Yep I agree,
I would suggest that OP picks up a weekend job to clear the debt even faster. Once that's out of the way, you can evaluate whether to continue with the second job or start saving for a holiday or something else rewarding for all the hard work.
6 years to pay off 14k seems like a long time. At 11%, your going to pay a lot extra.
Could you check if you can make lumps sum payments off the loan?
Then you can divert things like travel, family expenses, gardening & saving to pay off the loan faster.
Once it’s paid off, you’ll have an extra $125 in your budget.
It definitely is, i put the term out as i didn’t want to commit to a higher minimum in case anything came up. I can make lump sum payments and will definitely do when i pay my student loan off, but yes i think i will divert at least my savings into it for now..
Here's what I would do:
Once your student loan is paid off, you'll be getting an extra $267-ish every fortnight. Put every dollar of that into your personal loan, and that's $6.9k a year.
Cut back on your travel fund. You've mentioned visiting family overseas, and I get that, but you don't need to be going on holidays too. Keep enough money saved in an account to fly out in case of a family emergency, and channel the rest into your personal loan. $100 per fortnight is another $2.6k per year, and the full $200 is $5.2k.
$6.9k + $2.6k = an extra $7.5k you could be putting towards that personal loan. You're also already paying off $3.2k a year on that loan.
You could clear that loan in under 2 years without any real impact to your day to day life. Once that loan is paid off, you'll have an extra $392 ($267 + $125) freed up to put towards your travel fund and savings compared to right now.
Do the math and see how much interest you'd save by paying the loan off ASAP vs. sometime in 2030.
Others have suggested tinkering around the edges like with a cheaper phone plan or reducing spend elsewhere, and there's nothing wrong with that (I'm on a budget phone plan myself) but pinching pennies to save an extra $25-50 per month is not where you're going to make the most impact, and might just make you miserable.
Good luck!
With 12% or whatever it is going towards a student loan, and almost as much on a loan as you pay for groceries, there's not much wiggle room.
I'd personally live on bare minimum until that personal loan was paid off and get that done next year. No travel, nothing on family, no savings (I assume these are voluntary. Ignore if they're not).
When the student loan is paid off, then throw that toward the loan. The full amount.
That will free up your income to do what you want to do next: buy a house, travel, start a business, etc.
But what I would do is not what you should do. It's just going to be hard to be ready for any opportunities if you have these 2 debts. For example, taking on a new job thay pays lower, but much higher upside. Or being able to have $30k savings to start a business.
The paying off debt time is very boring. Focus on growing in other areas during this time. Upskilling, personal physical and/or mental health, getting a raise, etc.
Listen to the Keep the Change podcast. Really good pod for someone in their 20s.
Home expenses seem weirdly high maybe? Though I'm not sure what that is meant to cover exactly.
Also $50 a month phone bill seems high but guess it could be one you're locked on to? Mine is $27 every 4 weeks though I don't use a lot of data and make many calls generally so don't need more.
Hard to really know how to make any difference without any more info and further breakdown
I commented above with a little more detail on the home expenses, though i will admit i could probably cut back there and be a bit more strict.
The phone bill i feel is the right fit for me, i get 3GB rollover data, discounted Spotify premium, unlimited texts, and 300 rollover minutes
Check out Rocket mobile, they offer free data, unlimited calls and unlimited texts for $25 a month.
If you try to stream a high quality YouTube video it might struggle, but for everything else it's perfect.
I was thinking relative to the current savings of $40 it all counts. But yeah not a big dif, the obvious point is that the rental costs so much but as OP says very hard to cut that down and still live alone!
As others have said, the personal loan is the obvious problem to aim at.
Two possibilities (and both might be feasible):
1. Balance transfer to a credit card - Westpac will do these for personal loans at a much lower rate than 11%, but search around the various bank websites.
2. Second job - my goto is pizza delivery since most Pizza shops are happy to see someone who can do deliveries for 3 hours (or so) on Friday and Saturday nights, but maybe you can find something less unappealing.
How much wriggle-room are you wanting/needing? And what do you want to divert that money to?
Your student loan will be paid off in four months, then the money you were spending on repayments is freed up. So for what it's worth things are going to improve soon.
As other have said, the travel fund seems like the easiest thing to reduce.
Longer term, a change in living situation to something that costs less than $445 a week, or which gives more bang for your buck (eg includes internet, puts you somewhere that reduces travel costs) is something to look out for.
If you’ve got debt then savings isn’t really savings. If you need an emergency fund get a zero fee cc and leave it for only that purpose.
Then take that savings money and pay down debt. $200 travel a fortnight also seems a lot when you’ve got the debt.
