Help! My outgoings are more than my income

Bengal_tiger

I'm wondering if anyone can help me. I'm single and work full-time for the local council and my income is probably below average (£20,000) but that is not too low. I took a 10% pay cut a year ago and since then have been struggling every month. I rarely spend on luxuries and I feel I ought to be able to live a modest lifestyle, i.e. rent a one-bedroom flat and run a car. I've tried doing the MSE budget calculator and it's come out as a £6,000 annual overspend over my income. This is ok for now while I have savings, but how long will they last for at this rate?

I'm not sure how to post a link to my results, so I have copied the breakdown of spending below. Most of my spending is on rent (£540 a month), bills (about £200 a month), and my car (£678 a month - this includes petrol, tax, insurance and repairs).

Can anyone suggest how I could possibly cut back? I'm thinking of whether I should start house sharing again (not wild about the idea as I'm late 30s and don't like the idea of living with a bunch of people almost young enough to be my children, plus I have all my own furniture and it would cost me more to buy it all again if I sell it and my situation improves in future (e.g. if I manage to get a better paid job))

In Your Home£301.95 Motoring & Public Transport£678.54 Debt Repayments £0.00 Savings & Investments £0.00 Family£30.33 Entertainment£34.99 Clothes, Health & Beauty£80.37 Education & Courses£0.00 Big One Offs£41.67 Odds & Sods£56.33 Mortgage/Rent£540.00

Tixy

Hi

Its a bit difficult without seeing your full breakdown. But from what you have posted - your car is obviously a big outlay. Is a car essential for you? would pyblic transport be an option?

Does the £678 include car loan repayments? or just running costs? how does this breakdown? is a lot of it fuel? and if so do you drive as fuel efficently as possible?

What does 'in your home' breakdown into - obviously utilities -have you checked you are with the cheapest supplier/best tariff for these? Are things like mobiles/internet etc as cheap as you can find by shopping around? How much are you budgeting to spend on groceries?

With the rent - I can see you would rather not house share - is £540 competitive where you live? could you move somewhere cheaper? or smaller? or somewhere nearer work to reduce motoring costs?

Bengal_tiger

Hi Tixy, thanks for your quick and helpful response. I do need a car for work and for visiting friends/social groups in areas without good public transport, so I will still have the big payments of insurance, tax and repairs (my car is over ten years old and actually cost me over £1,000 in repairs last year).

The fuel is expensive at about £165 a month (I do about 10,000 miles a year), but public transport is not any cheaper, once you've paid insurance and tax, etc. I know I could save maybe £30 a month off the fuel by buying a smaller car, but that is only a £360 annual saving – barely making a dent in the £6,000 overspend,

I know that cutting a bit here and there on things like food and my mobile phone will not be enough to break even, as I don’t spend much on these anyway.

The “in your home” cost are:

Mobile phone £20
TV licence £12.12
Internet £10.66
Home phone (line rental) £10
Cleaning products £0.83
Oil £0.83
Electricity £60
Council tax £113 (My flat is ‘Band B’)
Home insurance £7.17
Food and household shopping £50

£540 a month is very competitive for a one bedroom flat in this area. I have to move in the next few months, as my landlord wants the flat back, so I have the chance to try and find somewhere cheaper – but really the only cheaper option would be a house share – or possibly a studio for £100 less, but a lot of the ones here are really awful, so living in a house share might be preferable.

I think moving closer to work could actually cost me more, as the rent in the middle of town is more expensive than the outskirts.

camuk81

Bengal are you paying over 12 months or 10. See if change to 12 months.

Ps is that a typo with the oil?

EssexHebridean

It might be helpful both to people trying to offer advice and to you yourself to do a full SOA via http://www.makesenseofcards.co.uk/soacalc.html as this will really underline what you spend and where. The car cost is crippling you I'm afraid, but I do appreciate that it's difficult to manage without one. To put it into persepctive though on the figures you've given you're spending over 8k a year on the car. My household runs two cars, between us we do about 24k miles a year and I reckon our two, including the cost of diesel, cost us just a little over half what you're spending. How much of the monthly figure you've given is insurance, and is there any chance of finding a cheaper quote for that? How many miles per gallon is your car doing?

Your council tax looks pricey too - I take it you are getting your single person (25%) discount?

Jamieldn

If I were you I would definitely consider a house share for a short period of time, perhaps 12 - 18 months? Although you lose your own space the financial advantages can be good. I would look for an "all-inclusive" deal which includes utilities and council tax, ideally for at least £150 less than your current rent. It's also worth remembering that other costs (i.e. phone / internet etc) are also split.

I live in London and it is not unusual for people in their late 30's to share. Look hard, be choosey and I'm sure you can find some likeminded house mates.

Your car is the real issue here. I would look at your car usage. Can you limit your mileage by walking shorter distances? Can you car share with someone else from work?

Bengal_tiger

Thanks, I will have a go at the SOA this evening and see if I can post the results on here, if it will help people.

My car costs do include repairs, which were about £1,000 last year. This included a major annual service and MOT for £560, a new clutch for £600, plus some other repairs for around £300. I estimated only £1,000 though as it isn’t every year that you have to buy a new clutch. My insurance is £400 a year, which was the best quote when I renewed (I have excesses). I rang my last insurer after they quoted me more than double that and they said that it was the industry-wide costs going up. I didn’t believe them hence I shopped around for a cheaper deal.

I only get about 30 miles per gallon. It’s a 1.8 litre vehicle, so I know I could save a bit a smaller car, on petrol, tax and insurance, but as I said, this will not make much difference to my overspend, which is several thousand.

I think I’d struggle to find the time to do a second job, assuming I could find one, so I really want to be able to cut back without resorting to that.

With those other figures, the ‘oil’ figure wasn’t a typo. I estimated I only buy oil for my car every 6 months, which is about £10 x2 / 12 = 83p. The garage always tops up the oil as part of my service any time I take it in.



I think I may be paying council tax over ten months, as I know that Band B in my area is £923 after the single person discount, which I am claiming (this is £76.91 a month rather than £113, so I see now that I was £433 a year out with that, but I'm sure the other figures are right).

Tixy

If the fuel is £165 of the £678 and the car is not on finance then how much is the insurance costing you? and how much are you budgeting for tax & maintenance? It looks like your insurance must be several hundred quid a month?

You are right that saving a few quid here and there won't make up your shortfall, but all reductions will certainly reduce the amount you eat into your savings each year.

Whilst moving closer to work might cost a bit more in rent, if it resulted in not having a car and saving £678 then it would be an overall saving.

How much do you have in savings? how many more years can you manage to overspend by £6k a year?
Do you expect/anticipate to get a payrise in your current job or a promotion or a better paid job?
Could you work a second job at evenings/weekends to supplement your income?

Edit -- sorry cross posted (although I still can't understand the car costs),
£165 fuel
£90 maintenance
£35 insurance
£30(?) tax
what is the remainder of over £300 being spent on?

debtfreewannabe321

could you look at renting a 2 bed flat if the difference isn't too much and flat sharing? That way you could take your furniture with you and if you found yourself in a better position you could keep the flat without sharing? x

mancitychick

Have you looked into getting a new car or leasing a car, I am pretty sure you could do either of these for a lot less than £678 a month.

Mellypoos

You also have to remember that buying a smaller car will not only save you in fuel, but also potentially in tax and insurance. These will all add up