General Budgeting Advice

Piscean1991

I wasn't sure where to put this as it seems to fall into so many categories. Apologies in advance for the length, I'm not really sure where to start so I'll explain my situation before asking my question.

To cut a long story short, I'm looking at having a severe drop in income for a few months followed by a drastic improvement and I need to be able to make ends meet in the interim.

More detailed circumstances are as follows:

24 years old, recent graduate earning £820 after tax so not paying student loans. Rent is currently £350 including bills each month. I really struggle on what I'm earning.

Until recently, I had £300 of savings which had to be spent on a costly repair to my car so I now have 16 pence in savings instead. Debts are as follows: heavily into my graduate overdraft (limit is £1000, interest-free until July 2016 - I reach the limit by the end of each month), borrowed £1000 off my grandparents (this is being paid back at £50 monthly and I've paid off £300) and owe my boyfriend £500.

Employment is quite unstable - work in a school on a temp contract which ends 30 June. They may make me permanent but don't know until funding comes through - they may also end my contract on 30 June then re-hire me in September. Started to apply for other jobs (most of which will also start in September) so likely to have no employment income over summer except irregular amounts from temp/agency work.

Living situation due to change shortly - stepdad owns an empty house and has asked if I'd like to rent it from him and let the two spare rooms out to lodgers. The house will be ready for me to move in by the end of May but stepdad has agreed to charge me introductory rent of £150 a month until I get lodgers in.

Judging by prices in local area, I think I'll be able to get £675 overall each month from lodgers but the rooms won't be ready to advertise until July. £675 would cover the full rent and utility bills (any surplus would go into a savings account to offset winter heating bills/unexpected house-related costs). Obviously, I have some initial costs in terms of furnishing the bedrooms but stepdad has agreed to help.

Overall, I'm struggling to make ends meet right now but just about keeping my head above water. I am very worried about meeting my living costs over the summer holidays. Depending on how paydays fall, this may mean no wage for 1 or 2 months. I'm quite confident that come September, my income and general financial prospects will have improved.

I'm fairly sure I'm going to have to borrow money to cover costs but I know I've exhausted my options in terms of family and boyfriend. I own up to not being particularly financially savvy but it looks like my options are to extend my overdraft or get a credit card. Never had a credit card before so my options are limited.

In terms of my overdraft, I can have an overdraft of upto £2000 but only £1000 of it will be interest-free.

The eligibility checker for credit cards says I'm 90% likely to be accepted for a Barclaycard Initial credit card (0% interest on purchases for 3 months, assumed credit limit of £1,200, and representative APR of 34.9% variable whatever all that means).

I'm not sure which is the best option - any advice or other alternatives?

Thanks in advance.

Once again, apologies for the length and I hope it's posted in the right area.

Dobbibill

Hi Piscean1991,

Welcome to the forum.

The first thing you need to do would be to complete a SOA (statement of affairs) here is the link. You don't go into much details about why you are struggling and only tell us about the income v's rent, no other bills/spends are mentioned. If you can post the SOA we can have a look with fresh eyes to see where best to advise you. A drop in income will always hurt but you need to address the current budget before you look to a future budget.

All the best

DB

Piscean1991

Thanks for your response. This was a little hard to do for my situation and I've put some explanatory notes in where I think they're needed. I hope I've filled it out right.

Statement of Affairs and Personal Balance Sheet

Monthly Income Details
Monthly income after tax................ 821
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 821

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 350 (This is inclusive of all my bills).
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 0
Gas..................................... 0
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 26
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 130 (This includes dinners that I eat at work which I know I need to cut).
Clothing................................ 10 (I very rarely spend my own money on clothes - I mainly ask for them for Christmas/birthday).
Petrol/diesel........................... 30
Road tax................................ 12.68
Car Insurance........................... 0 (I paid this in full out of the savings I had at the start of the policy so it doesn't factor into my monthly spending and my breakdown cover was paid for me as a graduation present so I haven't factored this in either).
Car maintenance (including MOT)......... 50 (This is very much an estimate. I've never put a car through MOT before so I'm not sure how much it will cost. I had to spend £300 on a car repair very recently so I figured estimating an additional £300 for the year would be an over-estimate rather than under?)
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 28 (£15 monthly on contact lenses and the remainder is my yearly dental costs divided by 12 - I have got to pay £60 out this month for a filling however so this perhaps isn't as accurate a reflection as it could be).
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 10
Haircuts................................ 30
Entertainment........................... 0 (My boyfriend pays for meals out, etc. with the Tastecard I got free from my bank covering my half and I don't go out with anyone but him so this spending is currently 0 but hopefully won't need to be for too much longer.)
Holiday................................. 50 (This isn't an accurate reflection in terms of how it hits my monthly budget - I've divided the cost of my half of our holiday by 12 but in actuality, I paid in four monthly instalments of £105. The additional £200 (annually) is what I would hope to have as minimum for spending money).
Emergency fund.......................... 0
Payment to relative..................... 50
Total monthly expenses.................. 776.68


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 1800
Other assets............................ 0
Total Assets............................ 1800

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Overdraft......................1000......0.........0
Total unsecured debts..........1000......0.........-


Monthly Budget Summary
Total monthly income.................... 821
Expenses (including HP & secured debts). 776.68
Available for debt repayments........... 44.32
Monthly UNsecured debt repayments....... 0
Amount left after debt repayments....... 44.32

Personal Balance Sheet Summary
Total assets (things you own)........... 1,800
Total HP & Secured debt................. -0
Total Unsecured debt.................... -1,000
Net Assets.............................. 800

Created using the SOA calculator at [sorry - it made me take the link out as a new user].
Reproduced on Moneysavingexpert with permission, using other browser.

