Reader Case Study: Buddhist in England Desires a Simple, Secure Financial Future
Lotus lives in the beautiful rural South of England with her partner, Rowan, and their 12-year-old son. She currently works as a communications manager for a nonprofit that supports vulnerable women and she’s had a varied and exciting path through life. With a PhD in music, a yoga teacher training certification and as a practicing Buddhist, Lotus enjoys a life filled with meaning, community, music, connection and love. What she lacks is financial security. She is deeply insightful about her relationship to money and notes that,
There’s something in here about the balance between freedom and [financial] security…. Recognising that we can’t ever be completely secure in this changing, unpredictable life, but also that having some security in place will give rise to a greater sense of freedom.
This is very well said. Lotus has requested our help in crafting an intentional, minimalist lifestyle that aligns with her Buddhist beliefs but also gets her out of debt and onto a more stable financial path. Let’s travel to the UK today as we work with Lotus towards her goals!
What’s a Reader Case Study?
Case Studies address financial and life dilemmas that readers of Frugalwoods send in requesting advice. Then, we (that’d be me and YOU, dear reader) read through their situation and provide advice, encouragement, insight and feedback in the comment section.
For an example, check out the last case study. Case Studies are updated by participants (at the end of the post) several months after the Case is featured. Visit this page for links to all updated Case Studies.
The Goal Of Reader Case Studies
Reader Case Studies intend to highlight a diverse range of financial situations, ages, ethnicities, locations, goals, careers, incomes, family compositions and more!
The Case Study series began in 2016 and, to date, there’ve been 67 Case Studies. I’ve featured folks with annual incomes ranging from $17k to $200k+ and net worths ranging from -$300k to $2.9M+.
I’ve featured single, married, partnered, divorced, child-filled and child-free households. I’ve featured gay, straight and trans people. I’ve featured men, women and non-binary folks. I’ve had cat people and dog people. I’ve featured folks from the US, Australia, Canada, England, South Africa, Spain, Finland and France.
I’ve featured people with PhDs and people with high school diplomas. I’ve featured people in their early 20’s and people in their late 60’s. I’ve featured folks who live on farms and folks who live in New York City.
The goal is diversity and only YOU can help me achieve that by emailing me your story! If you haven’t seen your circumstances reflected in a Case Study, I encourage you to apply to be a Case Study participant by emailing email@example.com.
Reader Case Study Guidelines
I probably don’t need to say the following because you folks are the kindest, most polite commenters on the internet, but please note that Frugalwoods is a judgement-free zone where we endeavor to help one another, not condemn.
There’s no room for rudeness here–the goal is to create a supportive environment where we all acknowledge that we’re human, we’re flawed, but we choose to be here together, workshopping our money and our lives with positive, proactive suggestions and ideas.
A disclaimer that I am not a trained financial professional and I encourage people not to make serious financial decisions based solely on what one person on the internet advises.
I encourage everyone to do their own research to determine the best course of action for their finances. I am not a financial advisor and I am not your financial advisor.
With that I’ll let Lotus, today’s Case Study subject, take it from here!
Hi Frugalwoods! My name is Lotus, I am 45 and I live in rural South England with my partner Rowan (age 53), and our 12-year-old son. Rowan and I have been together for 15 years and we’ve been quite happy living in the countryside for that time. We like nature, walking, quiet, watching films, and being at home. We have rented long term in the same area and have just recently moved–only 3 miles down the road!–after living in the same rented house for a decade.
Whilst we like this area, we’re not totally sold on this new house we’re renting and have been thinking about what the future holds. Our son is very happy at school, he’s just one year into high school and wants to stay at this school, so we feel we need to stay in the area.
Lotus’s Buddhist Practice
I am aware that I’m a little less than 5 years from age 50, and so this a real ‘taking stock’ time for me. I’m excited about how my life has been going and the changes I’ve made in my lifestyle to be more responsible and live a ‘good life.’ Over the past 5 years I’ve explored minimalism as a way of life and as a family, we’ve reduced our possessions by about 75% and have looked at what’s most important to us.
Materialism is NOT important to us and we don’t miss anything we’ve decluttered! We are looking more towards simplicity than ever before and taking a lot of joy in the small things. For me, the most crucial thing in my life is my Buddhist practice, which has flourished over the past 7 years. It is now the foundation of everything I do. Historically I was a striver – super ambitious, always got something new going on and very busy. My practice has shown me how to be more present, to value what’s happening now, and that striving isn’t always good for my heart or mind. Buddhism allows me to focus on developing qualities of compassion, generosity, love and awareness. Thus, time for meditation, reflection, walking and my yoga practice is absolutely vital to what I see as ‘the good life.’
I got my PhD in music about 6 years ago but left academia pretty soon after because I found it very ego-based, stressful and it didn’t leave me with enough time for my family. Then I worked for a Buddhist charity (nonprofit for you US folks!) for around 5 years for not very much money. Having a sense that my work makes a meaningful difference in the world has always been crucial to me. It was a job I absolutely loved, with a community of loving and beautiful people, but there was just no money in it! It was like earning less than minimum wage but for the love of it. 12 months ago, I switched jobs to work for another charity, doing important work supporting vulnerable women, but happily for quite a bit more money. However, it’s still charity sector wages, which are comparatively low. It’s a communications role, so I do things such as writing newsletters, social media, website development and communications with donors and fundraisers. I definitely don’t want to be doing it forever.
