Savings Kick Starter Diary

Jonesy135

Im 22, still living at home with mum and dad and trying to save for a mortgage plus a few other things.

Im hoping that by keeping a little diary on here it'll keep me on track with my savings a shifting my credit card!

So lets start with savings ----

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Savings

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ISA - Circa £10K
(account held by parents, i have no access! which is a good thing really! so i dont know how much is in there exactly) +£120 per month - payments to be increased in the new year

Cash Savings - £780 cash -
(and is deffinatly not in the draw on my window sill and is in a secret bank vault guarded by snakes and lions!... just in case anyone finds out here i live :P) will be moved into the bank when i hit £1K i think!

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Debts

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Nationwide Credit Card - £1074.60
Car HP - £4819.92 (pay £200.83 per month)

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Goals (in no real order)

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Clear Credit Card
Build 1 months salary emergency fund (to start with)
Pay off car
minimum £25K house deposit
Laser eye surgery fund (£3K?)
Snowboarding Equipment

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Im trying to balance saving for stuff and enjoying my life before i get a mortgage and cant afford to go out any more!!

having said that i don't go out all that much, i budget £200 a month to spend on stuff such as snacks, drinks, nights out, hair cuts, snowboarding, basically anything that isn't a regular monthly bill!!

This should leave me with about 500 quid a month to save/ pay off credit cards.

i have to admit that the past few months have been pretty tough, having broken up with girlfriend of 3.5 years, and thats lead to me over spending pretty much every month since(although not so much that i've gone into my overdraft or had to use my credit card)

Although its probably cheaper, i am reluctant to pay off my credit card with the cash i have, as thats what i have been doing in the past and every time i clear the blasted thing something crops up and because i have no cash left over it gets put on the credit card and it all starts over! so im trying to get a bit of a cash buffer going first this time!!


The house deposit, whilst i would love to move out straight away, even if i was given £25K tomorrow, because the area i live in is quite expensive (anything with 2 beds costs upwards of £160K or is in an area as described below!) i wouldn't be able to buy what i want because the bank will only lend me 100K! and £125K would get me a one bed apartment (if im lucky) or a house in a part of town well know for its drug deals and stabbings!! so untill my salary increasing im sticking with mum and dad!!!


Sorry i've rambled on so much!

Ill leave it there for now then

So ill aim to update this thread every so often (probably around the 23rd of each month, the day before payday, when im moving money into my savings etc) so hopefully in months down the road i can see how far i've come


Thanks

ALM2013

Jonesy, welcome to the forum. You are in the exact same position as me. Young and trying to save, although I have more debts than you.

Best thing t do is keep that isa in your parents name so you don't touch it. Get that credit card paid off and save like mad.

If you need any motivation, get loads of figures on your signature and you will see your goals everyday!

Jonesy135

ALM2013 wrote: »

Jonesy, welcome to the forum. You are in the exact same position as me. Young and trying to save, although I have more debts than you.

Best thing t do is keep that isa in your parents name so you don't touch it. Get that credit card paid off and save like mad.

If you need any motivation, get loads of figures on your signature and you will see your goals everyday!

Thanks!

up until recently my credit card debt was about £3K which was really getting me down! so i've made a dent already... its just this last grand which wont go away because of stuff like car insurance

Thanks for the idea, ill get some figures in my signature as soon as i figure out how!! lol

Jonesy135

Something nice and easy for me to update (and keep a note of the date)

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House Deposit ≈£10,000.00 (19/11/13)
Cash Savings - £780.00 (19/11/13)
e-Savings Plus - £00.28 (19/11/13)
ISA - Open One!!!!!!!!!!!!!!!!!!

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Credit Card - £1074.60 (19/11/13)
Car HP - £4819.92 (19/11/13)

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jimjames

Unless your credit card is 0% then I'd say it was crazy not paying it off with your savings.

If credit card at 20% and savings at 2% and £1k in each then at the end of year 1 you would have:

Credit card £1200 owed
Savings £1020 in credit

So every year the credit card will increase by £180 more than savings you have made. Far better to pay off the card and have that money boosting your savings account.

