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 🤦‍♀️

OP, this could be such an eye opening exercise for you! I'm quite excited about how much you could save.

You've had some great tips, but wanted to add this one - sign up to cash back sites (Quidco, top cash back etc). Use them whenever you shop, particularly when you switch a provider such as insurance, energy etc. You'll quickly build a pot of money that you can either withdraw or get a further % to withdraw as vouchers for meals out, day trips, gift experiences etc,

I know this is a bit woe is me but I didn't have a 'proper' holiday for a few years when I started my business.

Starting one means you really have to reassess what's most important to you and what you're willing to go without - for some people it's a hobby, for others a holiday etc.

Have you got a really clear, detailed business plan including all finances? You need to do this ASAP ideally going through it with a business adviser or accountant because there will be lots of things you haven't thought of - that was the case for me and all of my friends who set up a business.

So you need super clear, detailed outgoings (not just leisure lumped together but go through three months statements to work out the average spent on coffee / top ups / clothing etc per month) and also a very detailed financial forecast for your business too.

Leisure incl takeaways, clothes, socialising, holidays, personal savings etc 500 for the two of us

Socialising and holidays? Hasn't this spend already reduced dramatically due to lockdown?

Does your partner want to give up all their leisure or fun money just because you’re not happy at work?

OP my DH took voluntary redundancy in September to start his own business and so we have been through the exact same exercise to adjust to now living on my salary alone until his business starts making any money.

The main changes we have made are:

• Food shopping. Our budget is slightly higher than yours (we also have a 5 year old) but we have switched to a weekly online shop and very rarely buy anything in between. At first I felt we were spending more on the weekly shop than I was used to but I quickly realised that it was cheaper to spend £100 a week on a full shop than go to the Tesco express or similar every 2/3 days and spend £30-£40 a time.

• Phones - we switched to much cheaper SIM only deals. For DH this meant buying himself out of a more expensive contract but we wanted to have lower monthly outgoings. Yours seem quite cheap already though.

• Pots of money for everything. We worked out the annual costs of running both our cars (insurance, road tax, petrol, MOT/servicing) and divided it by 12 and we now set that amount aside every month so when the bills come round the money is there. Slightly cheaper than paying monthly for insurance etc as well. We set aside money separately for DS’s clothes/shoes etc and anything that’s left at the end of the month goes into a savings account for him.

• it doesn’t save much but we’ve switched to a lower Netflix package and cut Amazon prime as we felt we didn’t need both.

Your leisure spend doesn’t feel high to me but it’s all relative I suppose. My monthly “spends” mainly disappears on small things needed for the house, a weekly takeaway, the odd bit of clothing (though I really don’t buy much) and things like birthday presents and cards.

House repairs, appliances breaking down, car repairs?

500 per month is huge on leisure. We spend £200 per month between us tops, that includes clothes, hair, makeup, basically anything personal we want to buy. We don't do takeout coffee or grab and go meal deal type things.

You can definitely cut out take away coffee and reduce your food bills. 2.5 of us here (DSD here part of the time) plus 2 cats. We spend £200/250 pcm on groceries, toiletries etc. Plus cat food, cat litter. We spend maybe £20-30 tops on one takeaway a month but you wouldn't have to do that if you're serious about saving.

Go through your bank statements and look at everything you spend to see where you can cut. Definitely get rid of the TV licence and just stick to on demand TV. Isn't the cheapest Netflix about £6 too?

@Jillybons for leisure we don't have a set budget but in lockdown we've hardly spent at all. Maybe £50 for the month if we've had a takeaway and rented a few films.

For normal leisure spends it isn't much more, we will choose to either have a takeaway/eat out/ go to the cinema once a month and use vouchers to keep the cost reasonable.

Get a cheaper energy deal and work on bringing your usage down - we pay £47 a month.
Get rid of Amazon prime, it only encourages you to spend more.
Your petrol bill is high - could you use the car less or refill at a cheaper garage?
You can definitely cut the food bill. We spend up to £200 a month on food, cleaning products and groceries for the two of us.
For leisure I budget £100 a month each.
And definitely remortgage! We were FTB in 2019 with a 10% deposit and our interest rate is just above 2% which was unusually high due to DP’s employment situation - you will be able to get below 2%.
Get rid of homeserve and always pay insurance upfront rather than monthly if you can - it’s cheaper that way.

I would say takeaways is surely a thing you can cut out.
We swop each month between Prime and Netflix. Can't justify having both, just two of us, only using for 1-2 hours in an evening. Re Homeserve, we used to have that, then switched insurance companies and they offered a different home emergency service similar to Homeserve, but only £3.30 a month. We have just renewed with them, had a few callouts in the last year, they have been fine.

