily feed themselves on £200 a month for a couple - you get about £1000 left which could go to life/eating out/enjoyment or could go to your debt. I suggest you make a plan - how much of this money do you want to put to long term aims (getting rid of the loan, then house deposit, children or whatever) and how much to living for the moment. Only you can make this decision, but I think you are would be wise to make a decision.

I don't find simply trying to spend less is as effective as saving towards something specific.

eyeopener2

This is good example where 'paying yourself first' can be used.

Stick away, in a savings account 15%, say £400, of your take home pay and live off the rest.

AS thoretica says, there is £1200 for eating, holidaying and going out. Cut that down to £800 (which is still alot in my view) and start saving.

wannabee_in_credit

I would really advise you to keep a spending diary so that you know exactly where every penny is going. It was a real eye opener for me, and gave me the motivation to cut right back. I live with my partner and 2 children and spend les than half of what you do on groceries.
Good advice above on putting stuff straight into savings and living off the rest.

MrsBull_2

Thank you for the advice guys.
I think that saving for something is a good idea. I am thinking about opening up a separate bank account that we can't access easily and setting up a DD to go to that each month.

Groceries are definitely an area where we need to cut back! We are going to start putting some effort into shopping around. We currently shop in Sainsburys but only because it is near us and it can be expensive. We also waste a lot and we are gonna try cut down on that.

The spending diary is a good idea, i'm gonna give that a go from Monday.

Thanks for your help!!

pmlindyloo

Have a look at Martin's guide to Savings. Regular savings accounts seem to get the best interest rates and I believe Martin has some good ideas how to maximise the amount of money your savings accounts earn.

Both my son and daughter (who are your age) have Regular Savings accounts and admit that this is far and away the best way to build up their savings.

Don't forget ISAs too!

Tuesday_Tenor

I'd agree with eyeopener2 about the savings if it wasn't for the fact that you do have a big loan to repay.

Building on what Theoretica says above, you actually have about £1000 PLUS the £320 you currently pay for your loan truly available, after necessities have been taken care of, to do exactly what you want with: pay off debts, save, spend on holidays/entertainment or fritter away on rubbish.

Only you can decide what proportions are correct for you, but I would suggest you cut the complete frittering to zero (that's where the spending diary helps) , keep the holidays/entertainment to a sensible level, and remember that you have a big debt to pay off.

As an example of what's possible with the approx £1300 available per month, with some points to consider, how about the following?:

Increase your loan repayments to £800. In the bigger picture, there is not much point saving where the interest gained is 3% while your debts are incurring interest costs of 17%.

Put £200 per month into a Regular Saver or ISA. Despite my point just made about the interest, I think you need to develop the HABIT of saving. This is as valuable a discipline/lesson as understanding about the interest. The savings pot is also your buffer for emergencies; it gives you more choices of actions in difficult circumstances. When you have savings you can afford a day's unpaid leave or an extra flight to Ireland withour getting into the habit of relying on credit cards.

You will then have £300 per month for holidays and entertainment which includes take-aways and meals out. (For many couples this would be a LOT, but I take your need for trips to Ireland).

Using the amounts above, at the end of 15 months you will have paid off your loan completely AND have amassed £3000 in savings (or coped well with emergencies) AND still had some holidays/entertainment. Win, win, win all round if you're not frittering!

You might decide to spend more on holidays and entertainment. So your loan will be paid off more slowly and/or your savings grow more slowly. It's entirely up to you.

Well done for recognising you need to get a grip on this! Good luck!