Re the ISA I'd be very careful with money in someone else's name. As you are over 18 there is no reason why you can't have it in your own name as you have an ISA allowance yourself.

Legally the money is theirs as it is in their name and should anything happen such as needing benefits etc that money will count as theirs.

But well done for starting saving, knowing you want to save is the first battle!

Jonesy135

Thanks for your comments eeryone!

jimjames wrote: »

Unless your credit card is 0% then I'd say it was crazy not paying it off with your savings.

If credit card at 20% and savings at 2% and £1k in each then at the end of year 1 you would have:

Credit card £1200 owed
Savings £1020 in credit

So every year the credit card will increase by £180 more than savings you have made. Far better to pay off the card and have that money boosting your savings account.

Re the ISA I'd be very careful with money in someone else's name. As you are over 18 there is no reason why you can't have it in your own name as you have an ISA allowance yourself.

Legally the money is theirs as it is in their name and should anything happen such as needing benefits etc that money will count as theirs.

But well done for starting saving, knowing you want to save is the first battle!

With regards to my credit card, paying it off with savings has always been my school of thought, but it hasnt actually saved me money because ive had to go right back into it because ive had bills pop up that have needed paying - and with no cash CC is theonly other option!

what im hoping to do is pay it off little by little with my savings over the next few months so that ive always got at least £1K cash incase of unexpected bills! (so once i have £1K saved everything on top of that will go on CC)

the ISA was something that my parents set up when i first started working properly (i.e. a career and salary) 4 years ago i was paying "Rent" which at the time i thought was going towards house hold bills. i found out a few months ago how ever that my "Rent" had actually been put into an ISA for me... now that i know its set aside for me, im happy to take the risk of it being in their name, as it means i cant get near it no matter how desperate i am!! that and if they are happy to use their ISA allowance on that then it still leave me with my full allowance

Eco_Miser

If you pay off of much as you can of the CC debt, you will save money, even if you subsequently borrow again, because the interest is calculated daily. When you get to the point where it is paid off every month, you also get an interest-free period. Don't worry about unexpected bills - pay them with your card if they happen, but in the meantime pay less CC interest.
Here's Martin's explanation.

pat_cashmoney

Sell the car and get something for £500, instant extra £200 a month in your pocket!

Jonesy135

pat_cashmoney wrote: »

Sell the car and get something for £500, instant extra £200 a month in your pocket!

But where is the "Live a little" in that?

i dont want a 500 quid banger, i love my car, yes if i sell my car ill have a little extra money in my pocket each month... but why stop there?

i should cancel my cineworld unlimited too thatll save 15 quid a month

cancel my gym membership, thats £36 saved

sell my phone and move to a pay as you go and save maybe £20 a month

stop snowboarding thatll be £50 a month, out of my budgeted £200 i can spend, that i can save

stop having a coffee when im at uni 2 days a week thats £3.60 saved

and stop wearing my contact and wear glasses instead saving £10 a month

Thats £130 a month i could save!



sorry to be absurd (and a little rude?:embarasse ) but i see things like that thrown around a lot (i get it big time from my Gran!)
yes i could give up lots of stuff and save loads of money, and i could maybe save for a house deposit in a shorter time. but where does that leave me? in a house, with no friends or hobbies, with a bucket load of money in the bank, but whats the point in that? money is there to be enjoyed. but yes, if i was in serious debt then selling my car would be a sensible option (i nearly did earlier this year when i was with my now ex girlfriend!) but i'm not.

so i'm trying to find a good balance between, saving as much as i can whilst still being able to enjoy my youth!!



sorry for the rant



Eco Miser - yeah ive seen that article really is food for thought! but i wanna be debt free! im going to be flogging loads of stuff on ebay soon so hopefully thatll help me pay everything off quickly! (might only keep 500 quid in cash savings so i can get the CC cleared quicker!). Thank You

Eco_Miser

Jonesy135 wrote: »

But where is the "Live a little" in that?

i dont want a 500 quid banger, i love my car, yes if i sell my car ill have a little extra money in my pocket each month... but why stop there?