I now also work only 3.5 days a week for that increased salary, which allows me to spend time leading Buddhist meditation classes voluntarily and helping in any way I can at my local Buddhist Centre to build community and friendships. This takes a lot of my spare time – I’d say I am in classes/events around 9-10 hours a week – but I love it and it’s important to me. Unfortunately there is no money at the Buddhist Centre to pay for me to work there, or I’d love to do that! I also took a yoga teacher training, which I completed in May. It was great to do because I love yoga! I did it more for my own practice and I’m not sure I’m confident enough to teach, I can be quite scared of putting myself out there. But it’s another string to my bow. I practice yoga most days.
A Career Change?
I am considering a career change. I have always flitted about jobs-wise and have never found what I really want to do. This has also limited my potential earnings. Coming up on age 46 I kind of feel like this is last chance to make a big change for the final 20 years of my working life. I considered retraining as a physiotherapist, but that would mean doing another degree, which would be expensive and I’d get into debt. So instead I’m thinking of taking some smaller, less expensive courses over the next couple of years in bodywork therapies – so probably anatomy to start with, then maybe something like myofascial release or Bowen therapy – to slowly build up ‘another path’ for earning income.
But this is an idea very much in its infancy and I need time to explore what would be good for me in the bigger picture of my (not so great) finances. I am definitely open to other ideas – I am a strong writer and this could be one option for me, for example. I also enjoy giving talks to help motivate and support people’s development.
What feels most pressing right now? What brings you to submit a Case Study?
Rowan and I run our finances separately, which seems to work pretty well for us and is unlikely to change. We split the bills 50/50 and he tends to pay for more food and fun stuff when he has spare income (he’s self-employed and earns a little more than I do). Hopefully it’s ok to ask that you not suggest we combine finances – I think the only way we’d do that is if we bought a house, which we’d do equally together, again splitting it 50/50. Everything else will stay separate, and we’re happy that way.
I’m writing now because I feel I don’t have a clear plan, and with 50 in sight, I ought to get one! I have been carrying debt for awhile–from historical overspending and materialism–and in 2018 I consolidated it, cut up all my credit cards (I can’t sensibly manage them, I am too impulsive!), and have doggedly been paying my debt off at the minimum monthly amounts. Loan #1’s term ends in December 2022 and the plan has always been to then roll that amount into paying off Loan #2 by November 2023. So, I am starting to see a little bit of light at the end of the debt tunnel, but it’s very slow and I can be a bit impatient with it. As you can see, debt repayment is the largest percentage of my outgoings. It is a weight I’m very keen to lose and with it, I can only do the paycheck-to-paycheck thing.
Lotus’s Low Income
I’m aware that my low income puts me in the position of making only slow progress toward any financial plan. Thinking forward to retirement is quite scary when change is so slow – I have nothing planned for the future and I don’t have any savings or assets. I’ll get a state pension when I’m 67 if it still exists (at present that’s about £780 a month in the UK) and I have a tiny amount of employer pension, but that’ll not be much at all. I am not averse to living a simple life – I feel I am happy to have a low amount of expenses, and I’m definitely not aiming for luxury. But I also am not good at managing my money, particularly larger expenses that are spread throughout the year such as Christmas or clothes/shoe purchases.
You’ll see from my figures that I spend more each month than I earn.
I usually muddle through – I recently borrowed some money from my sister to cover some of that – but I can’t rely on that as a financial strategy. I need to grow up financially! I read the Reader Case studies and often think that the people have such assets and have made such progress and I wonder whether I should be a little more concerned about my future. I definitely think I have the conditioning to be flippant around money and think ‘oh it will all work out.’ I was very lucky to find employment during the pandemic and I’m aware it could have gone very differently as it has done for so many people.
There’s something in here about the balance between freedom and security. I lean more to the former and have had my head in the sand about the latter. I’d like to find a middle way (as the Buddha encouraged!) between the two. Recognising that we can’t ever be completely secure in this changing, unpredictable life, but also that having some security in place will give rise to a greater sense of freedom.
The work question is a tricky one. On one hand, I feel like I want to be semi-retired and meditate and walk in nature and just be, but in reality I think that might be a bit boring after a while. Perhaps I’ve just got stuck in work and haven’t found anything that really motivates me and there’s some stuck energy that could be unleashed. I’d like to feel a bit more vital in my life. My work is ok but it doesn’t set me on fire! And as someone in their mid-40s, maybe I should use my energy for good whilst I have it! The idea of doing physiotherapy inspires me but it feels like too big a risk both financially and in terms of changing careers. So this new plan of a slower path into complimentary bodywork therapies may work instead. Or perhaps exploring something a bit more like a ‘portfolio career’ with a bit of writing, a bit of speaking, a bit of yoga teaching etc.
What’s the best part of your current lifestyle/routine?
