Drop in income - budgeting tips please

[doggiesayswoof]

DH's contract ran out last Oct (university researcher)

He has been out of work since then. Yesterday he started a p/t job [hurray]. He will be earning about 25% of his previous salary.

My job is permanent (thank goodness) and I've always been the main breadwinner - I earn slightly more than he did when he was in contract.

So here's the deal. We are about to remortgage so that we can consolidate credit card debts. Our outgoings will be controllable.

However, we have 3yo dd who is at nursery f/t, and we intend to keep the f/t place going because DH is still looking for a f/t job - this will be a major financial drain.

Also, I am going to go on maternity leave May-Nov - so quite a big drop in salary from July - and I am worried about how we will make ends meet.

I don't want to sound pathetic but we are used to going out for the odd lunch, coffee etc and buying cds/books etc. We are going to have to go from this to buying essentials only. We are also going to have to hugely cut our food shopping bills - atm I don't really look at what I spend

Anyone who has experienced a drop in income like this and has had to readjust - can you share your tips please?

(DH and I both try and budget, but we are not very good at it )

Meal planning has helped ud to save money, also DH self employed an I get a small wage from my family, the rest of income is variable, we don't wualify for working tax credits but we do get DD'd nursery place paid for so maybe that's one thing to do.

You need to separate your bank accounts for essentials and for splurging.

If your bills are not already on direct debits then get them organised, add up how much that comes to every month and put that into one account as soon as your pay comes in.

Then decide a reasonable amount for the food each week. Draw that out in cash and keep it in a separate purse. When it is gone it is gone. To be honest I spend a lot on food (given my income) but we enjoy our food and see it as our main splurging thing as we spend a minimal amount on going out, it all depends on what you want to spend it on.

The only thing you should keep in your main bank account that you access with your card etc is your budgeted money for coffee, going out etc. Tranfer nursery fees out, transfer anything you want to save straight out etc. Then you know what you have left. to be honest for £10 a week you could easily go out once or twice for tea and scone and buy a couple of books from a charity shop. Or at least you can here.

Don't forget that come the warmer weather it is so much cheaper to get a cake from a bakery and have a picnic in the park instead

Wow yes I'd forgotten about tax credits. We were just over the threshold before & didn't qualify. Need to apply for that.

Once you have paid off the debts cut the cards up!

Indith that sounds wise. I already do a version of that because I have set up direct debits to come out as close to the start of the month as possible - that way the bills are paid straight away and the money just comes in and goes right back out again, so I don't miss it (that's the theory anyway!)

I like the idea of having separate pots for bills, food and "treats".

noddyholder that's the hard bit isn't it

I have been in this cycle for so long (run up debt, transfer onto 0% card, take out personal loan to consolidate, run up another debt, find another 0% card, and so on and so on)

I am sick of it and would love to have no cards at all. My willpower is poor though.

Oh god yes just saw credit card debts. Credit cards can be your best friend but also your worst enemy. Keep one by all means for those occasional times that they are needed (some websites only accept credit cards not debit cards) but pay it off in full as soon as you get the bill. The interest rates are so high! If you are tempted then sit there and calculate how much the purchase would cost you if you only paid the minimum each month. It is not nice!

If you don't you always end up with cards maxed out and a need to remortgage.Also remortgaging not as easy as it was so be careful

I know, it's hideous. Current credit card debts stand around £9k [withdraws to corner and starts rocking]

To be fair, some of that is home improvements which we always intended to add to the mortgage, but it has just crept up and up (and this was during a period when we earned more). That is the main problem - I just don't want to find myself here again in a couple of years.

Is PFB three yet as you will get some help from government towards nursery fees when reaches three.

You get double tax credits in the first year.

If you pay council tax and H20 rates by direct debit mine are spread out over 10 and 8 months respectively. We use the 'free' months to fund Xmas as in our case it adds up to around five hundred pounds.

DH and I take our cash spends out at beginning of month and when it's gone, it's gone. We put all food and petrol on a crdit card which gives us extra nectar points but have set up a direct debit to pay it in full each month (this is a good way to give yourself an initial cash injection if you time it right with dates/pay day)

Go through each and every direct debit and ask if you really need the item and whether you can reduce the payments at all.

The library is great for books and CDs especially if they do internet reservations. I have saved thousands post children and part time work by using the libary.

Good luck!

Thanks wolveschick. We get the part nursery funding - it timed in nicely with dh's job finishing so it was a godsend, saves us a fair bit each month.

I pay the council tax over 10 months - I am never sure what happens to the money in the 2 months I don't pay it - just seems to disappear Much better idea to save it for Xmas!

The food and petrol on a card each month sounds like a good plan - and then paying it off in full of course...

I am the sort of person who needs to have a limit imposed on me, so maybe I should get a card with a very low credit limit and tell them not to increase it. That way it hopefully wouldn't get out of control again.