Financial advice for a 25 year old woman

[SweetButterfly90]

I am trying desperately to get out of debt. I've just turned 25, my yearly income is £16190. My monthly take home pay varies between £1200-£1500 a month, but usually towards the lower scale.

To date I have £300 in savings - yes, I know, I know - you don't have to tell me,

My debts are: £400 student credit card, £479 student credit card, £205 mobile phone default, £2000 student overdraft.

I am currently trying to save £800-900 a month to meet my savings goals by the end of August 2015. I want to pay off my student credit cards and mobile default by the end of March 2015, then pay off my student overdraft by August 2015 at the very latest.

To be honest, I am a young woman, my parents didn't teach me about savings/becoming financially savvy - I literally had to learn out of desperation.

My credit rating is bad - I have an unpaid payday loan of about £700 that hasn't showed up on my credit rating yet, and I owe my brother £100. Please don't bee too harsh on me, I am sure you are all millionaires earning my yearly income in interest alone.

My outgoings are:
Rent £200 a month (living in a shared house)
Bus pass: £50 a month
Food and toiletries: £25 a week
Bills: £90
Leisure £100.

Any advice would be appreciated?? I am trying to save £4000 by August to move into a one bedroom flat (renting) and save £10,000 by the end of the year. The debt has given me headaches and kept me awake for years now, considering I took out my first student credit card in 2009 and defaulted four months later.

I just feel so depressed, now all the clothes and shoes I bought, and the trips to the hair salon don't seem worth it.I am also desperate too start driving lessons and buy a car - taking the bus is so stressful. I feel so financially vulnerable... like the only way out of this is to date or marry someone wealthy.

[bjl584]

A good start would be to find a better paying job. Or, pick up a part time job to supplement your income.

Next, you need a budget. Find out where the money is going each month.

[disneysteve]

My monthly take home pay varies between £1200-£1500 a month, but usually towards the lower scale.

My outgoings are:
Rent £200 a month (living in a shared house)
Bus pass: £50 a month
Food and toiletries: £25 a week
Bills: £90
Leisure £100.

Welcome. We need better information to help you. You are earning at least £1,200/month but only listed expenses of £465. That leaves £735/month unaccounted for. You need to figure out where all of that money is disappearing. If it wasn't disappearing, you wouldn't have any trouble at all repaying your debts. You have total debt of £3,884 which could be gone in just over 5 months with that unaccounted for excess income.

Start tracking your spending. Use a smartphone app or old-fashioned paper and pencil to write down every single penny you spend for the next 30 days so that you can really see where your money goes. Only then can you start addressing your spending issues and start devoting more of your income to debt repayment and later to savings.

For now, I'd forget about moving (unless it will be cheaper than what you pay now) and definitely forget about getting a car until you rein in your spending and pay off the debts.

[SweetButterfly90]

Welcome. We need better information to help you. You are earning at least £1,200/month but only listed expenses of £465. That leaves £735/month unaccounted for. You need to figure out where all of that money is disappearing. If it wasn't disappearing, you wouldn't have any trouble at all repaying your debts. You have total debt of £3,884 which could be gone in just over 5 months with that unaccounted for excess income.

Start tracking your spending. Use a smartphone app or old-fashioned paper and pencil to write down every single penny you spend for the next 30 days so that you can really see where your money goes. Only then can you start addressing your spending issues and start devoting more of your income to debt repayment and later to savings.

For now, I'd forget about moving (unless it will be cheaper than what you pay now) and definitely forget about getting a car until you rein in your spending and pay off the debts.

/////
Hi, thanks for replying. The rest of the money is spent on non-essentials, coffee at work, new clothes, trips to the hair salon, trips to London or Liverpool, trips to the cinema. I could definitely save more with more self-discipline and willpower. I have been tracking my spending and have cut down on alot. I could save £800 this month... but I know I will end up spending the money. I am desperate to get out of debt, I know it's not a lot of money in the grand scheme of things, but it is a big deal to me as I feel so guilty about spending money. I haven't been on holiday since 2008, as I feel I don't deserve one until I have paid the debts..... so depressing.

