Debt starting to build, need to nip it in the bud now!!

JS123_2

Hi all,

Sorry, this unintentionally got a bit long....!

Have lurked for a while and I think I need to post on this board before I lose my nerve! I'm not in huge amounts of debt like some people but I think I really need to get my finances sorted out now because I feel like they're starting to get a bit uncontrollable, and right now I need my life to be nice and simple and to feel in control!

A few months ago I was completely debt free. A year ago I would have been able to save about £500 per month in the hopes of one day having a house deposit (I live in London, so this is quite a hefty amount needed!).

In the last few months things have changed. I moved in with my partner, from my ridiculously cheap-for-London tiny studio to an actual apartment. He earns a lot more than me, so it was a flat slightly out of my price range - he does pay a bit more of the rent, and he pays for the internet/tv/phone line. Everything else is currently split 50/50, with the exception of car expenses - it is my car and he doesn't drive it so I pay for all of that.

On the plus side, I did get a new job paying a couple of grand more than my old one, but the money still seems to be getting swallowed up.

The latest development is holidays (sigh!) - so, we just had a weeks package deal - we got a late deal and both desperately needed a break, but of course we spent a bit more than planned out there etc... we also have an amazing holiday coming up in March to Fiji, which is for a family wedding on his side and we have taken the opportunity to turn it into a holiday for us too seeing as we have to pay to go all the way out there! Not cheap, we've agreed it's a once in a lifetime type holiday although trying to keep costs down. This is pretty much all booked and accommodation, deposits, flights etc are all on my credit card (0% interest, thank god!) although we'll have about another £1k each to pay before next March (e.g. the balance of hotels that have taken deposits.) We have already agreed that we will not be taking any more holidays for at least a couple of years!

So, I'm looking at my bank which doesn't have much money in it right now, my credit card which has a current balance of over 5k (although half of that is my partners which he will pay me back before the interest free rate finishes), and knowing my income doesn't allow me much left over i am panicking about getting back into debt and not being able to save to buy a house. Baically I need to nip this in the bud right now.

If anyone can help me I would really appreciate it. I'm just toddling off to sort my SOA now for you to dissect if you have the time and inclination, and any comments at all would be really helpful if you can help me pull my expenses down at all!

Will be back with an SOA shortly, if I can figure out how to post it here! :rotfl:

Thanks in advance,
J
x

HeadAboveWater

Hey

Obviously I don't know the whole story, but from what I read it appears that since getting into this relationship you've basically been living above your means. Your OH earns a lot more than you so can afford a 'flashy' lifestyle. Does he realise you're earning less than him and you're struggling? Holidays etc are all well and good - if they're affordable.

My OH earns the same as me. I live on my wages every month, but he owns the house, has a load of money in the bank, drives the flash car... He knows where I stand financially and won't ask me, nor expect me, to pay out for something big. He'll either offer to pay for it in full, or else we'll compromise on a cheaper alternative. It works perfect for us.

Post an SOA too so we can have a look and try to help

Onwards and upwards!!

JS123_2

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................ 1600.95
Partners monthly income after tax....... 0 (Am doing this purely on my income, and my expenditure, we haven't completely joint finances yet).
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1600.95
Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 650
Management charge (leasehold property).. 0
Council tax............................. 53
Electricity............................. 26
Gas..................................... 26
Water rates............................. 10
Telephone (land line)................... 0 (partner pays for phone/internet/tv package)
Satellite/Cable TV...................... 0
Internet Services....................... 0
Mobile phone............................ 20
TV Licence.............................. 6.06
Groceries etc. ......................... 150
Clothing................................ 15
Petrol/diesel........................... 50
Road tax................................ 8.33
Car Insurance........................... 42.83
Car maintenance (including MOT)......... 10.83
Car parking............................. 5.58
Other travel............................ 92
Medical (prescriptions, dentist etc).... 30 (contact lenses and dentist)
Contents insurance...................... 3.54
Life assurance ......................... 0
Presents (birthday, christmas etc)...... 50
Haircuts................................ 6.25
Entertainment........................... 50
Holiday................................. 0
Emergency fund.......................... 0
Toiletries.............................. 20
Netflix................................. 3
Gym..................................... 49
Total monthly expenses.................. 1377.42

Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 4000
Other assets............................ 0
Total Assets............................ 4000

