Cash Clinic helps wannabe first-time buyer save £1,600 a year on £13,000 annual salary
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COUNSELLOR Natalie Mills, 28, is desperate to move out of her shared rental digs and get onto the property ladder, but she earns just £13,000 a year.
And the average first-time buyer property in Manchester, where Natalie lives, is £176,512 with an average £23,306 deposit, according to property portal Zoopla.
So Natalie has turned to our Cash Clinic expert, Holly Thomas, to see if there are any ways she can cut her spending.
Natalie told The Sun: “Paying both rent and bills makes it really hard to save on my salary.
"Last year I earned around £800 to £1,000 a month but this can vary as my job is freelance.
"I hope to earn £13,000 this year and I'm hoping to take on extra work too, to help with saving.
It's really hard to save on such a low income
Natalie Mills
“But it’s really difficult on such a low income to save for a deposit in the first place.”
At the moment, Natalie stashes £200 a month into a Help to Buy Isa with NatWest. The interest rate is 2.5 per cent, and she’s saved £6,800.
She also uses a tool called Plum, which calculates how much she can afford to save each month and moves small amounts of money from her bank account automatically into a separate savings account.
"I saved about £150 using Plum, and didn’t even notice it going out of my account – but I’ve used this to pay for Christmas presents," she added.
This tool compares prices to show you where you can get every item on your shopping list for the cheapest price.
Social life: £40 per month
New spend: £5 per month
Saving: £35 per month
At the moment Natalie spends £5 a class going rock climbing twice a week.
But if she switched this up to go once a month and then used free classes, such as Coca Cola’s initiative, she'd cut her £40 monthly costs by £35.
Eating out: £50 per month
New spend: £25 per month
Saving: £25 per month
Natalie is pretty savvy when it comes to eating out, using - which you get by taking out an insurance policy from CompareTheMarket - to make the most of two for one offers.
But she still ends up spending around £50 a month on takeaways.
She could try making her own "fakeaways", which are half the price, instead and often end up being healthier too.
Natalie could halve the cost of takeaways by making her own 'fakeaways'
Alternatively, she should look for takeaway offers on voucher websites such as MyVoucherCodes and HotUKDeals.
Domino's, for example, currently has 25 per cent off when you spend £30 online, while Papa John's has £15 off first orders over £30.
Rent: £272 a month
New spend: £272
Saving: £0 a month
It will be difficult for Natalie to cut back on her £270 a month rent bill - unless she manages to find an even cheaper property to rent in or can move back in with family.
But when it comes to renewal she could try and haggle prices down, or at the very least argue against any proposed increases.
What has Cash Clinic saved Natalie?
Cash Clinic has managed to squeeze an extra £133.60 a month (£1,603.20 a year) from Natalie's outgoings.
This means she can now put at least £333.60 towards her house deposit, plus any disposable income left over each month.
The Help to Buy Isa is closing to new applicants from December 1 although existing users such as Natalie will continue to be able to save into one.
If Natalie saves at least £333.60 every month she'll achieve the extra £16,306 needed for the average first-time buyer deposit in Manchester in just over four years.
But this will drop to around two years if she's splitting the deposit equally with her boyfriend, and she'll be able to get there even quicker if she tops it up with any disposable income or if she gets a pay rise.
How we saved Natalie £1,603.20 a year
HERE'S how we've saved Natalie cash:
- Petrol: £16.60 a month or £199.20 a year
- Groceries: £30 a month or £360 a year
- Credit card: £27 a month or £324 a year
- Social life: £35 a month or £420 a year
- Eating out: £25 a month or £300 a year
TOTAL SAVINGS: £6,623.92
Plus, that's before you add any interest earned from her Isa and the government's 25 per cent bonus on top too.
Once the couple have saved for a deposit they will need to work out how much they can borrow - and as a freelancer Natalie will have to produce at least three years' of bank statements.
Another option for Natalie would be looking at buying a house through shared ownership.
This involves buying a portion of a property, while paying rent to the housing association on the remainder.
David Hollingworth, from mortgage broker London & County, added: "Natalie can also look at the Help to Buy equity loan scheme.
"It offers a loan on new build properties of up to 20 per cent of the purchase price, with the buyer putting down at least 5 per cent.
"These equity loans are initially interest-free but must ultimately be paid off - usually on sale of the property.”
Since The Sun talked to Natalie, she has now got a new job and with her higher salary she's been able to repay her credit card before the interest-free period expired and is now hoping to get onto the property ladder with her boyfriend in April 2020.
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