@Wanderlust20

Would love to know how people spend less than £300 on groceries! We're about £400-600 for the two of us Didn't realise this was a lot

wow you spend £150 a week on two people? I spend £100 pw for four of us. I don't scrimp either tho we do eat mainly veggie. I imagine people spending £75 a head either drink a lot of wine, buy all ready meals or shop at M&S tbh.

Op I agree your car insurance is high (but understand it varies so much). Ours is about £200pa per car. Small cars tho - any chance of downsizing yours?

Otherwise, phones could be cheaper, ditto tv costs, no need for Prime AND Netflix. Internet sounds expensive. Food is not low either, especially if you have regular takeaways. Shop at Aldi, go down a brand, batch cook, meal plan, stop buying snacks like crisps. You should be able to get that to £200 pm.

[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]
If you’ve gone from 90% LTV to 65% LTV all within the fix period, how long was that fix?!!!! 😳

Presumably you’ve overpaid a lot?

Do you really need two cars is my first thought? The other two are the mortgage (possible a better deal) and leisure.

Make sure you are on the best deals for each of your policies e.g switch mortgage after the fixed rate is up, change your Internet when the contract is up, pay for insurance policies in one lump sum and make sure you get the best deal rather than staying with the current provider. Use quidco or similar to ensure you are maximising your cash back.

how are you paying 30 quid for Netflix and prime?
its 7 each ish

I think I’m one of the few who think that £500 pm for ‘leisure and everything else’ isn’t actually that much. Where else does unexpected costs come from - additional car maintenance bills, car tax, boiler breaks, need new washing machine, holiday payments etc come from? The thing about budgeting effectively is to make sure that you budget for EVERYTHING including those thjngs that you will need to replace in the months or years down the line

@Covidatemyhomework

I think I’m one of the few who think that £500 pm for ‘leisure and everything else’ isn’t actually that much. Where else does unexpected costs come from - additional car maintenance bills, car tax, boiler breaks, need new washing machine, holiday payments etc come from? The thing about budgeting effectively is to make sure that you budget for EVERYTHING including those thjngs that you will need to replace in the months or years down the line

That's what she saves for every month though, surely? Nobody has all those payments every single month - it's just part of general household savings.

There's no need to spend £500 a month on the things you've listed.

*2 coffees pw 20
Hair 30
Theatre ticks 25
Night out 40
Magazine 5
Hols 50
Xmas 40
Birthdays 20 (all cards, mum, dad, nieces)

Adds up to 230 - not sure where to cut that?*

Well if you're trying to save money, you don't buy takeaway coffees, spend £25 a month on theatre tickets or buy magazines. Its not rocket science.
I also don't get my haircut every month (and my husbands haircut costs about £12, not £30) and we don't spend £500 each on Christmas presents over the course of the year either.

That's what she saves for every month though, surely? Nobody has all those payments every single month - it's just part of general household savings.

There's no need to spend £500 a month on the things you've listed.

But that £500 the OP describes INCLUDES savings. So yes, she isn't spending on those each month, but is saving for when those things come up.

give up savings and holidays for a while

I think it would be a good discipline to give yourself a fixed window for the 'savings holiday' and have the target to pay them back in a reasonable timeframe

Time goes past very quickly, it wouldn't be ideal to look back ten years later and wish you had kept the savings. Holidays not so much but savings are always useful to have, even if it's not much fun putting the money away.

I would also break down the 'leisure costs ' as see what savings can be made there.

I prefer to cut back really hard for a short period to build up a bit of a cushion of savings. Could you start with the lower amount before your income actually drops and save the difference ?

@Wanderlust20

Would love to know how people spend less than £300 on groceries! We're about £400-600 for the two of us Didn't realise this was a lot

Me too!

£300 is about £10 a day. I spend that on a sandwich and coffee most days let alone proper eating.

@summeriscomingsoon probably by making their own sandwiches and coffee at home...

Well that's no good unless they come and also make mine

Go down to one car, move so cheaper mortgage, internet is high, leisure, savings.
Your mortgage is the biggie.
We don't earn 2k a month, let alone spend it. So it can be done easily, you just cut your cloth accordingly.

@chocorange1 £40 monthly budget for Christmas isn't about buying one gift, it's about the cost of Christmas which for us includes:

Cards
Gifts for relatives
Tree
Probably an outing/office drinks
Petrol for visiting relatives

Far, far more if one has children and host. Some Christmases I have served 50 main meals over 4/5 days.

I don't think two coffees a week is at all excessive BTW.