No Secured nor Hire Purchase Debts
Unsecured Debts
Description....................Debt......Monthly...APR
Credit card....................5368.04...50........0
Total unsecured debts..........5368.04...50........-

Monthly Budget Summary
Total monthly income.................... 1,600.95
Expenses (including HP & secured debts). 1,377.42
Available for debt repayments........... 223.53
Monthly UNsecured debt repayments....... 50
Amount left after debt repayments....... 173.53
Personal Balance Sheet Summary
Total assets (things you own)........... 4,000
Total HP & Secured debt................. -0
Total Unsecured debt.................... -5,368.04
Net Assets.............................. -1,368.04

Ok, so, household costs are generally my half of the bills. Personal costs are obviously just mine. The car costs are mine. Financially it might make sense to get rid of the car, especially living in London and only using it once or twice a month - however I use it for long journeys out of london (i.e. to go home) and with 2 recent close family member's sudden deaths, i quite like the comfort of knowing my car is there to jump into and get home quickly should anything else happen.

I haven't included holiday costs as they are basically what I need to pay off of the card, not what I need to save for now!

I know it says I have around £170 left, but I'm not sure that's true - I think it gets eaten up in sandwiches at work when I've been too lazy to make my own, in odd bits of toiletries (I am awful and buy too much of these in the hopes they will make me prettier!) and clothes (i.e. having just gone on holiday and realising I have no shorts, skirts, sundresses, shoes except silly heels or trainers... etc, so gone over budget there for the last couple of months).

SO - my own plan going forward:
Stop buying food at work. Use food out of my groceries budget and take in sandwiches and salads etc.
Stop buying toiletries. I have boxes full of the stuff in the bathroom which will prob take me years to use up anyway.
Try to be savvy with buying presents and get good deals - stupidly if I know I've gotten a £40 present for £6 in the sales, I still then feel I need to buy something else to go with it to 'make up the value' to what I would have spent full price... I have no idea why I do this!
Curb going out for a while - We don't actually go out a lot or spend huge amounts, but I guess a drink here and there adds up too - so have spoken to the other half about this and we've agreed to do cheaper things, movie nights in etc.

Note re groceries - We budget as a couple £300 a month. I transfer this amount inot a spare bank account of mine and do most of the shopping. I pretty much always come in under budget, around £200-240. The rest is sitting there and I'm treating as the start of our savings as a couple. I'd be interested to know what people think a couple could manage on for a month (he gets lunches provided at work, I don't, and he is gluten intolerant so a bit of a consideration there).

If anyone else can help me get these costs down I would appreciate it!

xxx

cats2012

Quick one - do you pay all your rent or is your half that high? I'm guessing it's just you as you're in London...?

JS123_2

Hi HeadAboveWater,

Yes, I think that's a fair assessment! My partner earns easily more than twice my wage, although he has some debts he is currently paying back too (mainly to his parents for university - he's from Australia and didn't have student loans in the same way we do).

Moving in was a bit of a shock - I went from about £600 p/m all in, and a cheaper bus travelcard to work, to £650 plus bills p/m and a full travelcard needed. We don't have a luxurious apartment or anything - just a small one bed in a nice area. We looked at cheaper properties but they a) weren't much cheaper b) were disgustingly grotty and c) were further out so savings on rent would be swallowed by extra money on travelcards.

We have discussed that I cannot afford to do everything he would like to and for the most part he is quite understanding, although his attitude to money can frustrate me sometimes - because he see's his quite high income coming in he won't spend anytime to cut costs or find cheaper alternatives etc - for example he spent £50 on an aftershave in the Perfume Shop despite me pointing out that it was £40 in Boots just around the corner or £30 online... he thinks his time is worth more than the savings... grrrr!

Anyway... yes, we can't (well, I can't) really afford the holidays right now. I need to scrimp for the next few months to afford Fiji, hence me trying to cut right back now - and then hopefully can continue to be very frugal after that and put those savings towards a house deposit.

x

JS123_2

cats2012 wrote: »

Quick one - do you pay all your rent or is your half that high? I'm guessing it's just you as you're in London...?

That's my half of the rent. May partner pays the other half (well, £800). Rent is ridiculous as it's London, zone 2. But we looked at other options and it seemed the best compromise between rent, travelling and location etc. Moving in together as a couple we really wanted our own place rather than sharing, he wanted a 2 bed but we went for the cheaper 1 bed option!

