What do you honestly think about this financial situation?

[somewhereinthemid]

My husband (full time) earns £55k, I (part time) earn £14k. We own our own home and have an outstanding mortgage of around £175k (but we do have help to buy loan of 20% to factor in in 3 years). We have a 3 year old who has just started receiving funded hours but have a newborn too. Our house is big enough to last us so we don’t need to worry about moving. We have a nice car but it is on PCP. We did have a good pot of savings which got absorbed between buying our house and our wedding and we now have only £3200 in savings and at the moment we aren’t putting anything into savings a month. We live comfortably in the sense that we don’t go without anything, our house/car are nice, warm enough, enough food, little luxuries etc but we don’t live lavishly. At the moment we can afford everything but we are living relatively pay check to pay check in the sense that we don’t really have much left over at the end of the month and aren’t paying into savings.

My husband keeps saying that he can’t believe we are back living pay check to pay check, he earns the best he ever has and feels like he has less money than ever before. I feel like he could look at it a bit more positively, we’ve been able to afford to buy a lovely house in a nice area, have a lovely wedding/honeymoon, have two kids, me go part time, keep luxuries such as nice car, sky, Netflix and afford to keep ourselves warm, clothed and fed. Yes we are looking at another 3 years before we can start rebuilding savings but at that point I can go back full time, or atleast an extra day or two and my salary that has been eaten up on nursery/maternity leave etc will be available, even with my PT hours that would be an extra £1200 a month we currently don’t factor in and even more if I go full time.

This isn’t a stealth boast before someone says I just get so anxious when he makes it sound like we are practically skint and living right to the wire and o don’t know whether he’s right and it’s a shit situation or whether I’m right and we are doing quite well considering it’s only short term?

We're paying £300 off the credit card a month so it's not being ignored and is already under £5k. It'll be cleared before the 0% interest ends.

The credit card debt is a drip feed. I’d also be concerned, you owe more than you have and live month to month. Your husband is right.

The whole bonus doesn't all go on Christmas itself like the one day, just on this general time of year being more expensive with higher heating bills, all the extra food shops/presents/days out over Christmas and towards our annual extended family get together weekend away which we don't want to miss out on as it's we only all get together once a year. It just vanishes!

Of course it's good to have savings but I think outside of mumsnet most people don't have 6 months wages sat in savings, especially people with pre-school kids. A good income, minimal debt and a timescale of things improving I.e paid childcare sounds good to me.

You are both right. You are much better off than many, many, many people but also you have every right to be a bit pissed off that the state of the economy means you aren’t as well as off as you would have been.

I think it's about perception.

My DH can moan and say similar but I think that it is partly because you think that £x is (used to be) a good salary and you expect a certain lifestyle.

Then you take those things
for granted, want the next thing and so it goes on.

So our car is 3 years old and Dh now wants a new one feels hard done by that we can't get one.

I think it also depends on who you mix with/where you live as to how you feel financially.

If you don't know people struggling then it is hard to appreciate what you do have. If everyone is more well off then you can feel hard done by even if you're not.

I can see why your DH is anxious about your financial situation. He earns quite good money but you are living paycheck to paycheck. You need to get a grip on your budget.

You are underestimating the mental load involved with being the sole / main earner for your family. Your DP feels as though it’s all on him and with energy bills increasing, mortgage interest rates rising and inflation as it is, he is twitchy.
Start off by auditing your dd’s and standing orders. Cancel any subscriptions that you no longer use. Shop around for insurances upon renewal and see if there are ways you can save money re food shopping and incidentals. By making relatively small changes this may free up enough for you to start a savings pot each month and ease the mental load for your DH.
Best of luck OP x

Write down everything you spend in a month. You'll be amazed what you're wasting money on.

In your position I would prioritise the £4K debt repayment and building up savings. With a bit of planning you could likely free up £200+ a month.

You can't have it all unfortunately, you have no savings (debt is greater), no concept of your spending and want to keep your luxuries. Having young children usually means financial sacrifices.

I would be worried if I was your DH carrying the financial burden for the family and not being on top of the spending.

