To try to get our household outgoings to <2k

[Jillybons]

Dreading work tomorrow and want to try and start my own business. To do this we’d need to get our household outgoings to less than 2k. AIBU to ask if we could and where you’d cut costs. Budget as below currently

• Mortgage 785 (interest rate is 3.5) so probably could get this down
• council tax 100
• electricity and gas 100
• Food 300
• Leisure incl takeaways, clothes, socialising, holidays, personal savings etc 500 for the two of us
• Netflix, Prime 30
• 2 x car insurance 110
• Petrol/car maintenance 200
• insurance home/Homeserve 50
• water 30
• Internet 35

Think that’s it! Though the smart people of Mumsnet will probably figure out something else we’re spending on 🤦‍♀️

I thought the food budget was very reasonable. Get rid of homeserve and ask friends and neighbours for names of tradesmen they use and put the list somewhere safe for emergencies.
Shop around for insurance. If you run your business from home you’ll use less fuel. I’d try and cut the leisure spending. There will probably be a couple of months a year when it’s higher but you’ll make savings the rest of the year.
You could try earning more such as doing surveys, I make a few hundred a year at that, selling unwanted stuff on eBay about £300 a year, can easily make an extra £1K.

Is the 300 food per month or week? Seems very low if it’s monthly although take aways could be getting you through the week.

Try to get a cheaper mortgage rate
Shop around for car insurance
Make sure you don’t drive unnecessary journeys eg do your food shop on the way home from work
Netflix or prime . You don’t need both . Or share a Netflix account with a friend . My mum uses mine because she doesn’t watch very much tv.
Cancel your tv license?
Sim only for mobiles
Keep saving but cut down what you spend on things like takeaways, coffees etc .
Don’t buy magazines .
You don’t need a holiday fund atm
Sign up to sites like topcashback and Quidco if you shop online ?
Bulk buy items ,when you see them on offer, with a long shelf life.
Sell items you no longer use
Only buy things you need

@Jillybons

I think leisure money is probs the wrong word as it’s used for ‘everything else’ I.e grabbing a coffee, 100 quid a month into an account for once a year holiday etc

What do others spend on ‘leisure/everything else’

I'm saving hard for a building project at home. I lived for a while on a very low income so got used to economising - I learned to see it as a fun challenge rather than a hardship. So each coffee I forgo makes me happy because it's a step nearer my goal! Even 2 coffees a week @£3.50 is £364 a year...surprising isn't it. So little gains all add up. You don't need to go without everything fun but the spending choices you make should be conscious ones.

Menu planning is also a massive help in preventing impulse spends and keeping your supermarket shop under control. It also means you're much less likely to fall back on a takeaway when you're tired or in a rush, because you have already organised what you'll eat.

@Brokenrecord3006 2 coffees per week. 4 weeks x 2 = 8 coffees. £2.50 x 8 = £20. Is it really so hard.

First things would be Netflix and Amazon Prime. Do you pay for a television licence? We are a no TV household so anything spent on watching stuff seems like a huge waste. Also, takeaways are expensive. What is your breakdown of leisure costs?

Remortgage, the rate is 0.25%!
I have tv, broadband, Netflix, 3 phone and 2 plans on sky £90 a month!

You really should shop around, and curtail the takeaways....dine in for two £12 M&S.....tastes better and is better for you!

Why is your mortgage 3.5%?

@Cocomarine when we bought the house we were first time buyers with only a 10% deposit and wanted to fix to avoid unexpected costs. We’re now at 65% LTV so hopefully can get a better deal soon! 😃

500 on leisure/anything else is huge. And 300 for 2 people for food is also an awful lot. I spend 400 on 5 adults (2 teens but eat as adults).
Pretty easy to cut these bills.
Also Netflix and Prime are not essential at all. Cut them too and just use tv/record programming and freeview players like iplayer for a while then add one steaming service in for a couple of months, cancel and then use the other one for variation.

*streaming obv not steaming!

[quote Jillybons]@Cocomarine when we bought the house we were first time buyers with only a 10% deposit and wanted to fix to avoid unexpected costs. We’re now at 65% LTV so hopefully can get a better deal soon! 😃[/quote]
Remortgage!

