If you own your house

[rainbowbaby2]

If you owned your house outright but struggled with daily cash flow, what would you do?

Would suggest your husband talks to the landlord re his tenancy agreement and the possibility of agreeing early termination. The landlord may well prefer an agreed early termination to the possibility of a tenant who can’t pay the rent and needs to be evicted.

Equity release is a terrible idea. Sorry just read first page and panicked. It is tied to your house and you have to sell to pay back what you have borrowed usually at high interest rates. It is the sort of thing you would do if you were old and didn't want to leave your family any money or a house. So I think you should go on to Money Saving Expert and start reading on there. Set yourself a budget and stay with in it. E.g. your food runs out, eat food from the freezer or cupboard. You run out of petrol at the weekend, walk. Obviously in the week you may have to add petrol to get to work. In today's modern world it is really easy with credit etc to go over budget. Then I would look to improve your money flowing in. Sounds like your DP needs to be looking for work and you need to decide if your business is paying or you might need to find a different job.

At your age, rather than go for equity release, I'd keep my mortgage-free house and try to increase my income/reduce other expenses. I have been both employed and self-employed in my life and there are benefits and downsides to both. But in your current shoes, I'd suggest at least one of you goes into employment if possible and starts bringing in a regular, reliable amount of income, rather than both carrying the risks and variables of self-employment. Otherwise, if you borrow against your house, it feels like you're going backwards rather than forwards (not ideal at your stage of life) and it won't help you learn anything about budgeting and managing money. Best of luck!

You need to both get to grips with budgeting because you're not going to make the most of any business otherwise. So that means keeping an accurate record of all money coming in or out. Short term, one or both of you would be better working for somebody else. The other can be looking after the children and house. Long term, working outside your home gives you skills, career progression and payments towards your pension, even if you're not much better off financially.

Yes! You've said elsewhere that he could do well in any job, so unless his current business is turning over something in the region of £100k a year - £2,000 a week, every week - and making a profit of over £50,000 then it is not viable and won't support your family. (As an aside, few businesses make 50% profit). As the children grow, your living costs are only going to increase.

As a family you need to look at two budgets - the household budget and a separate business budget.

If the business is not viable, and has no chance of being viable within the next 3 to 6 months, then it closes and your husband gets a job. What is your husband's take on all of this? Is he convinced that his business can become viable (and has he a solid business plan to back this up) or has he put his head in the sand and is just hoping that things will get better? Is his pride dented and he refuses to see that the business is not, and cannot, be viable? What does he do in the weeks and months when no income is being generated? Is he out drumming up business, networking etc. or is he sitting in his office hoping that customers and orders will walk in by themselves? How long has the business been running, and as you both "thought it would do well" why has this not happened?

You clearly can't read either. She asked if OP was on benefits and could get help as then wouldn't have to worry about the mortgage.

Thinking about this some more @rainbowbaby2, my DH was self employed for the majority of his career. Some months were fatty, others lean.

His earnings were put into a separate bank account and he transferred enough for our monthly outgoings. Had there been a regular shortfall, he'd have had to have got a corporate job. Will never forget, the Jan when DS was one and there were a lot of unpaid invoices (I'd given up work because DS was poorly) and we had £7.26 until some money came in. It was only for five days but a sweat neverthless and I can still hear DH saying "FFS can you buy some meat".

That was the Xmas when I gave DH a Mars Bar, he gave me a bath bomb and the baby got an Alphabet and Thomas Book.

Had that continued, either I'd have had to get a temp Saturday job, or DH would have had to change tack.

One or both of you gets evening work, leaving one at home for childcare.

Why shouldn't people who own their own home be eligible for benefits?

It is possible to own your own home (even outright) and still fall on hard times). Not every home owner is a wealthy person with masses of savings.

Hey @rainbowbaby2

Re. childcare not being 'worth it' - I think you need to reframe this.

I have 2DC and decided soon after my 1DC that I would keep working, as, long term, all the stats show that you will be much better off. My DH was (& is) very well paid.

There were a couple of years when the nursery fees were more than my part time wage but I kept going. After 3 years, I went back to full time and earn substantially more 10 years on.

