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!

It's not that it's not enough it's that their outgoings are way too high

Maybe for you! It’s clearly not for the OP and I was sympathetic as I agree. Not everyone is the same

She says twice that the business is now making enough for her to pay herself minimum wage, so I think we should assume she’s right. I’m sure she’s not an idiot!

My point is, rather than working harder by taking on a minimum wage supermarket job or something (and then have to pay for childcare) she would be better off working smarter - thinking of ways her business could make more money.

Hit up a wealthier clientele? Diversify? Offer bespoke service? Not sure exactly what she does so it’s hard to offer suggestions.

Taking on extra hours in an p/t job and then paying for childcare would be daft.

She says that but then lists at least £600 of business expenses that she is paying from income. So she isn’t making minimum wage.

I am assuming she’s right in what she’s posted, that’s the problem. I am not accepting she is right about earning minimum wage because based on her own posts she definitely isn’t.

Also, as I said, we don’t know what she means by ‘paying myself minimum wage’. Which means we don’t even know what she is ‘right’ about.

She says:

Anything I can put througb my tax, I absolutely have. All my fuel, expenses etc. I'm fortunate my friend is an accountant and she checks over everything for me

So yes, she is putting all allowable costs through the business, then paying herself minimum wage.

Why don’t you believe her? 🤔

That’s tax. It has nothing to do with whether she is deducting expenses from profit before calculating income. I do believe her. Every word. That’s the problem.

I think it’s also the car thing, needs it for work but is paying as a personal expense. It’d more efficient to get a van that she can also stick kids in and put the whole vehicle through as a business expense surely?

The rules on vans as a benefit is different to cars so easier to write off. Lots of people have a car shaped van.I had a Nissan Navarra five seater car with a big back bit. Insured and treated as a van by HMRC.

They'll be nicer for it. Nothing wrong with some delayed gratification.

That’s exactly what she means, surely? That’s how I read it, anyway. She’s deducting all allowable expenses before she calculates her profit for tax purposes, then pays herself an income (minimum wage) out of that profit.

I don’t see why you suspect otherwise?

How do you know she isn’t deducting a proportion of the car costs as an allowable expense?

Besides, if you use the vehicle for personal use as well you can’t just deduct the whole thing as a business expense. You have to work out the proportion. That goes whether it’s a car or a van.

What proportion of the car is an allowable expense? The mileage? versus cost of finance, insurance, tax, petrol and servicing. I think OP would need to be doing 2-3 thousand a month before that would work out. Then after 10k miles a year it cuts down to 27p.

Lots of people pay no benefit in kind on a van which is why it often makes more sense than a big car.

You’re making so many assumptions! Without further details (and because she’s said it twice) we have to accept that OP is making enough to pay herself minimum wage after she’s deducted all allowable expenses from her profits.

That might sound infeasible to you, but believe me it’s not.

And yes, if you’re self-employed and use your car for business, you work out what proportion of the time you’re using it for business and deduct that percentage of the costs. OP has said she has an accountant who will be advising her on all of this.

Do you have some kind of chip on your shoulder about OP making a go of her business? I can’t think why else you’re ‘failing’ to understand this.

OP any part time jobs in your childrens or a local school? Whilst you WFH and need childcare, mid day assistants (one hour per day) plenty of time to do your WFH, no childcare needed as term time only. Approx £3k per year. Or a part time admin in a school office.

Or a part time WFH job-do 50/50 to your business.

It doesnt need to be full time, it doesnt need to be a chore. You can still do what you love and so you should ❤️ but ideas whilst trying to balance life, and extras.

Get a loan to pay a car off rather than the lease contract next! Least at the end of the term you have something of value you can sell on. As you own it.

Just curious. I always wonder about those who are always putting things on credit, the few times I've tried over my lifetime I've never been lent the money.

I’m no expert on credit lending but I assume you haven’t built up much of a credit history? I think they want to see you have a habit of using credit and paying it off fairly quickly. So basically you can build it up gradually. It also depends on your salary I think which is why some high earners manage to be 30K + in debt.