Also, there is nowhere in the country that is cheaper, in terms of rent, than where I am living now. The new place would be at least £600, plus £600 deposit and at least £300 for bills. I am desperate to move out though, as housemates are so annoying. Like I said, it seems like the only way out is to date and marry someone wealthy. I am very pretty, so it is an option, but a risky one as I'd have to depend on some guy financially...

[disneysteve]

The rest of the money is spent on non-essentials

Bingo! There's your solution right there. You don't need to find a rich guy. You just need to stop blowing money on stuff you don't need. You've already got £100/month listed for "Leisure". Maybe up that a bit to £150 and all of the rest goes straight to debt repayment. Pay the minimum payment on everything and put all of the extra on the debt with the highest interest rate. When that one is gone, throw all of the extra to the one with the next highest rate, and so on. Like I said, in 5-6 months, you will be debt-free and in a far better situation to move, start saving for a car, etc.

ETA: If you can, set up automatic payments to the creditors so that the money goes to them before you have a chance to spend it.

[SweetButterfly90]

Bingo! There's your solution right there. You don't need to find a rich guy. You just need to stop blowing money on stuff you don't need. You've already got £100/month listed for "Leisure". Maybe up that a bit to £150 and all of the rest goes straight to debt repayment. Pay the minimum payment on everything and put all of the extra on the debt with the highest interest rate. When that one is gone, throw all of the extra to the one with the next highest rate, and so on. Like I said, in 5-6 months, you will be debt-free and in a far better situation to move, start saving for a car, etc.

ETA: If you can, set up automatic payments to the creditors so that the money goes to them before you have a chance to spend it.

I don't have any interest to pay as the debts have already defaulted and the credit cards have been closed down. So I was hoping to save up the full amount over the next few months, and just pay off all the debts on the same day. It's just that if I pay off the debts, it means I will have no savings, no emergency money...

Eughh, I hate finance and money. I definitely need to date a rich guy, because I can't see a way out of this debt. It's just hanging over my life and making me so unhappy.

[disneysteve]

I don't have any interest to pay as the debts have already defaulted and the credit cards have been closed down. So I was hoping to save up the full amount over the next few months, and just pay off all the debts on the same day. It's just that if I pay off the debts, it means I will have no savings, no emergency money...

I think this is a really bad plan given what you've posted. If you have difficulty saving, aiming to save a large amount is going to be very difficult and overwhelming. It makes a lot more sense to do it incrementally.

If none of these debts are accruing interest (which sounds really strange to me because that isn't how it works in the US), I would alter my advice.

This month, you have about £700 to work with. Pay off the smallest debt first. That would be the $100 you owe your brother. Then pay off the next smallest which would be the £205 to the mobile phone. And maybe stop there for the month. Put the rest of the excess into your emergency savings to boost that up to about £700. Next month, you'll have another £700 to work with. Use that to pay off the £400 credit card and put the other £300 in your emergency fund taking it to £1,000. I can almost guarantee that at that point, you will be feeling less stressed and depressed about your situation. You will have fewer debts and a larger emergency fund and be well on your way to being debt free. If it takes you 8 months instead of 6, that's not really a big deal in the grand scheme of things.

This situation is NOT bad. Your income is more than enough to knock this out by the fall if not sooner. You just need to start and once you start, you will see how much better it makes you feel to be in control of your money.

[Bal.Leona]

Forget about the rich guy. It's a pipe dream and just a way for you to prevent taking responsibility for your own actions.

Your "essentials" are only slightly more than 1/3 of your income. You can absolutely do this yourself.