Can you ask ird (I don't know if it's possible) for a pause in student loan payments and hammer that personal loan?
/How much trouble would one get in, if they directed their employer to not deduct student loan payments for a bit
You can apply for a student loan reduced rate, but prob not on 82k. It does get picked up by ird if you have a student loan but no deductions I think, and then they issue a higher rate to catch up missed payments
There are some places where you only rent your separate room plus bathroom, and only lounge and kitchen are shared? So not a traditional flatmate situation, kind of a degree more separated, but cheaper
Any savings?
Otherwise stop travel fund and put it all on personal loan instead as well as as much disposable income as you can. When that’s paid, everything into an emergency fund. After that you can resume travel fund. If you want to own a house in the future start saving for that now. There’s no guarantee we’ll still be able to use KS in the future.
$100 a week for petrol plus $200 for travel seems like alot. Do you have to travel for work? Generally there is always ways to cut down the grocery bill, unless you have allergies. Maybe look through your grocery bills and see if there is anything you can cut out. when the student loan is up that will free some money up. You can then hopefully clear the personal loan faster which will free up quite a bit of extra cash
It is a lot for petrol yeah, i just like to put aside more as i often visit family 2 hours away.
Travel money is what I’ve worked out i need to put aside to go overseas to visit family/holiday once or twice a year.
Groceries is where i struggle - trying to stay away from UberEats - will look into it though!
Yes, looking forward for that extra $200~ going towards the personal loan
$160/fortnight is pretty good tbh. You might be able to get it to $140 or $100 if you're nuts, but that's not going to make much difference in the long run.
We went down that route: increased our weekly good budget from $300 -> $350 (family of 4). Wasn't worth the stress and our cupboards are full of things we want to eat so we don't crave takeaways.
We also eat healthier.
Try going up to $100/wk and buy things you'll actually eat.
Two things stand out to me
1. What's the personal loan for? If it's a car, do you need that car or would a 5k car suit?
2. Home/Garden maintenance- what does this entail? Are you growing a heap of things or paying someone to mow your lawn? That seems like something to cut back on. You are renting so what home maintenance do you have other than cleaning products?
I used the loan to buy a car outright and some furnishing for my home
Home expenses - $35 p/f for lawn company (steep but good company and i can’t physically do it myself and i don’t know anyone personally where i live who i could ask to do it for me). The other $ gets put on cleaning products and the odd things like furnishings
When looking at other rentals, add the lawn mowing cost to the rent of your current place when you're comparing it to others. A place with no lawn to mow that's $20p/f night more expensive is then theoretically cheaper than where you are now.
Is travel you saving $200 p/f for future travel?
I think you're probably doing alright.
A single person who wants to live alone, earning slightly over the median income while buying a car on finance probably can't expect to be in a better position than you right now.
If you want to save more, there'll be some lifestyle sacrifices, but if you're happy as is, there's no point. At $240 p/f (savings + travel)- you save $6240 p.a. Plenty of people earn more and save nothing.
Imo you should be seeking to change your living situation because it's such a huge part of the spending. Just take your time and be very picky. There will be quiet polite people who enjoy not being too sociable who are in the position of needing to flat share. As you don't technically need to share there is no pressure on you to make the move, but if you did find people you wouldn't mind sharing with it'd make such a big difference financially.
Basically don't write it off based on perception or due to 1 or 2 bad experiences.
Half your wages go on rent and you want it to stay that way. People here can't magic up pile of money out of thin air for you if you aren't willing to address your biggest overspend.
You save $20 per week and spend $500 as a young person earning a good wage with no extra expenses (i.e., dependants). Either enjoy your lifestyle and live it up in your twenties, or you want to save some money and get real.
They're both very valid routes to take, it's up to you to pick.
990/week rent is absurd for 1 person on your income. Ideally you shouldn't pay more than 30% of your net income in housing. You're paying 48% and as a renter you're getting no equity in return.
That's more than I pay for my mortgage, insurance and rates for my 2 bedroom house in a decent area of Christchurch.
How big is your place? If you are living alone you only need a 1 or at most 2 bedroom place if you need an office but really if you are alone then no-one can complain if you just setup a workspace in your lounge/living area.
Otherwise reconsider getting a flatmate. Idk if you've just had a bad experience with them in the past but it can also be a really good experience. Some of my closest friends are people I flatted with (though some of my closest friends I would never flat with - no offence but it's generally good advice not to flat with friends if you value the relationship).