The reason I did this is because the sectors that my DH & I work in are highly volatile, we have both been made redundant more than once. We need to be fiscally proactive as we know that one of us could be out of a job in any given year. As such, we have savings and know we will be OK for at least a year should one of us not have a job, it took my DH circa 5 months to find a decent job last time he was in this scenario. We are a team, when one of us is out of work, we treat finding a new job as a job.

Look at all the options - including your employment / career

Because benefits are there to help those in society that need support. If you have a 500k asset, why should taxpayers support your lifestyle on top of paying for their own mortgages?

I’m happy for you that you have no disabilities nor poverty which would make you eligible for benefits (which are only given to those in need).

Exactly, they’re given to those in need.
I didn’t say I’m not in a good position in terms of owning our house. I wasn’t the one that suggested benefits, someone else did. Hence my reply.

I think most people are ‘just scraping by’ at this stage of childcare. It’s the most expensive time of your life.

A steady, guaranteed income would give you security and make budgetting easier. So the sooner your DH can get into an employed job the better, I think (give or take the timing of his premises).

You need to do some maths and work out whether the bottom line is better if he keeps working til the tenancy runs out, OR gets a job and pays for the rental while not using it.

Something has to give if you can’t manage.

Budgeting is a good start.

But if you can’t manage, then being a f/t sahp is a luxury you can’t afford. There are p/t jobs you can do from home, you could do a weekend shift or two outside the home while your DH looks after the kids.

As others have said, a job is a stepping stone to the next better job, to promotion, to a job with a pension, to a time when you can save to make up for the lean young-children years.

The discipline if budgeting: planning and anticipating all expenditure, sticking to a budget, checking whether it turned out as planned, making adjustments etc are crucial business skills and I am. I am not sure how anyone runs their own business without this - however good at their actual work they are.

It’s good that you and DH seem a good team and you are proud of him and supportive. Life on a budget is so much easier when you are in it together. <<channels Bon Jovi>>

You have no idea what my life is like apart from the small snippet I’ve shared on here.

You don't seem to have a solid grasp on your current living expenses OP. I'm struggling to understand how you or your DH are running your own businesses. Or how as a relatively young couple you've managed to secure a mortgage-free house without really having an understanding of your finances or having made any long-term provisions for your and your DC future. I'd be tempted to say that you both need to talk to someone who can give you some solid financial advice, perhaps at Citizens Advice. And that your DH (and possibly you too) need to look to get a job where you are an employee. Do you have any pensions? Is where you are currently living expensive? If so, would it be a wiser move to sell your £500k house and move to a cheaper area? Selling things to cover expenses is rather desperate. And just hoping that another self-employment opportunity presents itself is a bit pie-in-the-sky thinking.

He could try to negotiate surrender of the lease. That way it could wind down faster if he has another year to go. Depends on landlord and premises popularity

Youve had a lot of good advice here. Im just wondering has your husband asked chatgpt for advice as maybe it will have some ideas to save it? Worth a try if you havent explored that already! Maybe its not too late?

In answer to your original post I'd say - look at your income and expenditure. Go through your bank statements, credit card statemente etc and type EVERYTHING into a spreadsheet. It sounds tedious but it should help you to identify your spending habits.

Some banks have a similar service where they've identified what's groceries, meals out etc but I prefer to do it myself.

Reading a bit more about your specific situation, that's a shame and a stress that your husband's business hasn't worked out but as he winds it all up he needs to be looking for a job. I know you say your job wouldn't bring in much but at the moment it sounds like every little will help.

I'm guessing you've got a fairly big house from the price of it and agree with one of the suggestions made about taking in a lodger. This could be a temporary situation but it's one way to bring in an income without impacting on your childcare responsibilities.

You've said you don't live frugally at the moment. Set a budget, monitor your income and expenditure. Cancel any unnecessary regular payments and luxuries. Spotify premium? cancel it and just suck up the adverts. Netflix, Disney+ etc? pick one or cut right back to the basics. Really look at any subscriptions and cut right back. Gym membership you're not using? Cancel. Are you still going on holidays and meals out? Those are luxuries, they aren't necessities, they can't happen until you get your income up to more than your expenditure. What have you got that you can sell on Vinted?

You're very fortunate not to have that mortgage payment each month but I think you need to shift your mindset while your husband's business is in the situation it's in.

Get on that Martin Lewis webiste. Check you've got the best deals for all of your insurance.