1) Set aside a "mini" emergency fund (usually recommended is $1000, not sure what that is in GBP). This is only to be touched in case of EMERGENCY!! A trip to the hair salon doesn't constitute an emergency. A trip to the emergency room does.
2) Start with the smallest debt and when you pay that off, move to the next. Keep paying the same total amount to your debts until they're gone, and pay minimums on accounts you aren't focusing on.
3) BUDGET. Track where your money goes. $800 to "miscellaneous" is not budgeting.
4) Dont accrue any more debt. Forget about a car right now. Get your feet under you.
5) The part we CAN'T help with is your mindset. You can't let money burn a hole in your pocket. Get an emergency fund at a different bank so you can access it if need be, but it's not just sitting there reminding you it's there. Set up a recurring automatic deposit into it and forget about it even existing as part of your available funds. Want to go on trips? Nothing wrong with that IF you budget reasonably for it. It's a great peace of mind to go "I can spend this money because I have already budgeted for it." and to be debt free.

We can offer advice and educational resources, but you're going to have to take responsibility for yourself and change your mindset/actions if you're going to get out of your hole.

[doingitallwrong]

There's quite a significant disconnect between what you say and not only what you do, but even what else you say.

I could save £800 this month

I am desperate to get out of debt

I know I will end up spending the money.

This will be a bit harsh, but I think it's what you need to hear. I am far from a millionaire and have had 30x more debt than you; I am not criticizing you, but you do need to face reality.

You are lying to yourself (and to us) when you say you're desperate to get out of debt. If you were truly desperate, you wouldn't end up spending the money. You would have made the decision to buckle down, exercise some self-discipline, and get yourself out of debt. You have, instead, chosen to throw away $800 a month, default on your obligations, and then whine about how much debt you have.

Your parents never taught you about money? Fair enough. Mine didn't either, really, and it's not something that was taught in school. I had to teach myself, and you will have to do the same. These forums are a great place to start. There are several threads on the best books to read as well, and I encourage you to pick up a few of the top recommendations.

Disneysteve's suggestion to have the debts paid automatically is a good one, but it doesn't address the underlying problem. It may get those debts paid off sooner, but once they're gone and that money is coming into your bank account, you'll just start throwing it away again. You need to change your behavior and your attitude about money if you ever truly want to live a debt-free life. (And I say this from a been-there, done-that point of view.)

You do not have to sacrifice everything that makes life enjoyable. You'll pay off your debt faster if you do, certainly, but for most people that's not a sustainable way of life, and you'll likely end up 'bingeing' on spending if you try to restrict yourself too much. As noted, you've already got $100 monthly allocated to leisure, if you increase that a bit you should have plenty to allow you to have some fun without completely overdoing it. Bring coffee from home, instead of buying it at work. You probably have enough clothes and shoes to fill three wardrobes -- you don't need more. (In fact, you could go through and pull out items you aren't likely to wear again and take them to a consignment shop. Dedicate any money you make to paying off your debt.) I'm guessing you have your hair done every six weeks -- stretch it to every eight. There are tons of ways you could save money, but you have to make the decision to do so.

I also think your goals are a little scattered. You want to pay off your debts, save to move out, build up your savings account, and buy a car. They're all good goals to have, but trying to achieve them all at once can be overwhelming. Make a long-range plan, but focus on one thing at a time. $800 a month for the 10 months left in 2015 is $8,000. It's not enough to do everything you want to do, but it will get you out of debt and let you build up an emergency fund so that if something happens, you won't necessarily need to go back into debt to deal with it. (This is another area of self-discipline -- your emergency fund is for *emergencies* -- not trips to the hair salon. Put it in an online bank so that you don't have instant access to it (transfers take 2-3 business days, generally).) Then you can focus on your $10,000 savings account, then a car (do not buy a car until you can pay cash for it), and then moving into your own flat. (Your expenses will increase significantly once you move -- the rent itself triples -- so it will be much harder to save any money afterward.)

As an alternative (or better yet, in addition), as was suggested, pick up a part-time job. Not only will you have extra income to pay off your debt, but you'll have less time to be tempted to spend money on frivolities and less time at home to be annoyed by your housemates.

