Living beyond our means.. will it ever end!

[Wharawho]

Aibu, to be completely fed up with living month to month and barely being able to pay for everything?

For context, we're a family of five... me, DH and 3DS.(7, 6 & 3)
Household income of £70k
3 bed semi- mortgaged (nearly £1k a month- this double last feb when the interest rate went up 😞)
2 cars (15yo car paid off and family car on pcp at £450p/m)
For context we need the family car to fit all 3 kids carseats in and I also require a big car for my business. I hate having finance, but we can't work without two cars or even go out as a family if we had one small car! And we definitely don't have the money to buy another outright.

Despite what I think is a reasonable household income, 1 week after being paid, almost every penny is claimed by our household bills and expenses and we spend the rest of the month penny pinching.
We're one big unexpected bill away from not being able to buy the shopping and I'm fed up of it to be honest!
We don't have big expensive holidays or eat out/ have lots of takeaways.
If anything I'd say we live quite modestly... we've lived in the same house for 6 years and still haven't be able to finish renovating it, as we don't have the money!
I haven't had my hair cut for 2 years, as I can't commit that much money to myself... I'm also in desperate need of a new pair of glasses, but I can't afford to buy a new pair ( I have to wear them all the time!)
Days out tend to be outdoor places, with a homemade picnic and maybe an ice cream for the kids!

We buy our clothes from places like Tesco and primark, rarely do me and DH get anything only when we really need something, just the kids and we pass down clothes through our boys as they grow to save on money.
The kids attend swimming lessons once a week, this is their only "luxury" or "extra thing" they do I'm all honesty, and something we prioritise, as we think it's important that they can swim! Even this I price shopped for the cheapest lessons to make sure we pay as little as possible!
We do have the typical Netflix, Disney etc and go for a Costa 2 times each month, but again nothing extravagant... just living and trying enjoy small pleasures and have something to look forward to!

I paid myself today and after all of our bills and food money we literally have £160 to last the month,.. which includes entertaining the kids, buying school clothes/shoes, treats, covering unexpected expenses or car/house repairs!
We don't have enough to save for a rainy day fund and the minute something comes up, any savings we do have are gone and we're back to square 1!
Last month the 15yo car needed new brakes/ discs and a few other bits to pass its mot, setting us back £500.... we paid for it on our monzo flex (we only use this in emergencies when we really can't afford and pay it back ASAP!) but now this has left us short last month and this month paying it back! (As I say... one bill away from despair)

I work for myself, from home and my business requires lots if space (I've converted our garage)... however my business is limited by my space and to grow and make more money I need a bigger work space/ bigger home.... which we can't afford!

How do people afford to go on holidays, have big flash cars and big 4 bed detached houses?!?!
18 year old me would have been thrilled to bring in £70k... but here we are struggling to make it through to the end of each month!

I guess this is just a rant really, as I'm feeling so deflated looking at our bank balance before the month has even started! 😞
Please tell me I'm not the only one experiencing this!

You shouldn't be saving for your baby! You've got years ahead to do that.

Beggars belief how parents do this when they are struggling.

Your baby's savings should be money from friends and extended family at this stage.

I am wondering if they can’t remortgage as they are now effectively only on one salary and wouldn’t pass affordability checks so can’t switch lenders.

I always think it is easier to earn more than cut back. At one point we both had full time jobs plus side jobs eg at weekends, not easy when we had 3 children under 4 at one point but did help financially. Is there another job one of you could do eg all day Saturday.

Could all 3 children sleep in your room and you let the other room out?

I've just totted everything up and you have around £800 left at the end of the month?

Clearly it's the £350 HMRC bill that is crippling you at the moment, but considering you're spending nearly £200 a week on food (which is NOT taken out of that £800) you shouldn't be struggling so much. All your little extras of course have used up most of it, but you're not going to need to do nearly £400 of work on your cars every month are you?

