Need advice on priorities setting up (UK)

[poorjoy]

Hey there mustachians, I'm in a tight spot just now and very vulnerable financially, I am looking to gain some stability so I can grow out my mustache and feel safe for the first time.
I'm 26 years old and currently live with my father.

Tough life situations have meant I haven't had enough work experience for a career or decent pay, my mother was term ill which led to me dropping out of university and spending a long period of my life visiting hospitals every day out of employment. After my mother passed, I took crappy hospitality jobs like to survive as it was all I could get and then my father became seriously ill and I have cared for him whilst he was in hospital for a few months and his subsequent at home rehabilitation and outpatient treatments. My father is now recovered and it's time for me to start moving on.

I am 26 but in reality you should consider me as financially mature as a teenager

My current employment situation is entry level with very little prospect for improvement in the near future.
I have only recently started my first job after a year with a full year of unemployment in between.

The stats:
Permanent contract subject to 12 week probationary period (week 5 now)
Pay - £13,000 per annum ($21,500 roughly)
Current account - negative £1,550 out of £1600 student overdraft, this has £30 per month interest charge and hefty over limit fees of £90 per month. I hit the over limit fee cap this month.
Credit card - negative £475

My pay per month is £1005 with £1250 on every 3rd month.
I have worked out the expected maintenance cost when I move out to rent my first ever place.

Per month:
Rent - £400pm
Electricity+gas - £70
TV license (legal requirement) - £26 pm
Council tax - £62
Travel ticket - £101
Food - £100
Internet - £35

Total = £794 per month outgoing.  Tax for year expected at £300 (low income)

This leaves me with only 20% able to save. I can't drop the internet btw, job req to be able to receive updates at short notice.

Next months pay (april 30) is a 1250 month.
I can expect 2 months more living with father before I must move out (he has a gf now, moving in together in summer)

Whilst living with my father my costs are £300 per month. So this will leave around £1,500 to utilize before moving out.

[warfreak2]

My father is now recovered and it's time for me to start moving on.

Glad to hear it. The following is all on the assumption that you are moving out:

Rent - £400pm

Where in the UK are you? Anywhere outside London, you can definitely find somewhere significantly cheaper than £400/month by sharing. Even in London, until last year I was paying £400/month for a decent room in a shared house, but that also included utilities and internet.

TV license (legal requirement) - £26 pm

TV license is not a legal requirement if you don't watch live TV! Sell the TV, you can even get the same entertainment watching it a day later on BBC iPlayer, Channel 4 On Demand, &c. That said, you can get even better entertainment elsewhere on the internet, or by leaving through the front door. I have never paid for a TV license.

Travel ticket - £101

At this rate, one month's travel expenses buys a second-hand bike instead; this should not be a recurring cost.

Food - £100 (£60-70)

This is a good food budget, it's hard to beat, but it can be reduced if you really want to. Meat is an expensive source of protein, so buy a lot less meat, and get protein from other sources (e.g. eggs, dried chickpeas, nuts). My monthly grocery spend is about £60-70 and I eat very well.

Internet - £35 £15

If you don't have one already, buy a second-hand Android smartphone, and sign up to 3's (the company called 3) The One Plan, which is all-you-can-eat mobile data with no caps or fair use policy, tethering allowed, £15/month on a SIM-only contract.

this will leave around £1,500 to utilize before moving out.

Firstly use this to kill the credit card balance. Then get yourself a second-hand bike and smartphone (£100 each on those is fine but you can probably do better). You'll also need some of this money for a deposit on whereever you're renting - usually one month's rent.


HOWEVER:
If your dad will let you stay (and after you've cared for him for months, he might be open to it), think very carefully about moving out at all! You're currently living on £300/month, simply being 26 isn't itself a reason to add on a bunch of expenses that you could avoid by just staying at home for a while longer. Show him your budgets for before and after moving, maybe you'll be able to agree on something - e.g. you'll move out once you are out of debt, once you can afford the deposit without going into debt, &c.

[Phil_Moore]

I can't really add much to warfreak's comments except:

Overdraft looks like hair-on-fire situation if you are paying £120 a month bouncing around the limit.

Personally I would lay all this out for your dad to try to persuade him not to chuck you out until you are made perm in your job and have firmer footing.

Out of interest, how far were you into uni before you dropped out? And was it a degree that would help you professionally? I had to take two years out for reasons similar to yours and the uni went well out of their way to help me finish up.

[poorjoy]

Rent - £400pm

Where in the UK are you? Anywhere outside London, you can definitely find somewhere significantly cheaper than £400/month by sharing. Even in London, until last year I was paying £400/month for a decent room in a shared house, but that also included utilities and internet.

Currently staying near Glasgow city in one of the outskirt towns.

I didn't know you were even allowed to flatshare, a few months ago I was looking into doing this and the advice I received (incorrectly) from a family member was that only students are allowed to have flatmates under tenancy laws.