Find out your exit fee and use this calculator

www.moneysavingexpert.com/mortgages/fixed-mortgage-calculator/

There's a good spreadsheet here www.moneysavingexpert.com/banking/budget-planning/ which has a list of almost everything - haircuts, presents, dental treatment, prescriptions, opticians, the odd magazine etc. Your leisure will need to be broken up into specifics though.

I remember doing the demotivator too.

[quote Jillybons]@Cocomarine when we bought the house we were first time buyers with only a 10% deposit and wanted to fix to avoid unexpected costs. We’re now at 65% LTV so hopefully can get a better deal soon! 😃[/quote]
You should have been on better deal like 20% ago!🙈

@JackieWeaversZoomAc

Do the free 35 day trial on YNAB. I've never had such a great hold on my finances & spending. And saving! It's paid for itself in the first month. Wish I'd discovered it years ago.

Me too. It really makes you account for every penny and has made a huge difference to what I now chose to spend my money on.

Good grief OP look at your mortgage, you've likely thrown hundreds, potentially thousands, down the drain.

How do you spend £400 on 5 adults - genuine question?

Am I the only one who thinks £500 to spend for everything else (including putting money into savings!) is particularly high between two adults? That's £250 each for a whole month.

If you can remortgage soon then you'll be laughing with a 65% LTV. It should be somewhere around 1.5% 👌

Damn it, I meant is not particular high*

@sbhydrogen did you mean not particularly high ?

If so then I'd agree. It's £400 per month once you take out the £100 for holiday savings, so £200 per adult. I get that if they want to really budget then it could be reduced but by the time you factor in a haircut-£30, a clothing item - £20, some toiletries-£10 it isn't that much. And whilst I totally get that buying coffees for the sake of it is a waste of money, if you're meeting a friend then it's a social occasion and therefore justified.

Going back to your original point about wanting to cut household costs so you can quit work and start your own business, how realistic is this ? What sort of business are you planning? Will it need capital, premises, other start up costs, or just time? Do you have any savings?

Will one of you continue to bring in an income to cover the basics, is this the basis for the £2k?

The expenses you have listed above are a little above £2k, but there is a lot of scope to cut back, without having to go to extremes, especially if you can get a cheaper mortgage. However, you will probably need to remortgage before you go self employed, otherwise you might not qualify until you have at least 3 years of accounts showing a profitable business.

The main areas to look at will be mortgage, personal spending, car insurance and maybe a little off your internet costs. You probably won't be able to get much off your food bill, if this also includes the dog's food.

You could have a look at the Moneysavingexpert budget planner, and also get the weekly email for ongoing tips about living a more frugal lifestyle.

www.moneysavingexpert.com/banking/budget-planning/

Am I the only one who thinks £500 to spend for everything else (including putting money into savings!) is not particularly high between two adults?

It's not particularly high, now it's clear that it actually is a catch all pot for anything that isn't a main bill. And even things that should be main bills (top up food shop).

OP's original description of it as "leisure" made it sounds like it was all spent on coffee and takeaways, which is what a lot of people have responded to.

If OP had split it out as
savings £100
top up food shop £50
save for holidays/days out £50
clothes/haircuts/beauty treatments £50

etc. I think there would have been fewer comments

Am I the only one who thinks £500 to spend for everything else (including putting money into savings!) is particularly high between two adults? That's £250 each for a whole month

It depends on your income, outgoings and priorities. If the OP is giving up her income to start a business, they probably need to get some of those things right down (holidays, takeaways, clothes, coffees) in order to free up enough money to cover not having an income for a while. Continuing to spend hundreds of pounds a month that you don't have on non essentials can be a very quick way to serious debt, or being trapped in a job you don't want, to pay for it.

So priorities. Does the OP want the chance to start her own business, which is likely to have a period of no/low income, plus maybe increased costs, or does she want to continue to spend freely on holidays, takeaways, clothes etc. Because it's unlikely to be possible to do both, without getting into debt.

Huge leisure bill...
Do you need 2 cars?

@Jillybons

I think leisure money is probs the wrong word as it’s used for ‘everything else’ I.e grabbing a coffee, 100 quid a month into an account for once a year holiday etc

What do others spend on ‘leisure/everything else’

People spend what they can afford. This is £500 you mostly don't need to spend, so it appears it is up to you. There's no magic in budgeting!