Can I please ask those who have sailed close to the wind financially, exactly how bad did it get and when did things improve?

(18 Posts)
poachedeggs Tue 12-Jun-12 15:30:54

We have, on paper, a reasonable income (DH works FT and I work PT and between us we bring home net £2250 a month, plus £130 CTB and £240 TCs).

However, we have a big mortgage, a car loan, a huge fuel bill and childcare for two children to pay out of that. I have a massive overdraft and max it out each month, two credit cards (about £2000 in total) and I don't even think about the student loan (it disappears with tax so I don't even see it!). We have no spare cash each month, by the time I have paid professional fees, car repairs/maintenance, various bills etc there's nothing left! We spend less than £200 a month on groceries/nappies etc and never have holidays. We do visit family 3 or 4 times a year but there are no accommodation costs with these visits and the travel costs equate with what DH would spend on fuel if he was travelling to work. Our house is shabby and unkempt but we can't afford to do anything with it. I have no clothes - spend about £100 a year in total between charity shops and supermarkets so everything's washed out and holey. It's just depressing.

I know people are much, much worse off than us - our income is IMO very good - but we clearly can't go on and on like this, with the credit cards creeping up each year.

DS starts school after the summer which will save us a little in childcare costs but I can't see it making much difference - we might add less to the card but I can't see us paying much off it.

Stories of recovery and optimism much appreciated!

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countydurhamlass Tue 12-Jun-12 17:58:08

when me and dh first got together we had debts which meant he had to do lots overtime every week just to have enough money to survive on. twelve years on and we now have a low mortgage and a small car loan both totalling about £36000.

it was hard work and its only been the last three of four years we have had money to buy what we want.

we sold our house (the equity was only about £2500) and used the equity to pay off some our debts. we then rented a property and did without sky tv, mobile phones and socialising for a couple of years. we transferred all our debts onto one credit card on a 0% balance transfer for a set period and kept on paying the same amount we would have done for a year, that way the debt came down quicker. we also cut up our other credit cards. for the first few years we didnt see a difference as we made a point of paying the same out to clear the debts as we had done before. we had a separate account for our wages to where the bills were paid from and each week we transferred money into the bills account so that we werent tempted to spend the extra we managed to have at the end of the month. My DH and a few of his work colleagues car shared (i think there was three of them) and so DH only used the car for work one week out of three and therefore saved us some money. the alternative was getting rid of the car and using public transport (a weekly ticket was cheaper than running a car when you add in the insurance, petrol etc)

we now put our CB and TC into a separate account which pays for a holiday for us each year.

poachedeggs Wed 13-Jun-12 07:05:15

Wow, sounds like hard work paid off, well done smile Unfortunately for various reasons we have to persevere as we are for now (although the opportunity to do some overtime would be lovely!). It has to get better eventually <optimistic>

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Tinkerisdead Wed 13-Jun-12 07:20:56

My dh's business went bust in 2010 and we had to sell our house losing 53k in equity. We had credit card debts and car loan etc.

We're now debt free but live in a rented house with a little bit of cash each month left over and had dd2 four months ago.

You say you have two credit cards and a big fuel bill. One of the things we did was get a tesco credit card because if you buy tesco fuel with it you get extra points. My dh's fuel bill meant i was making 8.00 a month in points, on a double points exchange it pays for xmas. Ive just spent 100 on tesco direct purely from buying fuel.

Do a balance transfer for the card that has the highest interest first and work to pay that one first. We also had no sky, mobiles are on sim only packages etc. we have no assets but being debt free makes it worth it. It can be done. We were living in 1 room at my mums for weeks and my mil had to act as guarantor for us to rent.

poachedeggs Wed 13-Jun-12 07:32:27

Gosh that's tough. But you've survived, which is inspirational!

Thanks for the ideas - we already do the Tesco thing, the vouchers are great for picking up toys cheaply during the exchanges so it takes the pressure off at Christmas. Cards are 0% and we cancelled sky last year (only had it because no terrestrial signal here). We're both on contracts but will probably go PAYG once they're up. It'll only save about £10 a month but every little helps smile

It helps to hear what others have achieved. The pressure will lessen slightly in theory as the DC grow up and we're using less childcare but I feel like I'm wishing their childhood away sometimes sad

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Pedigree Wed 13-Jun-12 07:53:47

There is a phrase that has kept me financially afloat for years: always make sure that fixed expenses are down to the absolute minimum.