My experience was I went from not getting approved for credit cards in my early 20s to getting approved for certain credit cards with fairly high interest on a lower limit. I always paid them off promptly and then I was getting offers on lower interest credit card with a far greater credit limit and zero percent purchase and transfer offers.

I don’t use them frequently, more for big purchases which I pay off within the zero percent interest period (eg. I needed a new iMac for my freelance business ) and I stay well below the credit limit , which of course leads to them increasing the limit.

And just add I was neither recommending nor discouraging the use of credit!

Everyone is different - some people can’t handle credit and end up in unmanageable debt frequently, unable to pay even the minimum payments - whereas some use it in ways which are beneficial to their life and have more control of it.

I was just explaining how it worked for me in terms of being able to get approved for credit.

Yep been doing that for years - actually main shop is Aldi Tesco for odd things.. my point is not advice on how to save money (I got good at this) but the COST of healthy food and how supermarkets cynically increase the cheapest goods the most, alongside reducing the quality and size hits the poorest hardest - I don’t consider myself poor because i own a small home (even tho I am working myself to death to fund it and will b paying £1100 mortgage on my own until I’m 75 yrs old) I still consider myself lucky because I can do this.

You mentioned moving - do you live in the sticks? Maybe moving would be your best long-term option. If you live 90 mins and 30 mins away from where you need to be, with no public transport options, and you want to make your life cheaper you need to move closer to the action. If you have several children then the need for 2 cars will grow with the children. Teenagers will need to be driven here, there and everywhere. It will cost you both time and money, that you could be investing in our business.

cant move nearer to work, friends and family - all in north London where I was born. I bought the cheapest fixer upper closest to London with freehold, garden & parking. I paid £192k in Somerset during lockdown. I can’t even afford shared ownership in London 1 bed flat. I am lucky that I wfh and only have to show my face in the office for meetings

I somehow came across this today, even though it is 072925 USA date, I'm in USA. Choose what you like to do and deal with making less and making it stretch the best you can. Look closely at your outgo each month and drop what you are comfortable to let go so you will have a little more money to get through each month, while keeping some fun item(s). With 3 kids, being realistic is so important in accepting that you cannot do everything you want to do but you can do SOME things you want to do (within reason and ability to pay). Lots of folks do on even less income and they make it work, even if they are parents, too. It is a choice. Everything is a choice. You have control. I do NOT suggest you go back to a career you got burned out at and I think it is wonderful you are getting to spend time with your children. Time and money cannot be compared. Time always wins. You will make it work. Pray and ask the Lord for his help. Your kids will soon be grown and you will look back on this (if we're still all here, according to what the Bible says) and it won't be so much about the lack of money while raising them, but it will be about the TIME you spent with your children. Enjoy them while you have them with you! Money cannot compare! Maria in South Carolina, USA

Could you get a paid job that you could do a bit of but keep your business?
If you switch to Lloyds bank you could get disney free
basic Netflix is 5.99 month
You can also use tax-free childcare to pay for additional activities such as dance lessons or swimming classes – even some holiday camps. Once you've created an account, you'll be able to see the details of all the registered providers. Head to the government website if you'd like to apply for tax-free childcare.
https://www.gov.uk/apply-for-tax-free-childcare

Can also get cheaper swimming lessons on things like groupon?

It’s nonsense that you don’t have the money to afford a car big enough for your family outright when you are shelling out £5500 a year in car finance. You just can’t afford a new car and you have made that a priority so finance it is. But your mortgage is low in my opinion so it’s swings and roundabouts.

I agree re choices we make. My husband gets up at 4.40am Monday - Friday to work and at 6.30am on a Saturday for second job. I get up at 6.25am Monday to Friday. I also have a part time marking/lecturing job. I get the three children out every morning for school before standing in my own classroom organised and ready to teach for the day. Nobody said it was easy. It’s the choices we make. I didn’t get to drop the children to school or collect the, when they were younger (they were dropped to childminder at 8am). You are getting to drop and greet your children from school which is a huge win as a mum. You are in control of the hours you work. The hit is the pay and you either absorb/accept this or return to full time work in the NHS and reopen your business when your three children are reared.
None of it is easy. They are the choices we make.
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