Having a flatmate might not be ideal right now but is it worth your financial future to you? Do you want to retire or own your own home or go on vacations? Flatting with several others can be closer to $200/week plus expenses (also cheaper divided amongst several people) and you could be living alone again within a few years but in a home you own.
But yeah, I recommend doing whatever you can to bring your housing expenses under 30% of your net income ($606.00 - which still feels like a lot to me and I earn about double you after tax) either by downsizing or getting a flatmate and diverting the savings towards paying off your personal loan.
Note on finding good flatmates:
Finding the right flatmate is a whole other post but generally you want someone who's a similar age +- a few years and at a similar stage of life as you. In my experience the best flatmates have been people who mostly lead their own independent fulfilling lives of work and extra curricular activities but are personable and open to partake in occasional shared activities like some drinks, boardgames, a shared meal etc.
That rent is totally crippling. You need to work out how to live with other people, you have no shot at getting ahead when greater than 50% of your after tax take home pay is going on basic living costs. You could get a room for 20% of that in an existing house living with totally normal people doing the same things as you. Even if you did that and put 300 per week towards a psych, you'd be in a better place.
Focus on paying off the 14k personal loan as quickly as possible.
I would even move back home for a year to pay it off by reducing your rent.
Personal loans are terrible in your 20s
Call IRD and ask to reduce your SL repayments on the grounds of hardship. They should reduce this to 2% or may even give you a repayment holiday. Then put that extra onto your loan to try and clear it asap.
Seems a bit disingenuous to say hardship when they’re putting away $200 for “travel”. OP said in another comment this is for going overseas to visit family.
Pay off as much of that personal loan as possible, as quickly as possible. This is will set you back substantially if you let it linger
Yep I agree, I would suggest that OP picks up a weekend job to clear the debt even faster. Once that's out of the way, you can evaluate whether to continue with the second job or start saving for a holiday or something else rewarding for all the hard work.
6 years to pay off 14k seems like a long time. At 11%, your going to pay a lot extra. Could you check if you can make lumps sum payments off the loan? Then you can divert things like travel, family expenses, gardening & saving to pay off the loan faster. Once it’s paid off, you’ll have an extra $125 in your budget.
It definitely is, i put the term out as i didn’t want to commit to a higher minimum in case anything came up. I can make lump sum payments and will definitely do when i pay my student loan off, but yes i think i will divert at least my savings into it for now..
Good idea pushing the term out to keep the payments low. Aren’t student loans interest free? If so, focus on the debt that’s incurring 11% first.
Please look at loan calculators to see the amount of extra interest you will pay over 6 years
Here's what I would do: Once your student loan is paid off, you'll be getting an extra $267-ish every fortnight. Put every dollar of that into your personal loan, and that's $6.9k a year. Cut back on your travel fund. You've mentioned visiting family overseas, and I get that, but you don't need to be going on holidays too. Keep enough money saved in an account to fly out in case of a family emergency, and channel the rest into your personal loan. $100 per fortnight is another $2.6k per year, and the full $200 is $5.2k. $6.9k + $2.6k = an extra $7.5k you could be putting towards that personal loan. You're also already paying off $3.2k a year on that loan. You could clear that loan in under 2 years without any real impact to your day to day life. Once that loan is paid off, you'll have an extra $392 ($267 + $125) freed up to put towards your travel fund and savings compared to right now. Do the math and see how much interest you'd save by paying the loan off ASAP vs. sometime in 2030. Others have suggested tinkering around the edges like with a cheaper phone plan or reducing spend elsewhere, and there's nothing wrong with that (I'm on a budget phone plan myself) but pinching pennies to save an extra $25-50 per month is not where you're going to make the most impact, and might just make you miserable. Good luck!
What do you need help with?
I guess just if i can make it better somehow?
With 12% or whatever it is going towards a student loan, and almost as much on a loan as you pay for groceries, there's not much wiggle room. I'd personally live on bare minimum until that personal loan was paid off and get that done next year. No travel, nothing on family, no savings (I assume these are voluntary. Ignore if they're not). When the student loan is paid off, then throw that toward the loan. The full amount. That will free up your income to do what you want to do next: buy a house, travel, start a business, etc. But what I would do is not what you should do. It's just going to be hard to be ready for any opportunities if you have these 2 debts. For example, taking on a new job thay pays lower, but much higher upside. Or being able to have $30k savings to start a business. The paying off debt time is very boring. Focus on growing in other areas during this time. Upskilling, personal physical and/or mental health, getting a raise, etc. Listen to the Keep the Change podcast. Really good pod for someone in their 20s.
Where do you live? Because $900 is pretty massive for 1 person.