I wouldn't want a £500 banger either, not least because it's likely to be more expensive in the long run.

Jonesy135 wrote: »

i should cancel my cineworld unlimited too thatll save 15 quid a month

Do you use it often enough to be cheaper than paying each visit? Do you really enjoy sitting in the dark watching moving images on a big screen that much?

Jonesy135 wrote: »

cancel my gym membership, thats £36 saved

Do you actually go to the gym regularly?

Jonesy135 wrote: »

sell my phone and move to a pay as you go and save maybe £20 a month

If your current plan is costing you £20 more than PAYG would, maybe you're on the wrong plan.

Jonesy135 wrote: »

stop snowboarding thatll be £50 a month, out of my budgeted £200 i can spend, that i can save

That's quite a lot, Do you really enjoy the snowboarding that much?

Jonesy135 wrote: »

stop having a coffee when im at uni 2 days a week thats £3.60 saved

Why do you drink coffee? Thirst? Boredom? The people you drink it with?

Jonesy135 wrote: »

and stop wearing my contact and wear glasses instead saving £10 a month[ Thats £130 a month i could save!

You've identified the possible savings, now justify why you won't make them.

Jonesy135 wrote: »

sorry to be absurd (and a little rude?:embarasse )

What's absurd, they all seem like reasonable savings.

Jonesy135 wrote: »

but i see things like that thrown around a lot (i get it big time from my Gran!)
yes i could give up lots of stuff and save loads of money, and i could maybe save for a house deposit in a shorter time. but where does that leave me? in a house, with no friends or hobbies, with a bucket load of money in the bank, but whats the point in that?

Your friends are dependant on wearing contacts and going to the gym? Friends, hobbies, and having fun don't have to cost a lot.
And you wouldn't have a bucketload of money in the bank until long after you'd bought the house.

Jonesy135 wrote: »

money is there to be enjoyed. but yes, if i was in serious debt then selling my car would be a sensible option (i nearly did earlier this year when i was with my now ex girlfriend!) but i'm not.

so i'm trying to find a good balance between, saving as much as i can whilst still being able to enjoy my youth!!
sorry for the rant

I enjoyed my old age by wandering around the North Yorks Moors all summer. Typical extra spending £2.75 a day. Met loads of friendly people. Got loads of exercise.

The comments above are for you to think about, not neccessarily to answer here.

Jonesy135 wrote: »

Eco Miser - yeah ive seen that article really is food for thought! but i wanna be debt free! im going to be flogging loads of stuff on ebay soon so hopefully thatll help me pay everything off quickly! (might only keep 500 quid in cash savings so i can get the CC cleared quicker!). Thank You

So be debt free! Pay off your card with your current savings and the ebay sales, then use it to borrow interest-free if needed. In your position, and assuming your credit limit is adequate, I'd have no savings, and just carry enough cash for those things you wouldn't/couldn't use a card for - and pay the card off each payday.

[Deleted User]

Jonesy135 wrote: »

But where is the "Live a little" in that?

sorry to be absurd (and a little rude?:embarasse ) but i see things like that thrown around a lot (i get it big time from my Gran!)
yes i could give up lots of stuff and save loads of money, and i could maybe save for a house deposit in a shorter time. but where does that leave me? in a house, with no friends or hobbies, with a bucket load of money in the bank, but whats the point in that? money is there to be enjoyed. but yes, if i was in serious debt then selling my car would be a sensible option (i nearly did earlier this year when i was with my now ex girlfriend!) but i'm not.

Think about money as the tool to provide you security, not as something to provide enjoyment, think of security as what provides enjoyment. Until you are financially secure every time you spend money you're increasing the distance between yourself and financial security.

There are things that you need to spend money on, a place to live is important and while you could save money by living on the streets, the mental health cost of doing is absurd and not worth it. Spending money on a place to live, on food to keep you healthy, on social activities to keep you happy, these are all things that are necessary long term and cannot be sacrificed however there are smaller things that can be sacrificed with no personal cost, a cheaper phone isn't going to make you unhappy when you're making that sacrifice for long term security.