My work is pretty self-contained and boundaried. I can turn off after 5pm, I don’t work on weekends and I have 1.5 days off during the week. This leaves me with quite a lot of flexibility and I get to choose how to spend my time. I spend a lot of my spare time in Buddhist classes and with Buddhist friends exploring different practices. I do about 9-10 hours a week of timetabled activities. I also love to read, to meditate, to do yoga, to walk in nature. I’m in a good location for all those things and have excellent resources to tap into with my Buddhist community, online resources, yoga classes and a great local library. Being with my partner and my son makes me happy – we are a close and loving family. I also love to chill with films and watch youtube videos about simple living, sustainability, decluttering etc. I have much to occupy my time and nothing I do is particularly expensive (except for my yoga membership, which is probably my main monthly ‘splurge’ aside from music lessons for my son).
What’s the worst part of your current lifestyle/routine?
I don’t want to be a Communications Officer forever! Though I find the context of my work meaningful and I love the people I work with, I have dreams of doing something else – multiple other things! Perhaps working in a hospice as a chaplain, or running meditation classes, maybe writing a book on simple living and spirituality, or just doing something in my local community with actual people rather than being in front of a computer all the time.
I have considered there are many things I know about – I’m a long-term vegan, I’ve been journeying to minimalism for quite some time, I’m an experienced meditator – that I could share with people, and maybe I should try doing YouTube or online courses, or something like that? However, marketing myself doesn’t appeal (but maybe that’s because I do marketing for my day job). I feel like I haven’t found my ‘thing’ yet, which is a bit depressing at the age of 45!
I am really clear about my values, and I know I love to talk about the things that really matter to me: love, life and death, spirituality, connection, the natural world. I also know that people turn to me for advice, in my Buddhist community I am often asked for input and I have friends that look up to me, which is very humbling. I want to exemplify having a positive life, a simple life, a joyful life. But I also want to exemplify mindful management of my finances, though that feels so far away! The idea of bodywork therapies popped into my head only recently and I am wondering if this could be my ‘thing’…
Currently I don’t like the rigidity of a paid, regular job – I enjoy spontaneity, and sometimes get offered chances to teach on retreats or be a part of longer events that I have to turn down because I don’t have enough time off work. I want to be able to be flexible and change up what I’m doing. I have dreams of doing some long-distance walks and taking time off. I’ve done a couple of marathon walks but I’d love to do something like 100+ miles in one go. Sometimes I think I’d like to be more adventurous. I have a fantasy that I’ll take a six-month sabbatical when I turn 50, and just mooch about the place! I think perhaps self-employed would suit me better, but that terrifies me financially as I’m not a natural money manager. I find budgeting hard and sticking to a budget even harder!
I live far away from my wider family – my mum, my dad and stepmum and my sister all live up in the North. I don’t see them as much as I want to, and that makes me sad. It’s expensive to travel up on public transport and I don’t have the funds to do that as regularly as I’d like. We’ve toyed with the idea of moving up to the North, but I don’t know if the culture change would suit my partner and son.
In terms of frugality, I think I’ve been quite good at cutting back where I can and doing things like selling as much of our stuff as possible. But there is very little to cut back now and we have so few ‘things’ that I feel I’m at the end of what I can do with frugality. I do have some areas where I splurge. My weak spots are paying for self-development courses and gifting. My yoga training was £1,950 in total, which I paid in installments. I could have just saved that and paid off some of my debt so I do feel silly about that. I get so hooked in with a new exciting idea, and when I’m just doggedly doing nothing fun for ages and paying off debt periodically I do things like that.
So I know I need to be more disciplined and not get hooked into expensive new courses or programmes unless they will definitely contribute to greater income/work satisfaction down the line. Then there’s gifting… I don’t spend a huge amount per person (usually £10 allows me to get something lovely) but I have lots of friends and family and I love to give little thoughtful gifts to celebrate them. Recently what I’ve been doing is saving gifts people have given me that are not totally my thing or I don’t need and regifting them, so that’s helped a little. But I still consistently overspend at Christmas and on birthdays, especially for my son who I do spend too much on. I have nothing saved up for these events so already I’m worried about how I’ll deal with this coming Christmas.
The other area I spend A LOT on are music lessons for my son. He’s talented musically and we want to develop that (my partner and I are both musical too) and his school teacher has advised that he will need formal lessons outside of school to really go places. I’d like to get better at saving up the money needed for music lessons – for example, we pay for his violin lessons every 9 weeks and I never feel ‘ready’ to pay the chunk of money. This part of my financial life really bothers me. I want to be more in control. I do track where my money is going – after I’ve spent it – but don’t always control the spending upfront. It’s often not huge spending, but I don’t have a lot of leeway with such a small income.
Where Lotus Wants to be in Ten Years:
- I would love to have no debt. I hate that so much of my money goes to debt servicing, and I can’t even remember what I got for this debt… what did I even spend it on?!
- I want to be better able to save up incrementally for bills that come less frequently than monthly. I find myself always feeling on the backfoot with these things.
- I would like some level of savings – I have no real idea of how much, but to have something for emergencies and for the future would give me a sense of security that is desperately missing.
- Ultimately, I want a plan for retirement, some sense of a roadmap of what I want and how I want to get there. In some ways I think what I’m looking for is to be retired sooner rather than later, so I can be spontaneous and follow my interests where they take me! I am open to exploring different career options and the possibility of being self-employed.
