Welcome to Money Matters: GLAMOUR’s weekly dive into the world of finance – your finance. These uncertain times have reminded us just how much understanding our money matters and yet… how little we talk about it and how much it’s shrouded in secrecy.
This stops now.
Keen to break that money taboo, we’re chatting all things personal finance from money saving tips to ISAs and pensions. Each week, a woman in a unique situation will give us an honest breakdown of her finances, and our expert will tell her easy tips on exactly how to tackle it. So, grab a cuppa, take a seat, and let’s talk about money…
Sarah*, is a 29-year-old full-time train manager/guard living in Hertfordshire. This is her money diary…
I live alone in a house I bought with my partner in 2014, at the age of 23. At the time, I worked over 100 hours overtime every month for the three years saving for a deposit.
Unfortunately we separated and I bought him out of the house in 2019, which has been a total financial shock. Previously, I had always been really good with money and budgets and saving, but I didn’t want to lose the house I loved and that I’d spent so long saving for. So I took the plunge and remortgaged and took on all the bills and mortgage payments alone.
I’m employed full-time as a train guard – we are seen as key workers, allowing safe travel for other key workers in and out of London. A lot of doctors, nurses, care workers, cleaners and supermarket employees etc commute into the city for work. I love working in the rail industry where I would like to progress in the future. We have a good pension scheme, with an optional top-up scheme, which I am currently taking advantage of.
I am currently working my full hours, however since the pandemic I have seen a major decline in my earnings as I used to average around 40 hours overtime a month. This was used to pay my credit cards, loan and for any luxuries. There is currently no overtime so I’m ending up in a deficit monthly. Eeek.
I’m not afraid of work and like to pay my way, so having the option of overtime when I needed money was so good. So I’m finding it difficult to adjust to at the moment. I’m worried about my credit score when it comes to remortgaging as I have maxed out a lot of my credit cards (during a splurge year pre-Covid and post-break-up, assuming overtime would continue so I could pay it off – doh!). I would like to be in a place where I am debt-free again and have a little savings.
MY ACCOUNTS
Current account: £-96.28 (three weeks left until payday, oops)
Savings account: £0
MY INCOMINGS
Annual salary: £42,000 pre-tax; £29,376 post-tax
Monthly wage: £2,970 pre-tax and post-pension deduction; £2,280 post-tax
Any other incoming payments: £8,000/£10,000 in overtime per annum if average 40 hours overtime per month, but this has stopped since the pandemic
MY OUTGOINGS
Mortgage: £900
Bills: Council tax, £122; energy, £73; water, £28; internet & TV, £36.50; life insurance, £18.84; phone, £12; gym (online), £15; pet insurance for two dogs, £21.94
Other: Loan repayments, £360.26; credit cards, £850 (over seven credit cards)
Splurges: NO MORE SPENDING, WOMAN!!!
Weekly budget: I don’t have one, I’m just scrimping as much as possible
What I spent this month: £200 on food shopping, petrol and parking for work
MY DEBTS
Oh lordyyyyy, here we go!
Loan: £10,726.22 for new kitchen pre-break-up, but I ended up taking the whole thing on when buying his share of the house.
Credit card #1: £2,744.19 (0%)
Credit card #2: £3,992.16 (0%)
Credit card #3: £1,900
Credit card #4: £3,745.92 (0%)
Credit card #5: £5,778.82 (0%)
Credit card #6: £534.69
Credit card #7: £492.01
I don’t spend anything on credit cards #1, #2, #4 or #5, and I pay over the minimum to pay back as much as possible monthly. But credit cards #3, #6 and #7 are used when my overdraft has maxed out for parking, petrol and shopping now. My overdraft limit is £500.
MY MONEY THOUGHTS
What I want to save for: Firstly I want to pay all my debt back, but would like a new car (still driving my first car 12 years later), some home improvements and some holidays. I want to be organised with my finances and not have that niggling in the back of my head about the debt.
How I want to plan my money for the future: I want to start contributing more into my pension pot by upping the ‘top-up pot’ payments monthly. Eventually I would like to invest in another property if I can, that is a long way off.
My worst money habit: I used to be very good with money and really vigilant and savvy. However the break-up of my relationship caused a lot of trauma and I went a bit crazy spending, mainly redecorating to make the home my own and not ‘ours’ anymore. I chose my mental health instead of my financial health, however I feel like it might have become a habit to deal with my emotions and when I feel down. I need to separate emotions and splurging.
My biggest money worry: I’m worried my stupidity may cost me a lot more in the future when I remortgage and affect any new deals or affect my credit score for future credit applications if I really need them.
Current money mood: 🤦🏼♀️ 🤷🏼♀️ 😬
WHAT OUR EXPERT SAYS…
1. You’re not ‘stupid’ or ‘crazy’
You’ve been through a traumatic break-up that would leave the best of us in a difficult spot, so let’s ban those words from your debt-free vocab! You’re right to prioritise your mental health, but we need sustainable solutions. If you’re in a low place and that’s still contributing to your overspending, then please seek the help of a counsellor. Chat to your GP or look for ‘sliding scale’ therapists who charge based on income. That’ll be worth every penny and maybe even save you a few too.
2. Your options
OK, so when it comes to managing debt there are two paths you can go down: 1) DIY – which means coming up with a plan of action by yourself and paying your debts off entirely, or 2) debt advice. This is where you get free help from a debt charity who will set you up with a debt solution (things like Debt Management Plans and IVAs – individual voluntary arrangements). Although the ads on TV suggest otherwise, these are no magic wand solutions. They can make it tricky to borrow in the future but they are the right option for some people. Which route to take isn’t always about how much debt you have, but about how unmanageable your debt is. The big question that we’ll work through is: how confident do you feel in being able to continue to pay your basic outgoings (mortgage, monthly credit card minimums and utilities etc)? Whichever answer you arrive at, it’s worth seeking advice anyway. I’ve suggested a few brilliant free services below.
3. Curb the splurge
Whether you go down the route of debt advice or not, getting your spending in hand is key. This all comes down to the OG mantra of personal finance: spend less than you earn. As we all know, how to actually make this happen is another and more difficult thing. The first step is to pledge not to use your credit cards anymore (unless an absolute ‘oh ****’ emergency happens). Next, use an app like Yolt to deep dive into where your money is being spent, what can be cut and set up a budget across all your spending categories. Yolt has a particularly nifty feature that tells you when you’re close to your budget limit. Finally, schedule a recurring calendar invite every week to check in with your money and monitor progress.
4. The tough love bit
Getting debt free also means having painful conversations with yourself. I know this is so difficult when you’re taking on a debt-free journey alone, but imagine yourself as a supportive yet critical friend who really cares about your future self. Does still driving your first car really mean you need a new one? Maybe it’s a good idea to hold off on the big holiday this year.
5. Tackling the debt
With your spending in hand and a budget in your armoury, you should be better placed to answer that first question. If the answer is no or you’re in any doubt at all, get free help ASAP. Citizens Advice and StepChange are both great. If it’s a solid yes and the debt advisor agrees, then it’s a question of creating your own payment plan and using the tools we’ve talked about to really stick to it. For more on how to do that, this free debt planner will help. It sounds like you might have already switched some of your debt to 0% deals, but if your credit score is medium to good, this is worth considering. You’ve got this!
NOTE: there’s no debt problem that doesn’t have a solution. If you’re struggling to make payments, speak to your lender and get the help of a free debt charity.
Alice Tapper is the author and founder of Go Fund Yourself.
This column offers guidance, not financial advice. For personal investment advice, it’s always best to speak with a financial advisor. *Name has been changed.
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