Too much month at the end of the money, radical ideas needed!

Stef_83

A few years ago, my DW and I were enjoying life in tranquil Norfolk – little did we know of the fantastic roller-coaster ride that was to come. We’re believers in the importance of education, so my DW helped to support me financially to take a day off work each week to study at Uni.

We’d always kept careful budgets, recording every penny, but there was a problem – we were in low paid jobs, renting a tiny damp flat and completely skint. We knew we needed to make some changes.

So, time for radical action – I finished Uni, joined a graduate scheme with a big company, we moved to London, my DW found a better job. We did a 180 degree switch, my DW secured a place at a top London Uni, doing a degree with me supporting her financially to take time off work each week to study.

Then suddenly I was lucky enough to secure a management position at a large company, and barely a few days later my DW was awarded a valuable scholarship in Spain as part of her degree. Yippee!! It felt like all our Christmases had come at once.

So today, we’ve achieved more than we ever dreamed, but here’s the thing – financially we seem to be worse off than ever. We’re earning more – me 26k, DW 11k. But – my job is miles away and we’re living apart during the week, so we’re paying 2 sets of rent - a small flat for my DW and a spare room with a family for me, total £975 per month.

My employer requires me to have a car, but doesn’t pay for it. We researched carefully to find the cheapest car to run, and settled on a Toyota Aygo - £400 per month on average including loan repayment, servicing and fuel. My DW walks whenever possible, but needs to use public transport to get to Uni - £160 per month

We’ve cut back on food shopping and switched to Asda – spending £250 per month. We know this is expensive for groceries - at the moment I’m working about 12 hours a day and tend to buy ready meals because I find it hard to make time to cook, but I know I can do better.

We’ve used MSE as a guide, switching to the cheapest providers for electricity, broadband etc, but here’s the problem – we’re still spending around £150 a month more than we’re earning and we have around £4k of debt which isn’t that much, but it will keep growing bigger if we don’t resolve the problem. We also want to save up for a flight to Spain and accommodation so my DW can take advantage of her scholarship. We’re looking for a cheaper place to rent, but are locked into the lease for another 5 months. Our mobile phone bill is expensive, £60 per month, but we’re locked into the contract for 12+ months. A potential saving could be to opt out of our pension schemes, but we’re reluctant to throw away the free money as both our employers match our contributions.

If there’s one group of people that can come up with ideas to turn this around, then it has to be you good folks on the MSE forum! So thanks for reading this, sorry it’s a long post, and we’d be really grateful to listen to your thoughts and ideas. All options considered - nothing is off the table! Thanks in advance!

---EDIT---

Thanks for your suggestions so far! Here's a tally of all the savings you've come up with I'm adding new savings here each time someone is kind enough to post more ideas.

Cooking my own 'ready meals' - £50 (Monkeyballs)
Downgrading mobile contract - TBC (Monkeyballs)
Public transport season ticket/carshare for DW - TBC (Monkeyballs)
Reduce pension payment without losing employer contribution - £50 (Monkeyballs)
DW to offer tutoring on People per Hour - £20 (theoretica)
Drive more economically, check petrol price before filling up (5% saving) - £9 (theoretica)
Switch to cheaper breakdown cover - £5 (theoretica)
Find free places to park instead of paying - £10 (theoretica)
Council Tax saving (TBC) - £35 (theoretica)
Shop in charity shop instead of paying out directly - £10 (ellesbellesxxx)
Split grocery shop between Aldi & ASDA - £15 (Fmess/Twiggy_34)
Reclaim tax for professional membership - £3 (katsu)
De-clutter and sell things on eBay (one off) £100 (Twiggy_34/nat21luv)

Monkeyballs

Aloha Stef!

Welcome to MSE, if there is one thing that we love here it's a challenge! I would first of all recommend an SOA (Statement of Affairs) which we can al pull apart I would tell you where it is but I'm not sure but someone will almost certainly be along with a link soon...

So, off the top of my head the first things I see are:

1. You say you don't have time to cook so rely on ready meals? Make you're own! I'm guessing when the two of you get together you spend time catching up... Why not do it as you're in the kitchen cooking? In no time at all you'll both have whipped up enough food to chuck in the freezer and heat up as you need it cooking together is a fun activity so you're not going out spending money either so it's win win!!!

2. Some mobile phone contracts allow you to downgrade to a lower contract after 6 months... Is this an option? I think off the top of my head that at least Vodafone and Orange allow you to do this so might be worth a call to customer services to ask? Even a tenner a month is worth having... You could even pop into your local friendly phone shop to ask about the possibility of being bought out to switch provider... You may be able to get them to buy you out so you can switch to them on a cheaper tariff

3. The public transport that your DW is using... Is this paid daily? You can normally save a fair wedge by paying for a month or even longer all in one go? How about carshare?

4. I really wouldn't advise opting out of the pension... false economy as tempting as it may be to free up some spare cash UNLESS you are able to reduce your contributions at all without reducing the amount your company contributes? I only ask because my employer makes a great contribution so long as I pay 2% of my monthly pay, anything over 2% is out of my own pocket and makes no difference to what they add?