- Not working too much so I have lots of time for meditation, yoga, friends and family!
- When I imagine my future self, I’m getting up early in a countryside home, doing yoga and meditating, eating some delicious healthy food, teaching a meditation class, spending time with my family, taking a lovely walk, writing a book, talking with friends about the important things in life.
- Maybe being more adventurous and spontaneous. Really relishing life!
- The house question is a big one. Renting feels like throwing away money sometimes, but the UK is so expensive to buy a house and I just don’t know if it’s worth pursuing. But we had to leave our wonderful last house because the landlord sold it, so there is little security in renting too. We don’t want anything huge but would love to live in the country in a beautiful place. We have talked about moving to Wales – where property is cheaper – but that wouldn’t be able to happen for at least 4-6 years whilst our son completes his education.
- I am conflicted about my career. I would love to do something more with people and less with answering emails and being on the computer. It’s really important to me that whatever I do has meaning and purpose – I can’t just tick along in a job that pays the bills but means nothing.
- I am often full of good ideas of things to do (I am an ENFP, slightly on the border of E/I – we love new ideas!) but then the reality of them isn’t practical or it’s not how I thought it was.
- I have historically had a tendency to flit from job to job a bit, never really putting roots down. I quite enjoy change and ‘fresh starts.’ I think I like variety and spontaneity, I know I’m fairly intelligent and have skills, but I don’t always know how to manage that in a financially sustainable way.
- Could this bodywork therapies idea be a good one, or is it just another bright idea that in reality isn’t the thing for me?
Note: all currency listed in Great British Pounds
|Salary||£1,366.71||Minus taxes, national insurance and workplace pension|
|Child benefit||£84.60||In the UK you receive a monthly child benefit for each child under 18 you have, irrespective of your income|
|Item||Outstanding loan balance||Interest Rate||Loan Period/Payoff Terms|
|Personal loan #1||£4,865.70||18.60%||I pay the £162 minimum payment each month|
|Personal loan #2||£2,795.07||6.90%||I pay the £191 minimum payment each month|
|Arrears on student loan||£367.43||I don’t think it’s accruing interest||I am currently ignoring this, which is silly, particularly as my student loans will be wiped out once this is paid (they are 25 years old). Not including student loans in this debt section for that reason|
|Owed to my sister||£350.00||None||Am paying her back £35 a month for 10 months|
|Rent||£259||This is half our rent minus the bills I pay on behalf of both of us|
|Payment on Loan #2||£191|
|Music lessons for my son||£163||Average amount for piano, violin and singing lessons. This is a LOT! He is musically talented but I am thinking about reducing this.
Sometimes my partner will contribute to this, but sometimes not – depends on what’s happening with his self-employed variable income
|Payment on Loan #1||£162|
|Travel (bus & train)||£117||I travel to work 2 days a week – some months there will be additional costs here if I’m taking a trip (e.g. in Oct I’m going up north to see family and this will cost an additional £100)|
|Food||£100||Average amount for food – sometimes it’s more, sometimes less. My partner tends to spend a lot on food so I top up, generally with organic veg boxes and this includes ‘food on the go’ (like the occasional bag of crisps or snack bar when travelling)|
|Yoga subscription||£46||I do 3-5 online real time yoga classes a week – this is really important to me and I trained as a yoga teacher in this method|
|Retreats||£40||I am a Buddhist and this is integral to my practice – again I tend to pay for them in larger sums and not save up|
|Payment on loan from sister||£35|
|Christmas||£35||This is what it would cost me a month but I tend not to save up for this so always find myself in a pickle come January|
|Fun money||£30||Varies hugely. Periodically I take courses and this would be included here. I’m contemplating doing an anatomy course which would be 3 x £85 payments for example|
|Exercise subscription||£24||Online classes and a Whatsapp community group – thinking about cutting this|
|Gifts||£20||Small birthday or other gifts for friends and family|
|Oil (heating)||£20||Comes in one large chunk, which I don’t save for (again)|
|Clothing/shoes||£15||This would be the monthly amount but I tend to not have this saved up and then I have to cope with larger costs|
|Mobile phone||£12||Through Giffgaff, which is very flexible and I own my handsets. This covers two phones I have – one smartphone, one dumbphone for when I want to be more mindful about my tech use|
|Donations||£12||Charity donations including for my Buddhist group|
|Netflix||£10||We don’t pay for a TV license or cable/satellite TV so this is our only media subscription|
|Magazine subscription for my son||£10|
Lotus’s Questions for You:
My questions might be a bit vague and indecisive because that’s exactly how I feel! I don’t know how to move forward!
- How bad is my situation? Am I wanting to have my cake and eat it too?
- I think maybe I’m a bit head-in-the-sand about my financial situation and feel like maybe it’s a lot worse than I think it is and I’m not taking it seriously enough! I’d love some good straight talking about this!
- I also wonder if I’m asking for too much – to have a good financial future, where I might retire early but also to not work too much in the meantime and to have meaningful and varied work. So again, I would welcome a bit of tough love if it’s needed!
- I know the first step is to live within my means but I don’t know how to start saving for the larger expenses – they just seem to come in so frequently and swallow up anything spare.