So I have ensured the mortgage payments are the lowest I could find in the market, dito for other household bills. I have credit cards for emergencies but never spend more on them than what I can pay at the end of the month. If i have to borros. Money for something, in my eyes that means I cannot afford it and that I should wait and save money until I do.

However, life is not all about frugality, I might be very tight in parting with my money when thinking about bills and loan interests. But that gives me some freedom to spend the remaining money in things I enjoy.

poachedeggs Wed 13-Jun-12 08:09:50

Ah yes, well, pedigree, I'm of the same view. However, when your emergency credit card has to be used to keep the car on the road and there isn't anything left to clear the card at the end of the month it gets more complicated!

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Pedigree Wed 13-Jun-12 11:58:40

Oh yes, i just spent two weeks on my bike as I couldn't afford to sort a problem with my car, but by waiting the credit card will be paid in full At the end of the month.

poachedeggs Wed 13-Jun-12 18:26:34

DH works shifts, 40 miles away grin

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clam Wed 13-Jun-12 18:44:18

At one point, we had about £50 a month "spare" after all else was paid for. For us though, and I'm talking 10 years ago, there was a massive relief financially when both dcs had started school because we hardly got any (financial) help with childcare and no tax credits. So we were able to feel the benefit when nursery fees stopped. Also, once they were both at school, I could increase my working hours a bit, which helped.
But, as you say, you don't want to wish those precious years away. And they're expensive in different ways now!

Pedigree Wed 13-Jun-12 20:22:36

Perhaps that's the reason you are not that well off Poached, you have reasonable expenses but a great part of your money goes in petrol, sadly apart of changung jobs, there's not much elsr you can do, which is obviously something I would NOT advise in this economic climate.

pancakeboobies Thu 14-Jun-12 14:37:33

I would not say we are out of it yet and are still quite close to the wind in that we have basically no money left at the end of the month but have spent the last 18 months gradually getting to a better position.
I started last year with a £2000 overdraft which we never came out of and about £500 on credit cards.
I already work PT but managed to get some extra short term work, which on top of setting up my own little business really helped. I bought things from charity shops/ car boots/ ebay then re sold on ebay. I bought a lot of items and averaged about 2 to 3 pounds profit per item. Every time I got to £100 on my paypal account, I transferred it to my bank account and reduced my overdraft by £100 and religiously ensured did not go over my new O/D amount. Slowly but surely my balance was down to 0.
I have now changed banks to one which will actually pay me some money in a few months. The O/D charges really mount up.
I also meal planned ensuring did not buy anything we already had and used up our store cupboards of spices, cleaning and beauty products which reduced my weekly shopping spend a lot.
I have also now got a spreadsheet with every expense on it down to dinner money, family weekend spending, basically everything. It has on it the days all bills go out. This means I know exactly what any overspend will do further on in the month and means I can cut back on petrol/ food shopping if have overspent a little.
At the start of each month a little is put aside for longer term costs like car tax, mot, holiday, birthday, clothes and xmas. This hopefully means that this year we will save a little by paying a full year of car insurance in one go and not paying an extra £50 or so to pay by installments and will hopefully mean we have the larger sums available at the right times.
Although it is very tight and we are by no means living extravagantly, we are now managing to live within our means. It is a good feeling and I feel very in control. It is horrible when you don't know exactly where you are with your money.

economymode Fri 15-Jun-12 13:06:41

Do your childcare costs come in at less than what you earn PT?

I only ask because we are in a similar situation - husband earns a good amount, one child but tax credits recently stopped. I decided not to go back to work, because what I earned at my old job wouldn't have been enough to cover childcare. I do a bit of freelance from home when I can, but we're having to be careful with the pennies.