Looking today I can see that there's some nice places right in the city centre for £300 pcm including electricity/internet.

TV license (legal requirement) - £26 pm

TV license is not a legal requirement if you don't watch live TV! Sell the TV, you can even get the same entertainment watching it a day later on BBC iPlayer, Channel 4 On Demand, &c. That said, you can get even better entertainment elsewhere on the internet, or by leaving through the front door. I have never paid for a TV license.

I had a friend who contested her TV license. She didn't own a TV or computer, invited the TV license inspector into her home to prove this and they still pulled her into court for refusing to pay.
Personally, I despise the TV license on principle and even more so in practice but refusal to pay still carries a criminal charge and I need employment too much to risk standing up for my beliefs right now.

Travel ticket - £101

At this rate, one month's travel expenses buys a second-hand bike instead; this should not be a recurring cost.

At the present time it's not possible to bike to work from my home location, part of the journey is motorway only.
Right now the £101 goes to a train and bus zonecard for 4 zones but if I move into the city centre then I could replace it with a bike/walk.

There's a lot of universities with student accom near my work, I'd have to look more into the residency rules.

this will leave around £1,500 to utilize before moving out.

Firstly use this to kill the credit card balance. Then get yourself a second-hand bike and smartphone (£100 each on those is fine but you can probably do better). You'll also need some of this money for a deposit on whereever you're renting - usually one month's rent.

I see, so the credit card is the first thing to target. Yesterday, I went to my bank to discuss the overdraft situation and the advice I received seems suspect, the advisor told me not to pay down my overdraft over time but to save up the entire balance and wipe it with a lump sum, apparently every time money goes into the account and reduces the balance, a credit check is made?

I have a nice road bike in the garage from when I used to work 7 miles away, loved riding to work and back and I have a pay as you go HTC one phone currently.
This phone was a gift btw, even before MM I wouldn't pay £480 for a phone on release day but my gran very kindly bought me it as a surprise surprise for helping her out over the last few years so I can't sell the phone either

HOWEVER:
If your dad will let you stay (and after you've cared for him for months, he might be open to it), think very carefully about moving out at all! You're currently living on £300/month, simply being 26 isn't itself a reason to add on a bunch of expenses that you could avoid by just staying at home for a while longer. Show him your budgets for before and after moving, maybe you'll be able to agree on something - e.g. you'll move out once you are out of debt, once you can afford the deposit without going into debt, &c.

I'll speak to him later today and see if he can postpone his plans at least until I have secured my job and I have enough savings for security.
My dad should be ok with this, it's just that he has a GF now and she wants them to move in together. Might get a bit tricky..

Out of interest, how far were you into uni before you dropped out? And was it a degree that would help you professionally? I had to take two years out for reasons similar to yours and the uni went well out of their way to help me finish up.

I was in the final year of my degree a few months before my final exams.
The degree was in law and I don't believe that I would use it again in my current situation or like to return.

Right now, I have a lot of professional certification in computing areas that I have taken on the side over the last few years.
I have my comptia A+, security+, networking+. CCNA and plan to do CCNP next year.

My plan is to keep my current job, become financially secure enough to risk entering a career path and in a few years progress into being a system/network admin for a big company, hopefully making £30k+ on year one with it increasing substantially as I branch more into network security based qualifications.

Ironically enough Fungalist, I currently work as an advisor for the student loans company who deals with account issues

[warfreak2]

Currently staying near Glasgow city in one of the outskirt towns.

I didn't know you were even allowed to flatshare, a few months ago I was looking into doing this and the advice I received (incorrectly) from a family member was that only students are allowed to have flatmates under tenancy laws.

Looking today I can see that there's some nice places right in the city centre for £300 pcm including electricity/internet.

Great!

I had a friend who contested her TV license. She didn't own a TV or computer, invited the TV license inspector into her home to prove this and they still pulled her into court for refusing to pay.

Ugh, that's some bullshit. TV license inspectors are generally bullies, but it's all hot air because they have to actually prove you are watching live TV in order to convict you, and obviously they can't prove something that is false. Anyway, you don't need one, and under no circumstances let the inspectors into your home - they have no right to enter without a warrant, so tell them (truthfully) you don't have a TV, you don't watch live TV, and they need a warrant to enter. They will not get a warrant. I just throw the letters away.

All that said, when you're sharing, you'll probably find that your flatmates/housemates want to watch TV, so your flat/house will need a license. If the TV is in a communal area, then just agree to splitting the fee, because you'll probably end up watching it a bit anyway and it's not worth fighting over. Otherwise, explain that you don't have a TV, and don't watch TV; they should be reasonable enough to exclude you from the split.

if I move into the city centre then I could replace it with a bike/walk.
[...]
I have a nice road bike in the garage

Excellent.