The bottom line, however, is that you need to dig deep and find every ounce of self-discipline you have, and make a determined effort to stop spending and start paying your debts. Get mad about it! If you're a visual person, make a vision board and put it where you'll see it every morning, to keep yourself motivated. (Depending on what works for you, it might be a goals-oriented board showing things like $0 debt, a full piggy bank, a car, a house, etc., or a progress board with every debt listed and broken down into $100 increments that you can cross off when you pay $100 on that debt. Or, show what that debt is costing you -- write down the $400 credit card and put two trips to the salon next to it.)

I know this is very long and probably not entirely what you wanted to hear, but I so wish I'd had someone to sit me down and tell me all of this 20 years ago when I only had a few thousand dollars of debt. My financial life would no doubt be very, very different -- in a very, very good way -- than it is today!

[doingitallwrong]

I meant to add, please give up on the idea of dating or marrying a rich guy. First of all, no rich guy wants to date someone who's only after his money. Secondly, dating a guy for money kind of makes you a prostitute. Thirdly, you need to become an independent person in your own right, and that means dealing with your own issues. Finally, if you do marry a rich guy, all you'll do is end up spending his money and getting him into debt, until he gets tired of it and kicks you to the curb. Don't count on any big divorce settlements, since most of it will go to pay off the debt you've run up. There's a book called "Tales of a Drama Queen" by Lee Nichols that, while it's really just a chick-lit fun read, has some quite astute observations about women who rely on men for money and shopping for happiness. You might consider picking it up and see if anything resonates for you.

[SweetButterfly90]

I think this is a really bad plan given what you've posted. If you have difficulty saving, aiming to save a large amount is going to be very difficult and overwhelming. It makes a lot more sense to do it incrementally.

If none of these debts are accruing interest (which sounds really strange to me because that isn't how it works in the US), I would alter my advice.

This month, you have about £700 to work with. Pay off the smallest debt first. That would be the $100 you owe your brother. Then pay off the next smallest which would be the £205 to the mobile phone. And maybe stop there for the month. Put the rest of the excess into your emergency savings to boost that up to about £700. Next month, you'll have another £700 to work with. Use that to pay off the £400 credit card and put the other £300 in your emergency fund taking it to £1,000. I can almost guarantee that at that point, you will be feeling less stressed and depressed about your situation. You will have fewer debts and a larger emergency fund and be well on your way to being debt free. If it takes you 8 months instead of 6, that's not really a big deal in the grand scheme of things.

This situation is NOT bad. Your income is more than enough to knock this out by the fall if not sooner. You just need to start and once you start, you will see how much better it makes you feel to be in control of your money.

Okay, this sounds like a plan. As soon as I am paid on Thursday 26th February:
1. Pay my brother the £100
2. Pay off £205 phone contract.
3. Put the rest into savings after paying rent, bills, bus pass and leisure costs.

Next month (March)
1. Pay off £400 credit card
2. Put the rest into savings after paying rent, bills, bus pass and leisure costs

Next month (April)
1. Pay of £479 credit card (now all credit cards are paid off)
2. Put the rest into savings

Next month (May)
1. Focus on paying £2000 overdraft...

[SweetButterfly90]

Forget about the rich guy. It's a pipe dream and just a way for you to prevent taking responsibility for your own actions.

Your "essentials" are only slightly more than 1/3 of your income. You can absolutely do this yourself.

1) Set aside a "mini" emergency fund (usually recommended is $1000, not sure what that is in GBP). This is only to be touched in case of EMERGENCY!! A trip to the hair salon doesn't constitute an emergency. A trip to the emergency room does.
2) Start with the smallest debt and when you pay that off, move to the next. Keep paying the same total amount to your debts until they're gone, and pay minimums on accounts you aren't focusing on.
3) BUDGET. Track where your money goes. $800 to "miscellaneous" is not budgeting.
4) Dont accrue any more debt. Forget about a car right now. Get your feet under you.
5) The part we CAN'T help with is your mindset. You can't let money burn a hole in your pocket. Get an emergency fund at a different bank so you can access it if need be, but it's not just sitting there reminding you it's there. Set up a recurring automatic deposit into it and forget about it even existing as part of your available funds. Want to go on trips? Nothing wrong with that IF you budget reasonably for it. It's a great peace of mind to go "I can spend this money because I have already budgeted for it." and to be debt free.