MB

theoretica

Can you fill this in? It will really show where all your money is going. Be honest with yourself! http://www.stoozing.com/calculator/soa.php

Is your DW taking full advantage of being a student? Council tax, discounts etc? Can she do any tutoring to increase her income?

Any way to cut down on petrol by using the car less?

Stef_83

Hi Monkeyballs, thank you for your helpful post and for welcoming me to MSE I've searched for how to write a SOA, I will pop it on the forum shortly. Nice spot with the pension contributions - I've had a trawl through the T&C's and we can reduce contributions by £50 per month without loosing out!!

Stef_83

Thanks for your suggestions! I'm going to keep a tally of how much these could save each month...

...(now added to original post)

Stef_83

Hi folks here's the SOA!

Total monthly income from all sources:

Salary (after tax & pension) - 2,367

Essential / fixed monthly outgoings:

Rent - DW flat (London) - 675
Rent - my room (Warwickshire) - bills included - 300
Council Tax - 141
Electricity - 92
Broadband - 18
Groceries - 250
Car loan, service agreement & MOT - 221
Fuel - 189
Car insurance- 35
Water - 26
Public transport - 160
Contact lenses & medical - 18
Books & materials for Uni (average) - 12

Discretionary / luxury spending:

Mobile Phone - 60
Gifts, cards (average) - 15
Clothing, footwear (average) - 30
Hairdressing - 25
Entertainment, recreation, holidays (average) - 40
Parking (average) - 10
Breakdown cover - 13
Charity donation - 10
Membership of professional organisations - 13

Debt:

Total debt (interest free at present) - 3,334
Debt repayment - 100

Totals:

Total expenditure - 2,453
Gap - (86)

Your assets

Savings - 1,200

Stef_83

Hi theoretica thanks for your post! I've posted the SOA, hopefully it makes sense. Thanks for the link.

Great suggestions I'm going to try add them to my earlier post if I can figure out how to edit!

DW taking advantage of being a student - she is classified as part-time so no Council Tax benefit, but definitely the tutoring could be an option, maybe register on People per Hour. We could aim for £20 a month to start with. My DW is pretty savvy, she always ask if they give student discount when buying things from the shops which is great

Petrol - it's hard to see where to cut down actual journeys, but what I could do is drive more economically as I tend to be a bit heavy on the pedals, and check petrol prices website before filling up like as suggested on MSE - we could say 5% saving here.

theoretica

Stef_83 wrote: »

Council Tax - 141 Have you looked into single occupant discounts if this is only for your DW and you are included in your room?
Electricity - 92
Groceries - 250 only if you can afford it without getting into more debt...
Fuel - 189 can you shave anything here? drive smoothly? fill up at the cheapest place?

Discretionary / luxury spending:

Mobile Phone - 60
Gifts, cards (average) - 15
Clothing, footwear (average) - 30
Hairdressing - 25
Entertainment, recreation, holidays (average) - 40
Parking (average) - 10 must you?
Breakdown cover - 13 http://www.moneysavingexpert.com/car-insurance/breakdown-cover

Total expenditure - 2,453
Gap - (86)

£86 isn't a big gap - only buy clothing/entertainment/readymeals if you can afford them rather than buying what you want and then looking to see how the finances fall.

Stef_83

You're right theoretica 86 isn't too big a gap. It does feel quite big as we've cut back quite a bit already so must have been spending far too much! Ideally we would like to cut back even more, and have a couple of hundred to spare each month to pay down debt and save for the scholarship because that will be a good investment for the future.

Regards the Council Tax I've kept myself registered in London because I will be moving quite often at the other place, and my thoughts were it would affect my credit rating if I keep moving where I'm registered on the electoral roll. What are your thoughts, have I got the right idea?

Driving smoothly & fuel - definitely a good idea! In fact I never check the price of petrol I just fill up at the same place out of habit! Added to list.

Parking - you're right we could try harder to find free places to park.

Breakdown cover - thanks for the link, good point - I haven't price checked that, will do so.

theoretica

Stef_83 wrote: »

Y
Regards the Council Tax I've kept myself registered in London because I will be moving quite often at the other place, and my thoughts were it would affect my credit rating if I keep moving where I'm registered on the electoral roll. What are your thoughts, have I got the right idea?

If you could get the 25% discount and not pay more where you are (which I am not certain of, it depends on the definition of 'main home' - but worth investigating) it would save you £35 a month. Paying that off your debt would also be good for your credit rating.

Also could your DW save money by going onto a water meter?

Weird_Nev

It's the groceries. £250/mo is too much.

Cook in bulk and freeze portions. Do Spag Bol, Chilli, Lasagne, Soups, things like Laksa and Thai Curry work well. Roast a chicken on Sunday, Cleant the carcass of meat and boil it up with a bouquet garnis (home grown herbs?) to make stock. Use the meat for sandwiches, then use the last of the meat and boil up the carcass to do a risotto or a soup weds night.

It takes a bit of planning, but you get helthier, cheaper, tastier meals for want of a couple of hours cooking on a Sunday.

Other than that, up your earnings. Management positions with a major london company on £26k? I hope there's some rapid progression.....