- What kind of financial plan should I have for the future? (I know this is vague!)
- What do I do after paying off my debts? Do I start saving an emergency fund and then investing? What kind of goal should I set for savings and for my income? What about pensions? Should I save for my son’s university fees?
- I feel totally clueless as I’ve been just focusing on being more frugal with my outgoings and paying off debt, so it feels like there’s a new set of goals that need to be developed once my debt is paid off.
- Should I retrain as a bodywork therapist or find another kind of job?
- Should I stay in my steady but low-income employment? Should I branch out and explore different options for a portfolio career, something self-employed with more flexibility and freedom? Is spending money on more courses to retrain in various bodywork disciplines wise?
- How can I have some sense of security in my income and yet find what really suits me? I currently work 3.5 days a week – would it be silly to reduce my hours to 3 days a week to allow for more exploration of what I want to do?
- What do we do about housing?
- We rent our house and renting in the UK is expensive. But renting also feels like throwing away such a big chunk of money each year. Buying a house is difficult without any deposit, and also buying in this part of the UK is verrrry expensive! But is it something we should aim to do?
- I do have dreams of doing something random and living in a tiny house/yurt/houseboat to save money but actually with our son still having 6 years in the compulsory education system, we don’t want to do anything radical now. He loves his school and is happy so although we live in an expensive place, it feels sensible to stay here.
- A small two-bed place would be a minimum of £300,000 in the area we live so we would need a deposit of at least £30k which feels SO far out of reach. And I’m not even sure we want to try for that. If we were in the US we’d probably go for a tiny house on some land, but UK planning laws are so draconian that won’t work here…
Liz Frugalwoods’ Recommendations
Lotus has crafted a beautiful life and it’s wonderful to read about her intentional, loving community and family. It’s not easy to create a fulfilling existence and I commend Lotus for figuring out what matters to her and her family. I think Lotus is deeply insightful about her financial situation and I’m really glad she came to us for a Case Study. It takes courage to bare your financial soul and ask for help. Lotus, thank you for inviting us to go on this journey with you!
Lotus’s Question #1: How bad is my situation? Am I wanting to have my cake and eat it too?
I’m going to listen to what Lotus asked me for today and recall that she said,
I would welcome a bit of tough love if it’s needed!
I preface my recommendations with this because today is going to serve up some tough love. But it is said with love and it comes from a place of wanting Lotus to succeed. With that said, let’s dive in.
Lotus is spot on in her assessment that her low income makes it tough to pursue financial goals. With an annual income of £17,412, Lotus is essentially at (or perhaps below?) the UK poverty line. Given that, I think the #1 priority for Lotus is to increase her income. She stated she’s not able to cover her monthly expenses on her current income and routinely goes into debt in order to pay her bills. This is not sustainable, full stop.
Although I completely empathize with the desire to work part-time, that’s simply not an option for Lotus at this stage, unless she’s able to find a position that pays tremendously more. I appreciate Lotus’s clear-eyed vision that now is the time to make a decision about what she wants to do for the final 20-ish years of her pre-pension working life. This brings us to…
Lotus’s Question #3: Should I retrain as a bodywork therapist or find another kind of job?
- Should I stay in my steady but low-income employment? Should I branch out and explore different options for a portfolio career, something self-employed with more flexibility and freedom? Is spending money on more courses to retrain in various bodywork disciplines wise?
The answer here is that Lotus needs to do all of it, except pay for bodywork courses. At this point, Lotus needs to focus on earning more in order to dig out of debt and build up some assets (more on those two things in a moment). Lotus has a multitude of degrees, qualifications, natural abilities, passions and aptitudes. Now’s the time to utilize what she already has in order to stabilize her finances. Once she’s stable, bodywork courses could be something she explores, but I wouldn’t go into debt with the hopes of someday earning more money.
Bottom line: Lotus needs to earn more money now!
Unfortunately, unless she increases her income, there’s very little we’re going to be able to accomplish. As an immediate stopgap measure–to cover her expenses every month–I suggest Lotus increase her hours to full-time at her current job. This will give her the stability and security to consider her next move.
Lotus expressed she’s not wild about her current job AND it doesn’t pay well, so it sounds like it’s time to find something new. I encourage Lotus to start researching what positions she might be interested in applying for while continuing to work full-time.
Lotus, feel confident as you embark on this job search! Know that you have all the qualifications you need to find a better-paying job. It may not be the ideal job of your dreams, but it just might be the job that you need. You will find a way to weave your passions into your work and your life no matter what work you do for money. Lotus’s idea of building out a portfolio of paid work is also a great idea! If she can pursue a number of different remunerative passions, that’d be lovely! But, I would suggest she build up that portfolio while continuing to work at her current job. Unfortunately, she doesn’t have the luxury of quitting her current job before another job is lined up.
Now, let’s circle back to the final bullet of Lotus’s first question:
I know the first step is to live within my means but I don’t know how to start saving for the larger expenses – they just seem to come in so frequently and swallow up anything spare.
I suggest Lotus implement a financial roadmap for herself. She expressed that her finances are something of a mystery to her, which explains her seesawing in and out of debt each month. I’m here to reassure Lotus that her money does not have to be a mystery any longer! It can be something she feels peacefully and completely in control of.