We can offer advice and educational resources, but you're going to have to take responsibility for yourself and change your mindset/actions if you're going to get out of your hole.

I know, I know. I do want to save up £1000 before I pay off my debts, just so that I feel safe and secure. This month I have saved £300 which is the most I have saved - ever, like, in my life. Usually I have £15 left, once I had nothing left and had to literally eat nothing for two weeks. I know, I know, I need to track my money. I am definitely doing it this month. I am definitely saving £700 this month and hopefully paying off my debts asap.

I know I can do this myself, but sometimes I do just want a rich guy to come and save me. Or just take me into his world even if it's just for a weekend...

[SweetButterfly90]

I meant to add, please give up on the idea of dating or marrying a rich guy. First of all, no rich guy wants to date someone who's only after his money. Secondly, dating a guy for money kind of makes you a prostitute. Thirdly, you need to become an independent person in your own right, and that means dealing with your own issues. Finally, if you do marry a rich guy, all you'll do is end up spending his money and getting him into debt, until he gets tired of it and kicks you to the curb. Don't count on any big divorce settlements, since most of it will go to pay off the debt you've run up. There's a book called "Tales of a Drama Queen" by Lee Nichols that, while it's really just a chick-lit fun read, has some quite astute observations about women who rely on men for money and shopping for happiness. You might consider picking it up and see if anything resonates for you.

I haven't given up on dating a rich guy. Like I said, I am really pretty, at least a 9/10. I'm just holding out for a guy with money, rather than dating every guy who compliments me. I am independent, I have been for at least two years now. I don't want to divorce, let alone have a divorce settlement - and I won't spend any of his money as I'll most likely have an allowance. I had an allowance growing up until my parents stopped giving me money, and until I stopped speaking to them because of this.

Also, it's pretty common for women to marry richer men - it's basic survival. I wouldn't ask for much, as anything is definitely better than struggling to pay debts at 25. I'm not a drama queen, and I only find rich guys attractive. But I am also really smart and trying to be more financially savvy. I've read some of Rich Dad Poor Dad, and I understand how investments work after reading Warren Buffet The Intelligent Investor. I just also have a problem with spending money, because I need things to feel pretty. Like a Chanel bag, and monthly trips to the hair salon. I did used to go weekly, but for obvious reasons I've had to cut down.

[rennigade]

I haven't given up on dating a rich guy. Like I said, I am really pretty, at least a 9/10. I'm just holding out for a guy with money, rather than dating every guy who compliments me. I am independent, I have been for at least two years now. I don't want to divorce, let alone have a divorce settlement - and I won't spend any of his money as I'll most likely have an allowance. I had an allowance growing up until my parents stopped giving me money, and until I stopped speaking to them because of this.

Also, it's pretty common for women to marry richer men - it's basic survival. I wouldn't ask for much, as anything is definitely better than struggling to pay debts at 25. I'm not a drama queen, and I only find rich guys attractive. But I am also really smart and trying to be more financially savvy. I've read some of Rich Dad Poor Dad, and I understand how investments work after reading Warren Buffet The Intelligent Investor. I just also have a problem with spending money, because I need things to feel pretty. Like a Chanel bag, and monthly trips to the hair salon. I did used to go weekly, but for obvious reasons I've had to cut down.

Trying to date a rich guy is fine. If you're really pretty then you already have one foot in the door. Unfortunately you're not alone in this game. A lot of nice looking girls have this mindset so you will have competition. With that being said...its good to have a backup plan in case you fail to meet someone with deep pockets. Like others said, pay off your debts, cut back a little and go from there.

[disneysteve]

I only find rich guys attractive

How interesting. How exactly do you go about determining if a guy is rich before deciding whether or not you find him attractive? Do you go up to him and ask for his financial statements? Or do you judge wealth based on outward appearances like clothing, jewelry, the car he drives, or where he lives?

What you are actually saying is you aren't attracted to him but to his money. What an incredibly sad statement. Good luck with that.