Your kids are primary age (I think? Please correct if I'm wrong); cut down on the food bill.
Get a different car. £450 a month is a HUGE luxury. I have a Qashquai +2 which I'm paying £100 a month for. Prior to that I had a Zafira which was only £1000 all in as it was ancient. Got rid when it started to cost more to service than to run it.
Really think long and hard about your business. Either it's more important to have money now, or to build up your business now. You clearly can't have both at this point in time.

I cook from scratch for similar family set (with packed lunch for one child weekdays) and struggle to come under £500 a month. We don't buy booze & toiletries are own brand or basic but do eat quite a high protein diet so lots of eggs, chicken, fish. I'd be interested to see how you manage to get your shopping bill so cheap. I find it's not the meals but the rising cost of fruit & veg, vast amounts of bread products my teenagers consume and dairy products that seem to cost the most now.

In regard to the ‘too many coaches’ point, I actually agree. Every apparently successful* MLM hun seems to be trying to pivot to business coaching as people become more aware that most members lose money in MLMs and therefore refuse to sign up (and buy the products to sell on).

Interestingly, most MLMs seem to train their salespeople that ‘profit’ is what you make - ignore all expenses. This seems to be exactly what the OP is doing. MLM math is no way to run an actual business.

*successful in MLM generally means either lying through their teeth about making money or making money on the backs of the debts of their down line)

@GameOfJones I agree with you - especially about that car finance. I live alone and my food bill is around £25 a week. Cutting down on meat made a big difference as does cooking from scratch.

Childcare is very expensive and adds up. How much are you paying monthly?
I noticed a big difference when nursery was no longer needed, then after school clubs no longer needed

That's a valid choice but you can't then moan you are skint!
You have made a very intentional choice to prioritise quality of life over income so things will be tight.
You are spending a high amount on car finance, especially when the justification is that you need it for a business that only makes mine wage.

If you want to prioritise quality of life (which is a very understandable choice) you will have to knock some material things like the car on the head.

Our income is higher than yours and we have lower mortgage than yours (small terraced house), no car payment (have one 10 year old car) and one child. We don't have to worry about paying for bills, food, days/meals out, hobbies etc. But if our income was the same as yours/we have more children it would be a different story.

Shocking poverty conditions in the twenty first century UK. Should be more distribution.
Also might not be civil service jobs locally

She says nothing because her business lets her care for the children with some assistance from her DH.

Do you have 3 children?! And why are you earning so less? Did you not bother with an education? Don’t be so nasty! People can struggle on any salary and 70K with 3 kids is not much money at all!

It’s amazing how they all have time to post during the day on here too, isn’t it…

Exactly. Giving up a good job when you have THREE dependents to provide for is a luxury. Many burnt-out people don’t have that option.

Other luxuries will have to go to offset it. The car and the giant grocery bill to start.

Your money is going on your mortgage and second car (and a lot of kids). When can you renegotiate the interest on your mortgage? Finance via the garage is the most expensive way to buy a car. It is cheaper to get a loan yourself and buy a second hand car (by far). Our household is on £120k and I have never bought a car on finance ever. Also the Disney subscription is unnecessary if you have Netflix. We grew up on four channels, the kids will live. Recommend Money Saving Expert, can you lower your bill cost, switch banks for cash etc. The household income really isn’t a lot for three kids. A minimum wage household of two people earning full time now is £50k!

Not advice on how to save money per se, but to make what you have for fun days out go further, could you investigate memberships/spending the fun money you do have available in a different way?

I saw that you went to a National Trust place. An annual family membership is about £150 so not cheap but could give you a year’s worth of different places to go to rather than spending £40 on one day. Also there is a National Rail 2 for 1 offer on lots of attractions, if you travel by train you get 2 for 1 on tickets…you can even travel just one stop by train.

For a free day out there is a nationwide Open Farm Day in June. Some farms you have to pay to visit, others are free https://farmsunday.org/.