My Suggestions for Lotus’s Financial Roadmap
Step 1: Track Expenses
Lotus’s assertions about expenses popping up and swallowing all extra money indicates that tracking expenses is the place to start. When we track what we spend, we’re able to feel in control and prepared for the big expenses of life because we know they’re coming. Most expenses aren’t actually surprises, they’re just irregular. For example, Lotus mentioned not feeling prepared for Christmas, which is a very common situation because… it’s irregular. But it doesn’t have to be a surprise. By tracking expenses, we empower ourselves to plan ahead. It turns financial management from a place of helplessness to a place of enfranchisement. When we plan ahead for expenses, WE are in charge of our money. When we know what we spend every month, every year, WE are the ones making the decisions, as opposed to feeling ruled by our money.
For US readers, I recommend the free expense tracking program from Personal Capital, which is what I personally use (affiliate link). Unfortunately, Personal Capital doesn’t work outside of the US. But all is not lost! The best way to track your spending is to find a system you will stick with.
Here are a few ideas for Lotus:
- Paper and pen. Write down every expense in a notebook you keep with you. Input the figures into a spreadsheet in order to keep clear track each month.
- Use Money Dashboard, which is a free, UK-based money management app that receives positive reviews.
- Emma is another a free, UK-based money management app that appears to receive middling reviews.
- Check out this article from The Guardian for reviews of these, and other, free expenses tracking apps.
Whichever method Lotus selects, the key is for her to do it every single month, without fail. By doing this, she’ll build a reservoir of data about her life and about the expenses she can anticipate each month and each year. Collating the months in a spreadsheet is an easy way to keep track and to later reference specific months.
Step #2: Pay Off High-Interest Debt First, then Pay Off All Debt
This is one reason why Lotus needs to increase her income ASAP. Her total debt load of £8,378.20 isn’t all that much, but of concern is the interest rate of 18.60% on her personal loan #1. This is an incredibly high interest rate and it’s costing her money every month that she carries this debt.
Once Lotus has ramped up to full-time employment and increased her income, I suggest she prioritize paying off both of her personal loans, starting with the £4,865.70 at 18.60%, followed by personal loan #2 (£2,795.07 at 6.90%), then the student loan arrears of £367.43 and finally, the interest-free loan from her sister.
The priority is to wipe out the two personal loans with high interest rates, then turn her attention to the interest-free loans.
The other absolutely wonderful thing about paying off this debt is that Lotus’s expenses will decrease by £388 every month! Paying off debt pays YOU in two ways: you’re no longer losing money to interest AND you pocket more money every month because you’re not servicing your debt! A win all around.
Step #3: Reduce Expenses
Lotus already lives very, very frugally so there’s not much ground we can make up in this area. However, since Lotus is in the dire situation of not being able to cover her bills every month, we’ve got to trim anything we can–at least until we get her onto solid financial footing. As I just noted, Lotus will save £388 every month once she pays off her debt–a whopping £4,656 per year!
I really, really, really HATE telling people to eliminate important things from their lives, which is why I’m an advocate for balanced, mindful frugality and values-based spending, something I covered in-depth in the last Reader Case Study. Unfortunately, today I have to tell Lotus to cut some things that she loves and are integral to who she is as a person. When you are in debt, have no assets, and a low income, there’s just not room for expenses beyond the basics. Hence, I’m suggesting a bare bones, ascetic budget for Lotus, but this is not for the long-term. This is just to get Lotus on her feet. Please don’t despair, Lotus! Please see this is a short-term jolt to your finances–a fast, if you will–that’ll help you get out of debt and into savings.
A note on separate finances within a partnership: I think this is a completely fine approach and have no argument with it at all. The key is that all expenses must be divided evenly. I made notes below to that effect and want to reiterate for Lotus that, if she and Rowan want to keep their finances separate, they need to be precise about dividing everything up. Particularly the music lessons for their son–they need to split that cost between the two of them.
Here are my notes on Lotus’s Expenses:
|Item||Amount||Lotus’s Notes||Liz’s Notes||Proposed New Amount|
|Rent||£259||This is half our rent minus the bills I pay on behalf of both of us||Fixed expense; no change.||£259|
|Payment on Loan #2||£191||Fixed expense; no change.||£191|
|Council Tax||£165||Is this split with partner? If not, it should be divided up.||£165|
|Music lessons for my son||£163||Average amount for piano, violin and singing lessons. This is a LOT! He is musically talented but I am thinking about reducing this. Sometimes my partner will contribute to this, but sometimes not – depends on what’s happening with his self-employed variable income||Lotus, this should be split between you and your partner. I think separate finances are a completely fine approach, but they need to be evenly divided.||£82|
|Payment on Loan #1||£162||Fixed expense; no change.||£162|
|Travel (bus & train)||£117||I travel to work 2 days a week – some months there will be additional costs here if I’m taking a trip (e.g. in Oct I’m going up north to see family and this will cost an additional £100)||Fixed expense; no change.||£117|
|Food||£100||Average amount for food – sometimes it’s more, sometimes less. My partner tends to spend a lot on food so I top up, generally with organic veg boxes and this includes ‘food on the go’ (like the occasional bag of crisps or snack bar when travelling)||Fixed expense; no change.||£100|
|Yoga subscription||£46||I do 3-5 online real time yoga classes a week – this is really important to me and I trained as a yoga teacher in this method||I HATE to suggest that Lotus eliminate important things from her life, but she’s in a dire situation and needs all the extra money she can scrape together to pay off her debt and build up some savings.