However, I do realise that we're very fortunate compared to others - we do manage to put some money into savings each month, but have had to cut the amount that we do. Savings we now use for car bills and one-off expenses (re-did our wills after the birth of our son, that kind of thing) rather than necessarily for the future (although I do pay into a private pension fund that gets government tax relief so future is kind of covered).

I have just started to pay with cash for all 'real-life' transactions when I can (ie anything other than internet shopping). So, £100 for two weeks covers food shopping and all sundries. Fuel I do put on a card though, but limit myself to filling up once a month. Once the money allowance and fuel has gone, it's gone. I've found this is a really good way of curtailing spending. Likepancake we don't have an extravagant lifestyle by any stretch of the imagination, but it works for us.

CogitoErgoSometimes Wed 20-Jun-12 16:47:29

House-selling bad... <grim> It was the mid nineties, my exH had walked out leaving me with a monster mortgage (five times my then salary) and joint account overdraft to match and then the base rate went up to something silly and I thought I'd had my chips and would lose the house. However, the base rate came back down a little, I renegotiated the mortgage with the bank using my DM as guarantor, took in a lodger with the Rent a Room scheme, cut costs hard, worked like stink and got a promotion plus a pay rise. Took a year to pay off the overdraft, two years to remortgage in my sole name, three years to lose the lodger and, after five years, I had enough put by to start doing home improvements.

Badvoc Thu 21-Jun-12 20:54:32

You should be really proud of yourself cog.
Your story is really inspiring.

CogitoErgoSometimes Fri 22-Jun-12 08:18:09

Thank you. None of us probably realise how resourceful and resilient we are until our backs are against the wall. My little tale of woe is from nearly 20 years ago. If it's any reassurance to people in a similar position today, I can look back now and see that because of that experience my aversion to debt saved me from the whole credit crunch/boom/bust situation of the least few years. Plus I'm reasonably confident that, if bad times happened again, I could cope.

Badvoc Fri 22-Jun-12 08:37:47

I feel very negative about things ATM cog.
Lots of reasons.
Am trying to decide what to do when ds2 starts school next year. Will need to retrain I think but as what?
Thinking of our cc debt too which I know isn't massive compared to some but it worries me. Not paying any interest on it til next dec helps!
Wish I knew what to do.
Been out of the workforce for 5 years and so therefore it would seem I am pretty much unemployable!

Babelange Fri 22-Jun-12 13:42:58

The worst it got was when I was on maternity leave with DS2 & DH wasn’t working and I told him I couldn’t meet the mortgage; he did go out and get a job – one that has a generous discount on useful things like children’s shoes and subsidised holidays. At one time the childcare costs were more than the mortgage (ie. like having a second mortgage), but these are getting less now. Getting a childminder meant that when DH was on a shift rota, we negotiated around that and by the time the childminder had a baby, DH had a different job with a different rota which was conducive to using a nursery/after school club.
Apart from food and utilities, childcare is the most carefully budgeted area of expenditure; I use the company’s childcare voucher scheme and although no longer so tax efficient for new starters, it creates an account for putting the money aside. This summer childcare for 2, bearing in mind 2 week’s holiday – this will be £720 – one year when it was closer to £900 – there wasn’t enough – I asked nicely if I could pay in two instalments. I am always respectful of childcare providers; I always pay on time, collect on time etc. As I have used them for 5 years, this wasn’t a problem.
Looking around, there are lots of SAHMs who have become childminders or TAs – they might start as school helpers and then move on. Other families are really resourceful with DPs working around each other – one mum shelf stacks in the evening – another did this until her plum job of working in the superstore’s pharmacy came up – she was in a better position to apply. I am surprised more people do not study – perhaps they are doing this covertly!
I hardly ever spend any money on myself – repairing everything including tights and knickers! – but that’s starting to change although now my appetite for spending has disappeared. I follow a no cash rule – and always ask for a receipt for everything, even in the corner shop, and they are held in a bull-dog clip to look at as and when the question of not having any money left needs to be answered!
The shabbiness of the house is only now being addressed… so gradually spending less, earning incrementally more over ten years has meant a more comfortable life. There is still debt – which is being decreased – all 3 paid off by 2014, although the challenge is to pick them off one-by-one sooner. Sometimes you need to accept that this is a “long haul”.

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