Many cinemas also shows kids films, albeit old not new ones, for a discounted price on a weekend or holiday morning. Libraries also have loads of free activities on for kids - ours has a Lego club and a coding club.

Zizzi’s and Pizza Express etc often do free children’s meals during the school holidays.

Vinted and equivalent are also great for getting cheaper clothes and toys (some new, some used) and it is also better for the environment.

If presents for birthdays and Christmas get pricey, you could do a secret Santa for the adults for a set modest amount (you could even set up the Secret Santa online with wish lists so that it is anonymous and everyone gets something they would like), or agree that adults don’t need to buy each other presents.

Good luck with it all.

To go through the figures in more detail, if the OP means she is paying herself £25,397 per year (and I’m not sure she is saying that - she might mean £12.21 per part time hour worked), that’s roughly £2,100 per month. If £450 of car payments and half (to be generous) of the fuel (so £125) should be deducted from that, that’s £1525 per month income (before tax)

Not a lot but doable with some belt tightening since this means her husband earns £45,000 in a PAYE job (so not higher tax rate, expenses paid by employer). She still needs to think about whether this is practical for the future with 3 children.

Providing the OP is properly filing her tax returns, she should know how much her business is taking and how much of the takings is profit.

On the other hand if she is earning £12.21 per hour and working 15 hours per week (for example) for a total income of £183.15 per week (£732.60 per month), that is very different.

Edited to say: And this would mean for a total family income of £70,000 her DH is a higher rate tax payer so will be paying 40% on the top chunk of his salary.

If this is closer to the real position, once the car payment and fuel at £125 per month is deducted, the OP is actually making £150 per month. Which is peanuts and she needs to get a job that actually pays NMW.

Yes. I grew up in the late eighties to early nineties and the careers messaging was very much around ‘Do what you enjoy’. The implicit message was that most qualified people who worked hard could afford to live somewhere reasonable and raise a family, if that was what they wanted to do. You could be ambitious and pursue a high salary but not doing so wouldn’t cut you off from the essential ingredients of life, like a family home. You would have to save, but it was within reach.

The salary differentials were also much closer. When I was a young graduate in 1998 a fairly good graduate salary was £17k. Bankers and lawyers that I knew were getting a starting salary of £25k.

Roll forward now and the six-figure graduate salary is not unknown, way above other graduate salaries. This of course all gets ploughed straight into the housing market…

Exactly.

Yep agree, we paid off our first mortgage in our 40's, no family help at all or inheritance to buy the house, well I say that, we were given £2k from each set of parents for our wedding so we did have that help.

It's in the same belief bucket as asserting that all thin people can eat what they want and not put on weight and you must cherish your mother as she is the only one you have, even if she's been absolutely awful all your life.

Thank you ☺️ it’s how it is and I will own it!

The issue though @WinterMorn is that one day you might REALLY need something on credit or have to provide references and you'll be stuffed.
eg if you want a mortgage or a new rental agreement.

What you mean about being in debt isn't clear.
If it's outstanding debt on a credit card, or far worse like multiple cc.

All it shows is poor budgeting regardless of how you try to say it's all ok.

Because all along you'll be paying shedloads in interest.

You have massive outgoings and need to look at these really carefully. The amount you're paying monthly for the family car is beyond your means tbh. And your business is basically a hobby given you're getting minimum wage. Your outgoings are only going to rise as your kids get older. And you really, really need to build some 'just in case' savings.
So, where can you cut back? How can you earn more? Have a look on the money saving expert forums for advice.
Honestly though, I had a business. Kept it going for years. Absolute worst decision because financially, we would have been so much better off if we'd packed it in sooner.

OP, lots of people would struggle if they gave up their jobs to run a minimum wage income business and paid £1100+ monthly just on food and a 2nd car.

Your tax bill will be paid off soon. in the meantime cut down on entertainment and try and spend less on food.