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In 2006, a lady came to see me with a common problem. She had a pretty good job and a regular income, and had been in that position for as long as she could remember. However, she had nothing to show for it apart from a few credit card debts, a personal loan and a well-used overdraft facility. It was all very depressing. Month in, month out, she was spending everything she earned – and more. Could she carry on like this? Here was good, heard-earned money going in fast and coming out faster. In summary, she had made no progress since her days as a broke student.

Living in rented accommodation, her biggest concern was that if the pattern continued, she would never be able to get on to the property ladder. I reassured her that her circumstances were not unique. A survey conducted by found that four in ten people living in rented accommodation could not save anywhere near enough for a deposit on their own home as high rents, especially in the Capital, made saving near enough impossible. The remaining six in ten tended to raise deposits through inheritances and gifts from wealthy parents. As much as I’d have loved to have waved a magic wand for her, it was clear that without wealthy parents in the background, she was potentially doomed to being one of the many young people out there who could only dream of owning property.

Regardless, I asked her in to see me and we started by completing a budget planner. We discovered that her net income (after tax) was just under £2,000 per month. Out of that, £700 went on rent, £350 on paying back loans and credit cards, and a further £400 or so on food and living expenses. Not much could be done about that. So we drilled a little further and realised that she had three mobile phones, spending on average £200 per month, spent £150 per month on hair, make-up and nails, regularly went on clothes shopping binges, gave her bum of a boyfriend money whenever he asked for it, had gym membership of £50 per month that she never used and, worst of all, had a car parked outside her flat that only her boyfriend used – meaning she had to pay for car insurance, road tax, MOT, fuel and the like. I found myself smiling. There was hope.

I discovered that the reason she had three phones was that one was paid for and provided by work and the other two were personal – one of which was used by her boyfriend but paid for by her. She rarely used the work phone, even though one of the perks of the job was that they would pay for her personal calls. It was time to be ruthless and she decided to scrap her other two phones and use her work phone solely. Bingo! £200 per month saved, without even trying.

I suggested that a more natural scrubbed look may be appropriate and managed to convince her to spend £50 less per month on hair, make-up and nails. She broke up with her boyfriend shortly after our meeting – perhaps he couldn’t deal with her new scrubbed look or the lack of a phone – the gym membership was cancelled, saving £50, and the car was sold, saving about £100. The proceeds were used to clear a large chunk of debt, reducing her monthly repayments by £200, and hey presto! We now have a £600 per month improvement and a small amount of debt which could be cleared within a few months.

After she repaid her debts, she came to see me again – now £750 better off – and we agreed that she would put £600 of that £750 into a suitable regular monthly savings vehicle and stick to her plan for as long as possible. Things went from strength to strength, with a couple of pay rises along the way. Best of all, she kept her side of the bargain, stuck with her savings plan and now, in 2012, has a whopping £40,000 to play with.

A few small tweaks and the right attitude can make all the difference – and helping her out and seeing her progress was very gratifying. I do, however, think I may be on her ex-boyfriend’s hit list!


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