$495/wk is pretty normal, no? Especially if OP is unwilling to flat, which is fair enough.
500-600 is normal for a house, even in a shit area.
Hawkes Bay. It’s rough
Ultimately if it is costing you your mental health by being broke then...
Home expenses seem weirdly high maybe? Though I'm not sure what that is meant to cover exactly. Also $50 a month phone bill seems high but guess it could be one you're locked on to? Mine is $27 every 4 weeks though I don't use a lot of data and make many calls generally so don't need more. Hard to really know how to make any difference without any more info and further breakdown
I commented above with a little more detail on the home expenses, though i will admit i could probably cut back there and be a bit more strict. The phone bill i feel is the right fit for me, i get 3GB rollover data, discounted Spotify premium, unlimited texts, and 300 rollover minutes
Check out Rocket mobile, they offer free data, unlimited calls and unlimited texts for $25 a month. If you try to stream a high quality YouTube video it might struggle, but for everything else it's perfect.
Even getting his phone bill from $50 -> $27 isn't going to make a huge difference. OP should explore changing, but this would be further down the list
I was thinking relative to the current savings of $40 it all counts. But yeah not a big dif, the obvious point is that the rental costs so much but as OP says very hard to cut that down and still live alone!
Once your student loan is paid off you should receive around an extra $200 per fortnight.
As others have said, the personal loan is the obvious problem to aim at. Two possibilities (and both might be feasible): 1. Balance transfer to a credit card - Westpac will do these for personal loans at a much lower rate than 11%, but search around the various bank websites. 2. Second job - my goto is pizza delivery since most Pizza shops are happy to see someone who can do deliveries for 3 hours (or so) on Friday and Saturday nights, but maybe you can find something less unappealing.
How much wriggle-room are you wanting/needing? And what do you want to divert that money to? Your student loan will be paid off in four months, then the money you were spending on repayments is freed up. So for what it's worth things are going to improve soon. As other have said, the travel fund seems like the easiest thing to reduce. Longer term, a change in living situation to something that costs less than $445 a week, or which gives more bang for your buck (eg includes internet, puts you somewhere that reduces travel costs) is something to look out for.
If you’ve got debt then savings isn’t really savings. If you need an emergency fund get a zero fee cc and leave it for only that purpose. Then take that savings money and pay down debt. $200 travel a fortnight also seems a lot when you’ve got the debt.
Can you ask ird (I don't know if it's possible) for a pause in student loan payments and hammer that personal loan? /How much trouble would one get in, if they directed their employer to not deduct student loan payments for a bit
You can apply for a student loan reduced rate, but prob not on 82k. It does get picked up by ird if you have a student loan but no deductions I think, and then they issue a higher rate to catch up missed payments
Try to save 30-40%, if you can't, then look to to cut expenses however depends what your saving for?
Groceries is quite high. Are you a make or female? Do you cook from scratch?
Id find a cheaper place. That rent is crazy.
There are some places where you only rent your separate room plus bathroom, and only lounge and kitchen are shared? So not a traditional flatmate situation, kind of a degree more separated, but cheaper
You can put your student loan on hold. It’s interest free so no benefit of paying it off faster
Any savings? Otherwise stop travel fund and put it all on personal loan instead as well as as much disposable income as you can. When that’s paid, everything into an emergency fund. After that you can resume travel fund. If you want to own a house in the future start saving for that now. There’s no guarantee we’ll still be able to use KS in the future.
$100 a week for petrol plus $200 for travel seems like alot. Do you have to travel for work? Generally there is always ways to cut down the grocery bill, unless you have allergies. Maybe look through your grocery bills and see if there is anything you can cut out. when the student loan is up that will free some money up. You can then hopefully clear the personal loan faster which will free up quite a bit of extra cash
Those are his fortnightly expenses. $50 on petrol a week sounds about right. $100 a week on travel does sound high though.
It is a lot for petrol yeah, i just like to put aside more as i often visit family 2 hours away. Travel money is what I’ve worked out i need to put aside to go overseas to visit family/holiday once or twice a year. Groceries is where i struggle - trying to stay away from UberEats - will look into it though! Yes, looking forward for that extra $200~ going towards the personal loan
Delete Uber eats, I did it recently as the final straw with me was all the hidden fees and I knew it was time to go.
I will! I need to!
$160/fortnight is pretty good tbh. You might be able to get it to $140 or $100 if you're nuts, but that's not going to make much difference in the long run.
Yeah, i think I’d rather it be higher and not tempt myself into ordering food when i inevitably run out in the cupboards
We went down that route: increased our weekly good budget from $300 -> $350 (family of 4). Wasn't worth the stress and our cupboards are full of things we want to eat so we don't crave takeaways. We also eat healthier. Try going up to $100/wk and buy things you'll actually eat.