I have a pay as you go HTC one phone currently.

Excellent, though if you're sharing an internet connection then a data contract will be superfluous, so just use this as little possible when it's not on wifi.

I see, so the credit card is the first thing to target.

I made the assumption that you're paying a typical interest rate on the credit card debt, and/or your monthly overdraft fee is independent of the overdraft balance (which you won't be able to eliminate immediately). In that case, you're getting a good return on paying off the credit card, but no marginal return from paying off the overdraft, although it will make it easier to avoid the £90 fees.

apparently every time money goes into the account and reduces the balance, a credit check is made?

Suspicious indeed, but in your situation, irrelevant. You are going to get out of debt soon and shouldn't need to borrow anything more until it makes sense to get a mortgage, so don't worry about your credit score now.

[Phil_Moore]

Yesterday, I went to my bank to discuss the overdraft situation and the advice I received seems suspect, the advisor told me not to pay down my overdraft over time but to save up the entire balance and wipe it with a lump sum, apparently every time money goes into the account and reduces the balance, a credit check is made?

I was in and out of overdraft for 5 years during uni and that never happened to me, so I'm not saying it's definitely bollocks, but it sounds odd.

You seem to have a solid plan, IT is not really my world so I'm very much taking your word for it though. Personally I would see what was necessary to finish up the degree just to assess options, some companies I have worked for fetishise law degrees even in job areas where it brings very little actual benefit. Especially if it took you nearly 4 years, I know sunk-cost-fallacy and blah-blah-etc. but still.

I will try not to hold it against you working for the SLC, they now owe me no money ;)

[poorjoy]

I made the assumption that you're paying a typical interest rate on the credit card debt, and/or your monthly overdraft fee is independent of the overdraft balance (which you won't be able to eliminate immediately). In that case, you're getting a good return on paying off the credit card, but no marginal return from paying off the overdraft, although it will make it easier to avoid the £90 fees.

The CC is 29% iirc
The over limit fee for the CC is a flat £12 per month and the interest is usually under £10 per month.

Looking over my bank statement, the overdraft is also charged a monthly interest but the charges are flat fees that stack more than once.
Here is my bank statement, I've edited out the personal info to reveal only the interest.



The 143 inputs are unemployment support, the 452 input on 31st march is my first wage from the new job (only 9 days).
The current balance of 1599.83 will certainly end up in another £100 to £150 of fees by next paycheck.

Unfortunately, the 452 input after the previous charges ended up at 325 able to withdraw and I had to withdraw this to pay for 2 months of trainfare + money borrowed from a relative.
From what I can see, it looks like the overdraft is crippling me and has been for 5 years. (I have had the balance at -1600 since 2009)

I'm VERY used to living without luxuries btw, I haven't had lunch or dinner at work the last 4 weeks (lost 25 pounds of weight) and I've never earned enough money to have any sort of comforts for years.
What I have earned the past few years went into education costs for my computer certs. I imagine once I get on my feet that the frugality stuff will be relatively easy to adapt to.

[Bored]

With regards to the overdraft, I beleive you only get credit checked when you ask to change your limit (in either direction). What I did to break free of my student overdraft (which I maxed out for about 5 years), was to open a new bank account with a separate bank and have my money paid into the new bank account. Then whenever I had spare cash I sent to the overdrawn account and treated it as any other debt. Living in an overdraft makes it very difficult and disheartening to budget.

Speaking of budgeting, YNAB is a great program that has turned my finances around. You do have to pay for it but it's a one off cost and they have a 30 day free trial to see if you like it before you buy

[warfreak2]

The CC is 29% iirc
The over limit fee for the CC is a flat £12 per month and the interest is usually under £10 per month.

Yep, kill the CC debt first. That £475 debt is costing you ~£250/yr just to stop it from growing, so paying it off is an investment which is recouped in under 2 years. The interest/fees on the overdraft are larger in absolute terms, but smaller in proportion to the size of the balance.

There's not a big difference because you should be able to pay both off in a matter of months, but paying off the CC is more urgent.

I'm VERY used to living without luxuries btw

I don't doubt this for a moment!

[poorjoy]

Cheers for all the advice, it's allowed me plan out the near future and feel more secure in what to expect.

I have downloaded that YNAB program and spent an hour setting it up.
It's very nice and I like the report graphs. Seeing all your costs in charts is strangely enjoyable ...when you're building up more money each month :)

There is now a decent budget in place where I'll be paying £400 per month into the CC and overdraft which should have my debts paid off in August with £1,500 to the side for moving out.
After moving out, the 400 debts expense would transfer into my future rent payment of £300 pm and I will be saving £80 of travel costs too from my £101 ticket, I still plan to visit family weekly, accounting for the £20.
Now to convince my father to let me stay until late summer instead of May as I had originally agreed to.

