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…
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I lost my job during the pandemic and was out of work for 6 months. Now I’m on £26k, but I’m broke and totally stuck. What the hell do I do?
Cassandra* is a 28-year-old dance artist in London, who’s lost most of her work in the pandemic. This is her money diary.
I have been a professional dancer for just over six years, in and out of employment with various companies, touring the world and living comfortably. I managed to purchase my first property last year after searching for approximately two years prior, it’s definitely a process!
I was on tour when Covid-19 broke out and since then it’s been an unsteady, anxious time for the theatre industry. There was no work for me for a long time – meantime I was trying to stay motivated and keep my fitness up so I am fit and ready to work when the industry opens again. We have taken an extreme hit due to the pandemic. I have felt incredibly vulnerable this entire year, trying not to rinse my ‘savings’, while also make the most of my year to learn, to create and to enjoy the move into my new home.
I have not been working half as much as I was prior to the virus. I have been fortunate to be able to get by – but I am just getting by. We/the industry are beginning to pick up again and I am hopeful for a better year financially next year.
My biggest worry is I won’t be able to get out of my help-to-buy mortgagescheme to purchase more properties. I would love to get a second property with my partner and rent out my current flat, but without paying back the 40% loan (approx £120k) it’s impossible for me. I’m stuck in this knot of never being able to profit from my property until I find over £100k or sell it. I am also very worried that I am mentally unable to save, if there’s money in my account I will find something to spend it on.
What on earth is trading, and can I do it myself? Here’s how to trade to the most of your money (without going all ‘Wolf of Wall Street’)
Current account: £1,700
Savings account: £2,500
Annual salary: I don’t know anymore. Pre-Covid, approx £30,000 pre-tax and £24,000 post-tax.
Monthly wage: Varied! Pre-Covid, approx £2,500 pre-tax and £1,850 post-tax.
Any other incoming payments: It is possible for me to get some great paying film jobs within a year, but it is also possible for me not to get any paying films.
Other: £200 (car, phone)
Splurges: £600 per month. I enjoy going out with friends and I am an advocate for being present in life and living in the moment. I also have a weakness for nice things for the house. I’ve got a lot better at splurging on fashion for myself.
Weekly budget: I don’t have a budget, but I probably easily spend £150-£200 a week and I would love some advice on this – is that a little unnecessary? As it is extremely inconvenient right now.
I have no debts.
MY MONEY THOUGHTS
My worst money habit: Buying the more expensive version because it’s designer.
My biggest money worry: Will I ever be able to save? And own multiple properties.
My financial hopes for the future: To work for pleasure, not for income.
Current money mood: ? ? ?
‘Covidflation’ has seen the cost of living soar, while our salaries remain the same – here are some hacks for keeping costs down
1. Help to buy help
The H2B scheme is confusing AF, so my main advice through all of this is to speak to a mortgage broker about your options. You’re right that you can’t rent out your home until you’ve repaid the equity loan. You’re also right that once you have, you don’t have to abide by the rules of the scheme. In an ideal world, help to buyers would save up over five years so they can they pay off their 20% (or 40% in London) loan in full. However, with house prices and living costs as they are, this is easier said than done. One option is to remortgage – essentially paying off the equity loan with a new mortgage. However, as with any mortgage, you’ll need to prove you can afford repayments, which could be difficult when your income has taken a hit. A good broker is your best bet but here’s a handy guide to paying off your help to buy mortgage.
2. Slow down
While the feeling of being trapped in a property isn’t ideal, remember: you do have time. The good news is that you’re not currently paying any interest on the equity loan – this only kicks in after five years so you have time to work out what to do. It’s also worth remembering that you’ve been through a lot! It’s totally understandable that you’d want the safety net of some rental income (and that sounds like a good idea), but there’s no need to rush. Your income is in recovery mode and for now, maybe it’s about building a safety net in the form of savings while you navigate the next steps with the house.
3. You’re the business
A handy hack I use in my own self-employed life is to think about my finances in quarters and years as opposed to months. It’s a psychological trick; the financial impact of a gig falling through or illness can be a devastating hit to your financial month but is less shocking when framed within three months or a year. Zooming out and looking at the big picture also helps you get some perspective and slow down.
4. Get tracking
I’m normally an advocate of using clever apps and technology, but if you’re self-employed, nothing beats an Excel spreadsheet. For every quarter, it’s vital that you track your income and expenses. On the topline you should have your gross income, followed by ‘minus tax’ (as a rule of thumb set aside 20-25% of everything you earn) on the next ‘minus expenses’ to produce your ‘net profit’. Taking your last three months, you can produce an ‘average net profit’ figure from which you can make a budget (still with me?!).
5. You do you(r budget)
Only you know whether £150-£200 a week is excessive. What I’d suggest is going back to your ‘average net profit’ figure and deciding how you’d like to spend it – give each pound a purpose. First comes saving (decide to set aside a % of everything you earn), then your mortgage, bills and finally, general expenditure. With a realistic weekly budget in mind and savings prioritised, building up your safety net, whatever that looks like, should be a whole lot easier. Wishing you luck!
Alice Tapper is the author and founder of Go Fund Yourself. For more money guidance and tips, follow her @gofundyourself.
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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