I could really stop worrying as my partner points out - once he has paid his debts (within this year) he can start saving with avengance and will be able to put away 1k per month minimum - but I really want to be able to do what I can myself and not rely on him in that way, you know?

x

JS123_2

Just another bit of info - our lease runs until October and we will be looking at other options in case we can find soemwhere suitable cheaper. Nothing yet though... x

faceuptoit

JS123 wrote: »

That's my half of the rent. May partner pays the other half (well, £800). Rent is ridiculous as it's London, zone 2. But we looked at other options and it seemed the best compromise between rent, travelling and location etc. Moving in together as a couple we really wanted our own place rather than sharing, he wanted a 2 bed but we went for the cheaper 1 bed option!

I could really stop worrying as my partner points out - once he has paid his debts (within this year) he can start saving with avengance and will be able to put away 1k per month minimum - but I really want to be able to do what I can myself and not rely on him in that way, you know?

x

Wow - our situation is literally 100% the same, except I am in your partners shoes.

I live in North London and earn a decent amount. My OH has just had a whopping salary increase but before that was on around £1400 a month. I was paying for both of us to have a nice lifestyle basically and ultimately have racked up spending on 0% credit cards when I should have been saving for a flat.

I would buy big things (holidays, furniture) on 0% credit cards and allow my OH to do the same, knowing she'd pay me back. However, we have not been able to get out of this habit and now I have £3750 in my name on a 0% card - which is basically half each.

I have just gotten to the point where, at the beginning of this month, I have cleared both of last month's overdrafts and paid off a big credit card bill from last month (I do all my spending on another CC and then pay that one off in full every month).

I'm not hugely in debt, but I want to pay off my CC. Seeing myself paying a couple of hundred off a card each month, and knowing I'll be doing it for another year, depresses me. I want to be saving to buy a flat!!

I think you're in the same traps I am - you don't know where your disposable income goes. I've been keeping a spending diary and it's slowly helping. Today I resisted the urge to go to Pret and instead spent £1.70 on lunch at work - before, I never would have given Pret lunches a second thought. Now that I can see it's a £100 difference every month, I am starting to change my habits.

Re your rent, my partner and I pay £1083/month (total) and live in a safe and pretty area in zone 2. It takes me 30 mins to get to work and there are pubs and local cafes around us. Your rent sounds high to me. We also live in a nice, newly refurb'ed one bedroom flat with a small garden.

My advice would be to change areas and lower your rent, then start a spending diary. Remember, the 0% will run out eventually! Scary thought.

Loubell83

I have found some of the challenges on here have helped me.

The one that might help you is the Not buying uneccessary toiletries challenge.

Here is a link to the July one, you will need to look for the August one when it starts up

http://forums.moneysavingexpert.com/showthread.php?t=4046033&highlight=toiletries

JS123_2

FaceUpToIt - thanks, it's kind of reassuring oddly to know there's other people in the same boat! Yes it's a combination of high rent and living costs, and small spends here and there that add up. I think we need to seriously consider looking for somewhere cheaper when our lease is up.

Loubell83 - that's great, thanks! Had a quick look and sounds like the sort of thing that might help keep me on the straight and narrow for that area, at least! x

ScotlandM

I think you should try and find where the 172 went last month and if you can keep track of it in August. Was it all sandwichs and toiletries?
Should be easy to have a week of packed lunches, week of bought lunches to halve lunch costs. Or Monday+Friday bought lunch and packed midweek.
Toiletries, good luck. I'm not a girl and think girls are crazy with what they buy/need/want. But with a bathroom full you should stay pretty

If your other half wants to do nice things together then suggest he be a gentleman. None of us know what he's like but if you're paying your half for everything and have moved to HIS expensive bit of town it seems fair he can buy the drinks/cinema. And since it sounds like he does more money then he won't mind it a few times but will soon see what you mean about how a drink here adds up.

50 for fuel for the car sounds higher than driving you made out to be doing. What sort of distance does that get you? 4 laps of the M25 and enough left to get into London for me. That 50 and 92 other travel expenses seems high. If the 50 is one off trips to home etc then you can probably cut it down and raise your spare cash to 200
And it's a lot easier to start looking after money at 200