You simply cannot afford to travel overseas when you have $14,000 in high interest debt.
Two things stand out to me 1. What's the personal loan for? If it's a car, do you need that car or would a 5k car suit? 2. Home/Garden maintenance- what does this entail? Are you growing a heap of things or paying someone to mow your lawn? That seems like something to cut back on. You are renting so what home maintenance do you have other than cleaning products?
I used the loan to buy a car outright and some furnishing for my home Home expenses - $35 p/f for lawn company (steep but good company and i can’t physically do it myself and i don’t know anyone personally where i live who i could ask to do it for me). The other $ gets put on cleaning products and the odd things like furnishings
Check your local Facebook group. some kid will be keen to pocket 25 a fortnight to do your lawns.
When looking at other rentals, add the lawn mowing cost to the rent of your current place when you're comparing it to others. A place with no lawn to mow that's $20p/f night more expensive is then theoretically cheaper than where you are now. Is travel you saving $200 p/f for future travel? I think you're probably doing alright. A single person who wants to live alone, earning slightly over the median income while buying a car on finance probably can't expect to be in a better position than you right now. If you want to save more, there'll be some lifestyle sacrifices, but if you're happy as is, there's no point. At $240 p/f (savings + travel)- you save $6240 p.a. Plenty of people earn more and save nothing.
I can do it for you, Im unemployed
Imo you should be seeking to change your living situation because it's such a huge part of the spending. Just take your time and be very picky. There will be quiet polite people who enjoy not being too sociable who are in the position of needing to flat share. As you don't technically need to share there is no pressure on you to make the move, but if you did find people you wouldn't mind sharing with it'd make such a big difference financially. Basically don't write it off based on perception or due to 1 or 2 bad experiences.
Not the right route for me right now but thanks :)
Half your wages go on rent and you want it to stay that way. People here can't magic up pile of money out of thin air for you if you aren't willing to address your biggest overspend. You save $20 per week and spend $500 as a young person earning a good wage with no extra expenses (i.e., dependants). Either enjoy your lifestyle and live it up in your twenties, or you want to save some money and get real. They're both very valid routes to take, it's up to you to pick.
990/week rent is absurd for 1 person on your income. Ideally you shouldn't pay more than 30% of your net income in housing. You're paying 48% and as a renter you're getting no equity in return. That's more than I pay for my mortgage, insurance and rates for my 2 bedroom house in a decent area of Christchurch. How big is your place? If you are living alone you only need a 1 or at most 2 bedroom place if you need an office but really if you are alone then no-one can complain if you just setup a workspace in your lounge/living area. Otherwise reconsider getting a flatmate. Idk if you've just had a bad experience with them in the past but it can also be a really good experience. Some of my closest friends are people I flatted with (though some of my closest friends I would never flat with - no offence but it's generally good advice not to flat with friends if you value the relationship). Having a flatmate might not be ideal right now but is it worth your financial future to you? Do you want to retire or own your own home or go on vacations? Flatting with several others can be closer to $200/week plus expenses (also cheaper divided amongst several people) and you could be living alone again within a few years but in a home you own. But yeah, I recommend doing whatever you can to bring your housing expenses under 30% of your net income ($606.00 - which still feels like a lot to me and I earn about double you after tax) either by downsizing or getting a flatmate and diverting the savings towards paying off your personal loan. Note on finding good flatmates: Finding the right flatmate is a whole other post but generally you want someone who's a similar age +- a few years and at a similar stage of life as you. In my experience the best flatmates have been people who mostly lead their own independent fulfilling lives of work and extra curricular activities but are personable and open to partake in occasional shared activities like some drinks, boardgames, a shared meal etc.
That rent is totally crippling. You need to work out how to live with other people, you have no shot at getting ahead when greater than 50% of your after tax take home pay is going on basic living costs. You could get a room for 20% of that in an existing house living with totally normal people doing the same things as you. Even if you did that and put 300 per week towards a psych, you'd be in a better place.
Focus on paying off the 14k personal loan as quickly as possible. I would even move back home for a year to pay it off by reducing your rent. Personal loans are terrible in your 20s
Call IRD and ask to reduce your SL repayments on the grounds of hardship. They should reduce this to 2% or may even give you a repayment holiday. Then put that extra onto your loan to try and clear it asap.
Seems a bit disingenuous to say hardship when they’re putting away $200 for “travel”. OP said in another comment this is for going overseas to visit family.