I put overdraft in unsecured debt because I didn't really know what to do with it - it is there but it's also not pressingly urgent at this exact moment in time. I also haven't included the £500 I owe my boyfriend because while he's not in a position to lend me money to cover me over summer, he's not hankering for it back immediately.

I feel that my living costs are pretty much in line with my income generally speaking but this doesn't reflect some of the costs that have overstretched my budget in the past couple of months, namely:

Holiday - not paid for at £50 monthly (paid for in 4 instalments of £105). This has now been paid off in full which frees up £105 in my budget monthly but I do still need spending money.
Car maintenance - £300 paid out within the last two weeks for a major repair and MOT due in July.
Dentist - filling which will cost £60 to have done privately next week (I could get it done on the NHS at £30 but it's the difference between a silver and a white filling - I really don't want a silver filling for the sake of saving £30 when I expect my finances to improve within six months).

I would normally save between £75 and £100 a month but unexpected expenses have made this unrealistic at the moment. I usually use savings to cover annual or 'one-off' larger expenses such as new glasses (usually every 2 years if my prescription changes), car insurance, etc.

My main financial priority in the short-term is to give myself some sort of preparation/security for the summer period when I'm unlikely to be getting paid a regular wage beyond what I can earn from temp/agency work. Ideally, I want to avoid signing on.

DCFC79

When does your phone contract end, its expsive at £26 a month ?

It obviously won't help much in the short term but long term it will.

PeacefulWaters

You'll hit the buffers when car insurance renewal is due. How much are you paying for the bank account?

Get a better paid job, switch to sim only when the phone contract's up. Stop having your hair done as often.

Price up public transport and consider ditching the car.

Piscean1991

It's a SIM only contract so I have a lot of flexibility to leave within 30 days. It gives me unlimited data which is vital. Prior to switching, I was spending an average of £60 a month on my phone bill and some months as much as £100.

I'm not too worried about my long-term finances - when I move house and take in lodgers, my income will improve by £675 a month. Income from lodgers will cover the rent and the utility bills at which point I'll then be able to direct my salary towards handling debts and re-building savings. It is mainly the short term I'm panicking about.

PeacefulWaters

Piscean1991 wrote: »

It's a SIM only contract so I have a lot of flexibility to leave within 30 days. It gives me unlimited data which is vital.

Why is it vital? Surely it's a matter of self control.

Piscean1991

PeacefulWaters wrote: »

You'll hit the buffers when car insurance renewal is due. How much are you paying for the bank account?

Get a better paid job, switch to sim only when the phone contract's up. Stop having your hair done as often.

Price up public transport and consider ditching the car.

PeacefulWaters - What my job lacks in money, I am gaining in experience - this job is a gateway to my teacher training. Even if I do the same job in another school, the pay will still be the same. I did for a while have a second job but the tax and additional expenses involved just weren't worth the exhaustion of working 7 days a week.

Ditching my car's not an option. Insurance is likely to drop a lot when I move.

I have a long-term financial plan. What I am concerned about is how I am going to make ends meet over the summer period should I need to. I do intend to do agency work but obviously this is not secure or consistent. What I need is advice on whether extending my overdraft or getting a credit card is my best option for accessing emergency money should I need to in an absolute pinch.

The things I'm being advised are really helpful for the long-term but do not help me in the short term which is what I'm really interested in.

PeacefulWaters

Piscean1991 wrote: »

PeacefulWaters - What my job lacks in money, I am gaining in experience - this job is a gateway to my teacher training. Even if I do the same job in another school, the pay will still be the same. I did for a while have a second job but the tax and additional expenses involved just weren't worth the exhaustion of working 7 days a week.

Ditching my car's not an option. Insurance is likely to drop a lot when I move.

I have a long-term financial plan. What I am concerned about is how I am going to make ends meet over the summer period should I need to. I do intend to do agency work but obviously this is not secure or consistent. What I need is advice on whether extending my overdraft or getting a credit card is my best option for accessing emergency money should I need to in an absolute pinch.

The things I'm being advised are really helpful for the long-term but do not help me in the short term which is what I'm really interested in.

Well that's me well and truly told.

Although you've ignored the shorter term things I raised.

Piscean1991

PeacefulWaters wrote: »

Well that's me well and truly told.

Although you've ignored the shorter term things I raised.

Oh, I didn't mean to come across like that! I absolutely hate being on such a low salary and to be honest, it's a bit gutting that I was earning more in the part-time job I had at university. If only I'd eaten less takeaways and saved more..

Maybe I've missed it but the hair was the only shorter term thing I really noticed? (No sarcasm meant there by the way - feel free to point out if I have missed more). My hair's probably my big weakness. I don't drink alcohol or smoke or go out on nights out. I feel like I haven't had a social life in months and sometimes I think we all need something to make us feel a bit better. I usually get it done about once every 12 weeks at a cost of £85 which is why I put it down for a £30 cost each month. I can stretch that 12 weeks to about 15 before my hair looks completely horrific and I sometimes get a half-head of highlights instead of full head to lower the cost.

As far as my phone contract goes, it does seem expensive but previously I was paying between £60 and £100 purely because of data in a contract that I was tied into for 24 months. I'm too scared to risk being in that situation again with bills that high and I like knowing with certainty what my bill's going to be each month. I don't have the self-control you're talking about.

colsten

Unlimited data, unlimited texts, 2,000 minutes, no contract: £18/mth.

Took me 30 seconds to find that on http://www.uswitch.com/mobiles/compare/sim_only_deals/ - with more searching you might find something even cheaper that suits your needs.

Can't you do the majority of your Data work on free WiFi? Thereby reducing the amount of data you need to pay for.