Net income avg is £746 after paying all the non debt expenses, gross income avg is £1083 and about 40% of gross income diverted into repaying debt.
I believe this is a good balance and frugal enough.

[boogiewoogie]

Seems you're on a sensible plan. I hope your father agrees, which I'm sure he will.

I might be inclined to stay as long as you possibly can, so that once you've cleared the debt you can work on getting some sort of emergency fund. Without wanting to intrude, is there any reason why this might not be possible?

Good luck from a fellow UKer!

[poorjoy]

My dad really wants to start fresh with his serious GF, this is the home he and my mother had all his life and she rarely comes round here as a result.
I'm also in the way too I guess, my dad plans to sell soon as we're in a housing bubble due to the silly "help to buy" crap.

[Bored]

I have downloaded that YNAB program and spent an hour setting it up.
It's very nice and I like the report graphs. Seeing all your costs in charts is strangely enjoyable ...when you're building up more money each month :)

Glad you like it! Be careful, YNAB is strangely addictive. I've lost hours trying to find ways to scrape extra cash from categories to send to debt, or re-organising category layouts and report settings. :P

Some of the set-up, such as pre-YNAB debt, itsn't very self explanatory but the website has live online classes and recordings of classes for those of us living in different timezones, which are really helpful for getting the most out of the software. The live classes have the bonus of having a chance to win a free licence for the software though.

[poorjoy]

Time for an update.

The 3 month probation review at the job went very well, a lot of the people I started with didn't make it but I spent extra time every day outside work trying to improve and it paid off.
Next Wednesday I have in interview for a promotion internally and another rival company has also asked me to apply with them for literally the same job in their company but for £3.40 an hour higher (currently at £6.70) than where I am.

It's a tough choice, I have a permanent position now where I am and although the other job is >50% the income, it's only a 6 month contract and I'm too exposed for that risk.
My dad agreed to let me stay at home until the end of this year

I haven't saved up a penny since starting work, I have been living frugally but had to pay for some dental surgery that wiped what I had saved to 0 from the first few months wages.

After a few months of research I have decided to pay down the credit card first and let the overdraft ride high so I can put money away into investments.
It appears silver is heavily suppressed and there will be an August 12th release of london price fixing so I want a kilogram asap. There is also deals about to start regarding bitcoin for Dell acceptance in payment which should bolster the position.

My years saving plan:
3 kilogrammes of silver by december. 2 bitcoins and £1,500 savings.

[tensile]

First, congrats on the steps you're taking! Taking the time to work harder than everyone else is a pretty sure route to success.

After a few months of research I have decided to pay down the credit card first and let the overdraft ride high so I can put money away into investments.
It appears silver is heavily suppressed and there will be an August 12th release of london price fixing so I want a kilogram asap. There is also deals about to start regarding bitcoin for Dell acceptance in payment which should bolster the position.

Leave the overdraft? Whhhyyyyyy?

You might be right about silver and bitcoins, but you're making an assumption that you know better than all the professionals who work in that industry. And while you might make 10% with those, there's a guaranteed return from paying off your overdraft. I don't know what rate that is exactly, but it's tangible. And there's no downside - whereas silver and bitcoin could fall by 10% or more.

At least pay it enough so you don't keep getting hit by charges for exceeding 1,600!

[poorjoy]

First, congrats on the steps you're taking! Taking the time to work harder than everyone else is a pretty sure route to success.
Leave the overdraft? Whhhyyyyyy?

You might be right about silver and bitcoins, but you're making an assumption that you know better than all the professionals who work in that industry. And while you might make 10% with those, there's a guaranteed return from paying off your overdraft. I don't know what rate that is exactly, but it's tangible. And there's no downside - whereas silver and bitcoin could fall by 10% or more.

At least pay it enough so you don't keep getting hit by charges for exceeding 1,600!

The reason for not paying down the overdraft is to remain in control until I move out to my own place.
I left university a few years ago and If I pay the overdraft down then even the small chance the bank may remove my overdraft is something that could cripple me.
It's worth the £150 extra service fees to keep the money in my control until I pay it down with a safety net already in place.

Silver is easily protected from exposure as the price is already very low and it's hard to spend, there's no real negative to buy into silver as long as it's a long term decision to cover the exit costs.
Bitcoins ....are a sore point for me. I mined a few hundred bitcoins shortly after launch and lost them after wiping a drive with a master boot record issue, I wasn't bothered back then to lose like £1 of cryptocurrency but the fact remains that this is now hundreds of thousands of pounds lost and I'm salty about it. Regardless of personal stance on bitcoins it would be silly not to have something placed in them, it doesn't have to be a big investment but just something as there is very serious moves away from unhinged capital going on at this time.

I genuinely don't think for a second I know more than finance professionals but hand on heart can guarantee I know more than what they inform the public about.
By the time something is public info, it's already old.