There are free yoga classes available online, particularly via YouTube, which is how I practice.
|Electricity||£42||Is this split with partner? If not, it should be divided up.||£42|
|Retreats||£40||I am a Buddhist and this is integral to my practice – again I tend to pay for them in larger sums and not save up||Again, I hate to advise Lotus to eliminate this, but for now, she needs to.||£0|
|Payment on loan from sister||£35||Fixed expense; no change.||£35|
|Christmas||£35||This is what it would cost me a month but I tend not to save up for this so always find myself in a pickle come Jan – £400||How low can this go this year? I hate to suggest austerity, but being creative with thoughtful homemade gifts and re-gifting is a priority this year.||£20|
|Fun money||£30||Varies hugely. Periodically I take courses and this would be included here. Contemplating doing an anatomy course which would be 3 x £85 payments for example||Unfortunately, this needs to be eliminated for the time being.||£0|
|Exercise subscription||£24||Online classes and a whatsapp community group – thinking about cutting this||Unfortunately, this needs to be eliminated for the time being.||£0|
|Gifts||£20||Small birthday or other gifts for friends and family||Unfortunately, this needs to be eliminated for the time being.||£0|
|Oil (heating)||£20||Comes in one large chunk, I don’t save for (again)||Is this split with partner? If not, it should be divided up.||£20|
|Clothing/shoes||£15||This would be the monthly amount but I tend to not have this saved up and then I have to cope with larger costs||Unfortunately, this needs to be eliminated for the time being.||£0|
|Mobile phone||£12||Giffgaff, very flexible and I own my handsets. This covers two phones I have – one smartphone, one dumbphone for when I want to be more mindful about my tech use||Fixed expense; no change.||£12|
|Donations||£12||Charity donations including for my Buddhist group||Unfortunately, this needs to be eliminated for the time being.||£0|
|Netflix||£10||We don’t pay for a TV license or cable/satellite TV so this is our only media subscription||Unfortunately, this needs to be eliminated for the time being.||£0|
|Magazine subscription for my son||£10||Unfortunately, this needs to be eliminated for the time being.||£0|
|Contact lenses||£10||Fixed expense; no change.||£10|
|Monthly subtotal:||£1,518||Proposed new monthly subtotal:||£1,215|
|Annual total:||£18,216||Proposed new annual total:||£14,580|
This proposal would give Lotus an extra £303 per month (£3,636 per year). This might not sound significant, but it is in this context. Lotus’s already low expenses also illustrate why priority #1 for her needs to be increasing her income. With these savings Lotus can attack her debts, in order of interest rate, pay them all off and then have another £388 to work with each month.
Step #4: Save Up an Emergency Fund
Lotus’s first order of business in a post-debt world should be to save up an emergency fund. Since she’s currently yo-yoing in and out of debt each month, I suggest she save up this emergency fund concurrent with her debt pay-off.
Thus, I recommend she not funnel all of her extra cash into debt repayment, but rather divide it up and funnel some into debt repayment and some into savings.
Lotus’s goal with her savings should be to have at least three to six months worth of her living expenses saved up in a checking/savings account that earns interest. If Lotus doesn’t already have a bank account, now’s the time to get one that offers as high an interest rate as possible (UK readers, please offer suggestions in the comments!!).
If we calculate this amount based on her current monthly expenses of £1,518, Lotus should target saving £4,554 to £9,108 in her emergency fund. This will be Lotus’s buffer against future debt. This savings account will ensure she can cover her necessary monthly bills without taking out another loan. This will empower Lotus to be in charge of her financial future.
Step #5: Save and Invest for Retirement
Once Lotus has:
- Increased her income
- Reduced her expenses
- Paid off all of her debt
- Saved up an emergency fund of six months’ worth of her expenses
…it’ll be time to turn her attention toward investing for her retirement.
I am (obviously) not an expert on the UK pension system but from my research, it’s my understanding that Lotus can–and should–find out how much State Pension she can expect to receive and at what age she’ll receive it. My source is gov.uk and the specific page for checking your eligibility is here. Lotus should do that first so that she knows the floor of what she’ll receive in retirement. It’s also my understanding that this State Pension won’t be enough to live on, but that it will supplement any other retirement savings.
If Lotus can find a new job that offers a workplace pension, that would be very helpful. Gov.uk has this handy step-by-step worksheet for helping you figure out your retirement, which I recommend Lotus complete.
Before we close, I want to address the questions that I haven’t covered yet:
Lotus Asked: Should I save for my son’s university fees? What do we do about housing?
Both of these are longer term goals and not things that Lotus can (or should) prioritize right now.
Regarding her son’s university costs, Lotus is in a “put your own oxygen mask on first” situation. She needs to right her own financial ship before even considering helping her son with university. He will need to take out loans unless her (or her partner’s) financial situation dramatically changes. If Lotus finds a high-paying new job and is able to tick through all of the priorities we’ve outlined above, then–and only then–she can begin to put away money for her son’s education.