Do a month of writing down everything you spend other than your normal household outgoings, things like Coffees, lunches at work, magazines, takeaways, things you don't really need. Then add up what you spend & make savings, take a pack up lunch, have an insulated cup & make your coffee to take with you, pay Readly, for £9.99 a month you can read most magazines & newspapers online, join the library, cook fakeaways instead of having food delivered. Then look at your household outgoings, shop around for phone, broadband & TV deals, often if you bundle them up you can save money, if you have Sky you can get Netflix for £6, get rid of any channels you don't need, if you don't watch many of the channels get Now tv or just a firestick or an android box, check you are getting the best deal for gas & electric, I know at the moment there aren't many deals around, are you on the right Council Tax band, many people have found that their property is on the wrong band & have reclaimed thousands. Look at Moneysavingexpert.com there is loads of help to save money & cut costs. Make a spreadsheet of everything you spend, I mean everything so you can see exactly where your money is going, there is an excellent one on the moneysavingexpert com site.

I would 100% cancel/substitute sky, put £100 in savings at the start of the month and see how that went. I’d do it by designating the second week of the month as ‘budget week’ - talk to Dh and agree no takeaway, no coffee or lunch out that week and plan a few budget meals you always have in budget week. It’s a very small sacrifice for long term stability.

I think you do definitely need to try to put something aside in savings. The easiest way I found was to start by trying to save 1% of your take home earnings and living on the other 99%. If you take it out before you see it, you are less likely to miss it. Then, when you've got used to saving that 1%, try taking it up to 2%. Keep going like that, saving another 1% as you feel comfortable. It might take a while and you might not get to very many % but you'll get into a habit and even a little bit of extra savings may help in an emergency.

We were in a similar position around 2007 when interest rates were high although we only had one baby (remember the last 15 years was a blip - mortgages are often expensive over their full life you can't expect interest to stay under 3%).

We did a really strict budget and i went back to work 30 hrs a week when baby was 10 months. Nearly all my income was eaten up in pension contributions and childcare but once we hit 30 free hrs and then school, it all got a lot easier. You just have to hold very tight.

We did manage to keep Sky and two cars and dining out sometimes, but we didnt take holidays and otherwise lived very cheap - cut our own hair, second hand clothes. Our savings got uncomfortably low.

Happy to say careers took off as we both kept a good foothold and now very comfortable.

Budget, budget, budget
Know where every penny gets spent

That's the key. You'll be ok.

We are in a similar situation. I think it’s a temporary issue, once the kids are in school I think we will be financially a lot better off. Childcare bill is an absolute killer for us (we have a 20 month age gap)

At the moment if we have a safe, warm place to live and food on the table we know we are extremely lucky...!

A really good budgeting program thing is YNAB ('You Need A Budget') - you allocate out your monthly budget before the month begins - and it's easy to use. If you know what your money is doing you can start to make a few changes and build up your savings a little more.

Also Monzo is really good too, they have really simple ways of keeping track of your finances inbuilt into their app.

Very similar to you OP. At the moment, we are throwing everything we can at the credit card and have and are aiming to be totally debt free in a couple of years, apart from the mortgage. Sadly we now need a new roof which is going to set us back, but i'm sick of so much of our monthly income going on debt repayments.

We went through a hard time with maternity leaves and DH taking a pay cut to change careers, but we can tackle it now.

This is the crux of it. At that stage in our relationship we were scrambling looking down the back of the couch for change., you are really just getting set up as a family. It's an expensive time for you. The main thing you have is a lovely home that you don't need to move from that's an amazing thing for you to have with young children knowing that you are settled as a family. Id imagine your financial situation is fairly normal for this stage of tbh.

You over-committed on your mortgage. You don’t say what you paid for it but with a Help to Buy loan of 20% plus an outstanding mortgage of £175k I’m surmising that if you had a 10% deposit you paid around £240k of which more than £40k is the Help to Buy element, which you haven’t touched yet?

That’s a lot in a time of rising interest rates with two small children and one person working part time. Plus, you got a car on PCP as well? Why didn’t you just buy a second hand one? And you have £4k on a credit card?

I’m amazed that so many posters are telling you that you’re in a ‘good position’. I’m with your husband. It shows how financially wobbly the average person is, though. All because of borrowing too much for houses.

