Our latest prescription…

Lee is 33 years old, a Marketing Manager earning £24,000 per annum.

Lee's philosophy.

Work hard, play hard and have a good time with friends. "He doesn't spend any money during the week, but spends far too much at weekends. He likes buying clothes, eating out, clubbing and generally "having a laugh". Lee owns his own property, in which he rents out a room. In his spare time he plays tennis, badminton and makes visits to the cinema. His ambitions are to travel the world and eventually move abroad to run a bar or club venue.

This is Lee's current monthly budget:

Income
Salary	£1,499
Rent	£300
Outgoing Expenses
Mortgage	£475
Food	£75
Electricity	£40
Gas	£47
Telephone	£40
Water	£30
Telephone	£40
Water	£30
Council Tax	£62
Home Insurance	£26
Home Repairs	£20
Petrol	£100
Car Tax	£15
Car Repairs	£25
Car Insurance	£38
Lunch	£20
Clothing	£75
Mobile Phone	£50
Internet	£20
Social	£250
Birthdays	£30
Savings	£40
Life Cover	£30
Pension	£40
Club Book	£50
Total	£1,753
Surplus	£47

In his present budget situation he's not going to make it to the Costa Brava very easily. Lee is too dependent on the rent from his lodger. The fact that Lee is saving is good and shows discipline, however the £800 saved so far will soon evaporate if an emergency strikes.

It's good news that Lee has a pension, but a little worrying that he pays £148 - when his budget is so tight. His mortgage is on a discounted rate until July 2002.

Doctor Pink's Prescription

Mortgage

Lee is paying low interest of 5.25% at present and does not have a redemption penalty on this loan. His current deal ends in July 2002, at which time he will be paying 2% more. He should consider moving his mortgage to another lender at this point. 

Saving £0

Spending

It is difficult to find any fat in household bills, so it's normally better to concentrate on discretionary items. Lee spends £250 per month on socialising, if Lee were to manage to stay in one weekend in four he would save £50 per month. or alternatively he could limit himself to one withdrawal a week of £50 for this purpose (Once this has been spent, that is his lot).

Lee's mobile bill is £50 per month. This seems high to me as my business mobile only amounts to £35 per month. He's either on the wrong tariff or I'm just a tight queen. Lee's clothing bill of £75 seems reasonable to me. 

Saving £85

Life Cover

Lee should check if critical illness cover is included within his policy. If not, why is he paying out for something that will pay out to dependants he does not have. Care should be taken not to cancel valuable illness cover though. 

Saving £22

Pension

Lee originally included a payment of £148 per month for his pension plan. When pressed further Lee informed us that he actually pays £75 and his employer pays £114.00. 

Saving £73

Conclusion

The only way Lee will be able to travel the world and set up his dream bar, will be to make a serious financial commitment now rather than later. He has a strong pension arrangement through work and the equity in his property is building nicely. Lee needs to be less reliant on the room rent and aim to save more cash.

The areas identified in Pink Prescription above could add £180 per month to lee's surplus of £46. Lee should increase his savings account standing order to £200 straight away.

Although he is still reliant on the room rent to the tune of £74, the chances of depleting his savings are much less if the unexpected strikes.

He will be left with £126 in his bank account at the end of each month if he manages to stick to the plan. If this happens he will have £600 towards his first holiday destination and his savings account will also be riding high at £2000 (including the present balance).

Good luck Lee, let us know how you get on. 

If you would like Doctor Pink to get personal with your finances then drop us an email at editor@pinkfinance.com

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