Mid 20's Financial Advice

pauloz

Hi All,

Just want some advice on attacking and straightening out my financial situation in 2016.

My Situation
I'm 26, In full time employment and studying part time, living with parents.

Earnings
25k per year plus bonus.
-1,800 per month after tax.
-1,800 bonus once per year.
-1,600 education assistance from employer per year.

Debts
-310 per month on a 13k loan(this is the balance) with AIB until 2020
-250 per month on a 6,600 loan (this is the balance) with Credit Union until 2018
-50 per month min payment on a 2,000 (this is the balance) Credit Card

Other Regular Outgoings
-315 per month on cigarettes!! (I have just quit so this should free up this amount)

Savings
-2,000k savings with Credit Union (50 monthly)
-3,500k savings with AIB (not saving at the moment)

I need some advice on freeing some of my monthly income up. I would like to get rid of one of the debts in 2016, but Im also concerned about saving, as I know I will want a mortgage in the future and want to make sure I can provide evidence of saving and also possibly have a deposit. As mentioned above I have quit smoking so that should free up 315 a month and I want to put it to good use.

As you can see after all outgoings I am left with 1,125 for things like car costs, fuel, tax, insurance etc.

Just trying to figure out a way to have more disposable income, reduce debt and save, i spend alot on eating out, junk food, coffee etc that can amount to possibly 300 per month (I know I need to cut this out).

Any advice much appreciated as I tend to do this every year but get nowhere, but this year I have actually quit smoking!

Thanks

manonboard

Do you keep a spread sheet with exact amounts for every single expenditure?

The reason i am big believer in this is, you don't even have to try give up stuff to save money by doing it.
Simply writing the exact amount down, knowing you are going to have to write that amount in later, and being constantly aware of your money expenses really helps curb bad habits quite quickly.

You constantly see that damn total for "coffee" growing as the days go by and it becomes a self fixing problem.
Its also surprising what categories we spend in that we dont think we do.

I was amazed at how much it turns i spent on food cause i was too lazy to cook. I assumed a little over spend.. It turned out to be about 400 month savings. huge.

Wish you the best OP.

pauloz

Thanks manonboard, part of the problem is yes that I don't know exactly what I'm spending, so I just assume its the loans etc. Thanks

Alkers

Keep maybe two months wages in your savings in case of emergencies, use any extra savings to pay off the loan with the higher interest. And use a good portion of the money saved on cigs and other lifestyle changes to repay that loan asap, once it's gone, you'll have the second loan paid off in no time. Then start saving properly!

topper_harley2

Pay every cent you have to clear the loans. Paying E50 per month is too low on E2k loan as interest alone will be more than that surely. Don't just pay minimum or you'll never clear them.
Pay loans off ASAP using all of your existing savings. Then try to pay off at least 500 per month from various loans from income, especially if you have extra 300 from cigarettes.
Clearing loans aggressively is where you should start. Spending diary is good idea to eek out more day to day cash for this purpose.

rantie

Get rid of the Credit Card debt ASAP. If you are not using it and paying it off within the month EVERY TIME, get rid of the card. Full stop.
Download a cheap and simple budgeting app (I have been using Ace Money for over seven years).
Religiously enter your income and expenditure (including the loose change) every week (or more often if you can) I do it every day; it takes 3 minutes.
Save €30 per week (YES you CAN) in the CU.
After a while, possibly two months, it will become horrifyingly clear that you are wasting too much of your hard earned cash.
When calculating income, round down to the nearest €5; when calculating expenditure, round up to the nearest €5.
Buy the best you can afford, never put up with the next best.
Revise the plan every month and try to increase the savings by even €1 per week.
It works.
Good luck

lcwill

I found it really useful to look up the CSO statistics on household income and expenditure to put my own situation in context.

In Irish households with average earnings the weekly disposable income per person (I.e. after housing costs, taxes) is about E250 (food, cars, beer, bills, phone etc)

You should only be spending more than this if you are on above average income.

If you feel your income is average or lower you should aim to spend E250 or less per week.

Think that sounds hard? Well its the reality for most households in Ireland and if they can do it then so can you.

This means you would have at least 800e per month to pay off debts (top priority) or save (second priority - with as much as possible going to a pension).

Keep your 1800 bonus for fun and use the education assistance to get more qualifications and boost your income.

Living at home is a golden opportunity to set yourself up for life. Make the most of it and realise that so far you have been spending way more than average so it should be easy to make big reductions.

riggsfitz

Pay off the credit card with the money saved from the cigs 315+50=365 will have the card cleared in 6 months or there abouts (credit cards usually the ones that occur the most interest).

You could then tackle the 13k one which would be reduced to 11.8k (after the 6 months of regular 310 payment). If you can add say 290 to the 310 (600) you,'ll clear that in 20 months.

If you keep the normal payments up on the 6k one. Then in 26 months time you'll be free from all three debts.

Hard going but debt free in two years could also give you the motivation to give up and stay off the cigs.

Other thing to be careful of is if there is a penalty for early payment of the loans.

Cute Hoor

1. Pay off the Credit Card balance
2. Borrow from the Credit Union if you need money to pay the Credit Card balance
3. Never again run up a Credit Card balance
4. If you have a problem with 3, get a scissors and cut your Credit Card neatly into multiple squares.

phantom_lord

Having a balance on a credit card is insane, never-mind when you have savings. Right now you're probably earning a fraction of a percent on your savings, and paying 20% APR on your credit card. Pay off that now, and use some of your savings to pay off whatever has the higher interest rate.