I think the issue is you haven't downgraded your lifestyle to account for new commitments (big house & kids) and reduced income. You're now much closer to the cliff edge than you used to be. The debt needs more thought that it used to, because you don't have the income to pay it off like before. I would have a trip over to the MSE website and get yourself a proper budget. Otherwise I foresee those credit cards building up with the "little" costs you're not forecasting and saving for.

When you get paid, pay yourself first (put some money in long term savings).

Then set up some savings pots via Monzo or similar to set aside money for known upcoming expenses (insurance etc) as well as monthly deposits for things that you will need to buy or replace. So I have dental, clothes, new laptop, annual insurance pots etc. This means money is set aside for these things - no debt required.

My bank account also allows me to track and categorise spending - so I can see what I'm spending on various things. Very helpful to spot overspending.

You need to face up to the reality that:
A) you have a mortgage, ergo you do not OWN your house, the bank does.

B) you have a car on HP so, again, you do not own it and need to include these two loans under the heading of “Debt”

If your husband lost his job tomorrow - for any number of reasons including accident/critical illness - how would you pay your mortgage and car loan?

That’s your starting point.

There wasn't anything suitable we could really buy without help to buy, it isn't ideal no but it means we have a house that we have no need to move from in the area we want with good schools. The interest won't start being due on it until both kids are in school/funded hours and by that point my salary can cover it, or we can remortgage (as soon as interest rates are somewhat settled) and add my salary to our affordability as it is all on my husbands at the moment. I see help to buy as debt, but no I don't see the mortgage as debt, or atleast not bad debt as it is an asset. Fair enough on the car, but buying a cheap run around isn't always the best option. We have a nice car, big enough for two kids/two dogs and we choose to prioritise that. I did speak to my husband about a cheaper car but he says he works hard and wants a nice car and it's a family car so we have half the running costs so he feels it's fine. He just seems to want our current life with our previous savings and doesn't understand they paid for our current life! I'm not worried at all about less than £5k debt on an interest free card we are paying off a big chunk each month by choice, not the minimum, it'll be gone in just over a year. We haven't used our savings to pay it off as it's in a stock and share ISA.

I personally wouldn't worry too much about the savings provided you have access to credit in case of emergency. We overpay our mortgage and put lots into our pensions rather than build up a savings pot but between us we probably have about 6 credit cards with limits totalling £50k! So if we needed to replace the washing machine for example we'd use the card.
Other than that I wouldn't say you were rolling in it but you get by which is the main thing.

We aren't using the credit cards, we don't need to use them day to day we put a few big ticket items when we bought the house on them as it was 0%, so we have less debt each month rather than them creeping up

It's time to a budget and and go back over your expenditure for the last few months with a fine tooth comb - possible if you use tap and pay for everything. I think you'll be shocked just how much money you spend on frivolous things that you can do without.

Then work out what your essential spending is, then what you want to save, and THEN which frivolous spends you would like to keep.

It may need to be a balancing act. Maybe have Netflix for a few months, binge watch everything in there, cancel and sign up for a different streaming service. The savings for an annual subscription for most of these is minimal, so this is an easy way to have the best of all. Perhaps overlap for a couple of weeks over Christmas or something.

If you love your take away coffees, it might be worth investing in a good bean to cup coffee machine (don't bother with one of the pod ones, they're run in the Gillette pricing model where they make a loss on the machine because they know they'll make a profit on the pods). A good keep warm cup (the metal Bodum keeps my drink hot for hours when closed!)

Cut down on take always and maybe do a store bought dinner for 2 as a treat instead. Still a treat but way less.

You can do this! It just need you both to THINK about your expenditure. And if you set your savings goal as the amount required to pay off your Help to Buy, think about how amazing that would be!!!!

I know he's Australian, but have a look at The Barefoot Investor. Seriously good, but simple advice, set out in a easy step by step. Scott Pape encourages Barefoot Date Nights where you go through all the financial decisions you need to over a period of time. Absolutely amazing and has helped a lot of people get out of debt and into their own homes with a safety net built up. I've been following him (on my own, date night for one, lol!!!) and working my way through the list.