Regarding housing, Lotus doesn’t have the assets to purchase a home. Additionally her share of the rent is fantastically cheap! It sounds like she and her family love where they live, so I’m not inclined to suggest a change here. Again, if she (or Rowan) comes into a lot of money, then buying a home would certainly be an option. However, at present, it doesn’t seem like a pressing desire, nor is it financially possible.
Lotus, I want you to feel confident that you have the fortitude and the knowledge to take care of your finances. You are a centered, mindful, caring person and you need to prioritize yourself as you journey towards financial wholeness. You can do this–we are all cheering you on! I wouldn’t give you all of this advice if I didn’t think you could do it.
- Increase your income ASAP. I suggest transitioning to full-time work at your current position immediately, then launching a job search for a higher-paying position.
- Start tracking your expenses with either pen-and-paper or one of the free apps mentioned in this article.
- Reduce your monthly spending per the suggestions in the above spreadsheet. Know that these reductions are temporary while you get your financial house into alignment. Increasing your income will deliver the greatest impact, but you need to hit this from both sides–income and expenses.
- Have a conversation with Rowan about the equitable split of all of your expenses, particularly your son’s music lessons. This division needs to be precise and fair to you both.
- Pay off all of your debt, starting with the highest interest rate and moving on from there. This will free you from the mental burden of knowing you’re in debt, eliminate your losses to interest, and give you more money to work with each month.
- Save up an emergency fund of at least three to six months worth of your living expenses. Do this concurrent with the debt pay-off, such that some of your extra money goes to servicing your debts and some goes to building up this savings account.
- Save and invest for retirement. Once items #1-5 are complete, turn your financial attentions toward retirement savings.
- Enjoy your life! You’ve built a wonderful life and my hope for you is that by setting yourself on this financial roadmap, you’ll remove the stress from financial management. You’ll have a clear plan with concrete goals. Once you click the buttons on your computer to set these things in motion, you can release the thoughts from your mind. You don’t need to be saddled with worrying about money all the time. That’s the true beauty of prudent personal financial management. It frees you from worrying about money. You set up a system, you follow the plan and you live your life!
Ok Frugalwoods nation, what advice would you give to Lotus? We’ll both reply to comments, so please feel free to ask questions!
Would you like your own case study to appear here on Frugalwoods? Email me (firstname.lastname@example.org) your brief story and we’ll talk.
Update from Lotus on 10/24/22:
“Hello frugal friends,
It’s been a year since my case study so I thought I’d give you a little update. Reflecting on change, I realise that what I’ve learned from this process is that there needs to be intrinsic motivation and it needs to happen at a pace that feels right to me, so that’s what this update is all about. I feel happy with the changes I’ve seen this year, even though they’re possibly slower than you would expect!
I really took Liz’s advice to heart in terms of me being in a worse state than I had thought, and making sure that the priority is that I can meet my expenditure properly out of my income, and not go into further debt. I had a word with myself about those additional things – Netflix, yoga etc. – that I really actually couldn’t afford and cancelled pretty much most of them. I also reduced my son’s music lessons. I think I finally got the severity of it all. I also renegotiated one of my loans from 18.6% to 11.4% which felt good. I also set about really just focusing on eliminating unnecessary impulsive daily expenses – which I’ve now been tracking properly – and repaying extra where I can on debt.
This time last year I owed £8,378.20 – 2 bank loans, a loan from my sister, some arrears on my student loans, which were stopping the loan being wiped out (which they do after 25 years). Right now I only have one bank loan left to pay, and the balance is just £2,360.34. My 25 year old student loans (which I didn’t include in my debt total) have also been written off. If I pay minimum payment, this remaining loan will be done in November 2023, but I plan to pay it off more aggressively, hopefully in six months. It was so fun to pay the others off!
I have found the income side much harder and there’s not been a lot of movement on that front. I feel like I needed to get into the right headspace of actively enjoying paying off debt and saving, to then feel like I wanted to bring in more income, rather than I had to work my butt off because I was in the ditch.
What I did do was change my job in February to something that is much more my scene – working with other Buddhists – and was paying around the same wage. However, it’s a work from home role, so I eliminated my travel line of expenses. In the light of inflation/cost of living, I’ve also just negotiated a 10% pay raise, so I feel I know my basic needs can be more than met. And over this next year, now I’m more happy at work, I can focus more energy on a side hustle to bring in some more income. I also feel more able to do this because I’m motivated due to my debt progress. I’m lined up to start teaching some yoga classes in the new year and am making a start writing a book, so these are exciting projects to be working on.
I’ve also started saving, as Liz encouraged me to start building an emergency fund alongside repaying debt. I only have around £700 at the moment, so it’s small, but anything spare I’m getting is going in there. As I don’t have a car or a house to maintain, I feel ok about this pace and once my debt is paid off in the next six months I’ll be able to throw much more at it.
It’s not the most audacious update, but it’s a slow and steady picture of someone really getting to understand their money a bit better. I feel motivated because I can see the effects of my actions, and I’m hoping that in another year there will be even more steady progress to report!
Thanks again for all the brilliant advice, from you Liz and from all you in the comments.
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