Don't think about your early adult life as your only time to have fun and live, think about the early adult years of your life as the time to invest in the rest of your life. This means relationships, work and most of all financial.

I know it's sort of robotic but... think of yourself as a character in The Sims game. You have basic needs to keep you functioning, food, water, happiness. Now consider the minimum amount that you need to be a productive person and the things that can impact that. Let's say this is your happiness with a roof over your head, food on the table and staying in every night (below your required amount):

[==========|==========]

Let's say this is your happiness with a roof over your head, food on the table, a weekly night out and snowboarding every weekend (required amount is met):

[==========|==========]

This situation is ideal, you're meeting your required levels of happiness! Now imagine that you lose your job, uh oh, now you can't afford to go out, you can't afford snowboarding and the only way you can keep paying your bills is to borrow from your housing fund! Your happiness now looks like this:

[==========|==========]

That sort of situation is what you need to avoid and where financial security comes in. You want need to be in a position where money is not a day to day concern and that if your worst case financial scenario happens (losing your job) the only impact is on your day, it does not have any impact on your financial situation or your day to day concerns.

Once you're into a situation where your worst case financial scenario still allows you to meet your minimum levels of happiness, then you're ready to be able to live a little and enjoy your money.

Here's what I would do in your situation:

1. Pick a financial situation you'd need to be in to give yourself financial security, that would mean your worst case financial scenario (losing your job) would just be a "consideration" and not a giant alarm going off in your head. That would probably be 2x your yearly expenditure in savings (not earmarked for deposit etc.), so let's say £30,000 (just over 1k/month).

2. Sacrifice the "extra" happiness gained through spending money now until you are financially secure, until your minimum level of happiness is being met regardless of your short term financial situation. Then you can spend money on a new phone or a fancy holiday (as long as it doesn't compromise you financially!) or a wonderful wedding.

3. Spend the rest of your adult life never having to worry about a financial thing. Had a brilliant business idea? Do it. Decided you want to work in biology? Sign up for the open university and work part time while you work through the OU! Had an opportunity to attend something important in your field of interest? Pay for the flights and have a great time. Need to do a 3 month unpaid internship in the field you now have a degree in, to get yourself a job? Do it.

I know so many people without financial security and it really does ruin your life, it destroys relationships, restricts your opportunities, drives addiction, has impacts on your family, it's really really not good. Spend more than a minute in any of the less-positive boards on this forum (eg: loans, bankruptcy, jobs) and you'll see the things people suffer: people being bullied by their co-workers to the point where they cry every day but they can't quit because otherwise their children will have to eat tumble dryer lint. Spending the first 10 years of your adult life to never have to suffer that is worth it, even if you don't get to go to the pub every night at 22.

The value of financial security cannot be overstated. You don't need to be rich or have a lot of money, you just need to have enough money that you don't have to think about money every single day.

I guess if I was to try and distil all this rambling down into one line: always fulfil your needs, only fulfil your wants when your needs are no longer a concern.

You're on the path to doing well but your attitude towards spending is probably going to be your biggest hurdle. I suffered from it for many years (I could cry about the amount of security I lost) and it was so hard to deal with, but I feel so much better for it. Sure right now it might only be an extra £100 per month on wants not needs, but next month when you see a new want it becomes £120, the month after it becomes £150... so on and so forth. Addressing your spending attitudes now (on both existing expenses and potential future) will pay dividends.

The enjoyment that I get from knowing that in a couple of years work will be something I do, not something that controls me, far exceeds the enjoyment a cup of coffee or a night out of a McDonalds meal or... anything could provide, and in a couple of years I'll be able to have all of those things without any concern.

(After spending 2 hours writing and rewriting and rerewriting and rererewriting this post I realise it is preachy and too long to read, but I gained a better understanding of my own feelings about money by thinking about this properly, so even if nobody reads this I've got value from it! )