Because you can't eat your house, or make it buy shoes for your kids when they need them.

With next to no income, the OP probably wouldn't be able to remortgage to release equity for them to live on. Most equity release schemes are only available to people who are 50+.

They could conceivably sell the house to release equity and downsize, but that costs shedloads and can take months. Estate agents' fees alone could be as much as £10k plus VAT, stamp duty alone would run into a few thousand.

And they need money to live on now, not in 3 or 4 months time.

When you say 'own' do you mean outright or with a mortgage?

Own usually means it's paid for- mortgaged is different.

@MajorProcrastination "In answer to your original post I'd say - look at your income and expenditure. Go through your bank statements, credit card statemente etc and type EVERYTHING into a spreadsheet. It sounds tedious but it should help you to identify your spending habits."

Expenditure does not seem to be the problem - the OP somehow thinks that they would be able to get by on £1000 - £1300 a month once the business costs are removed, so the family already appears to be quite frugal.

The problem seems to be the lack of income - the business is not generating enough money, and certainly not a stable, reliable income, that is sufficient to meet the business costs and pay a decent wage. If the husband is not earning £39k a year, the UK median wage, from his business (which would require a turnover of at least £100k) then he should close the business and find a job. The OP says that the husband is working 7 days a week and is still not making enough to make ends meet, so the business is simply not viable and he's wasting his time when he could be earning and have time to spend with his family.

Firstly this is coming as someone who had two businesses doing very well pre-covid, one took a huge hit and never got back to where it was, the other kept doing well until a different, unrelated issue stopped it dead unexpectedly earlier this year. So I know exactly what it is like to work so hard for something and ultimately that work amount to nothing, and how hard it is to walk away.

First things first, is it sole trader or limited company?

Secondly you say you can't judge how much it's making or loosing. Change this today. You can't operate a business without a really firm hand on the cash flow. Sit down with the business bank account statements from the last 6 months and work out what came in, and what went out, and importantly WHY that came in and out. If you are solely reliant on this business to pay household bills, but by taking that much out the business it doesn't have the money to take on a new contract or invest in needed equipment then you have to make a very different decision to if there is no demand for your product anymore and it's dying no matter what.

Thirdly you need to mentally reframe it from the business failing to the business was right for a time, and now it isn't, if indeed it doesn't have a feesable hope of recovery. If you have contracts in the pipeline and in 6 months it's going to definately have income again then it's a cashflow problem which has a very different solution to a business with no reasonable chance of recovery.

Fourth, household budget. Not what you would ideally like it to be but go over your last 3 months of spending, average it out, and accept that that is your household burn rate. Your business has been in trouble a while, so what you are spending now is realistically what you are able to stick to. Do you have enough coming in right now to cover this?

What you are doing right now isn't working so you are going to have to make a decision you don't want to make somewhere. One of you goes back into paid employment (keep one or both businesses on the side with that regular income stream, with the potential to building back up to working for yourself full time if you choose to, this is my path because I enjoy business too much to just work a 9-5), both of you go into emplyment, you dramatically and quickly turn around one or both businesses to bring in an income.

Good luck and pm me if I can help more

I’ve read most of the thread but not all so apologies if this has already been suggested. If I were you I’d do this:

spreadsheet for income and expenditure - what can I cut/reduce/amend to lower costs

citizens advice - an appointment with an expert who will be able to give benefits and income maximisation advice and how to apply for them

childcare - also advice likely to be given from above re childcare hours, tax benefits etc. If you get free childcare hours this will open up opportunities for part-time work

Business Advice from local authority - in Scotland we have business gateway and scottish enterprise but they could help on how to wind up the business in most cost effective way and it’s all free advice.

work - appreciate it’s not ideal but if you get childcare hours even signing up with an agency which gives temporary contracts or flex working gives you the chance to test the practical side out and brings in some extra money

Hi OP! 👋
I haven't RTFT just your replies.
My response would be 2 fold.

First off, how old are you children? 👶
Are they entitled to nursery hours?
Are you on the GOVT top up scheme (Tax free childcare) for nursery fees?
Where you pop money in and they top it up towards nursery fees (I used to get £2 top up for every £8) I popped in, and it really helped us toward the fees.
https://www.gov.uk/tax-free-childcare

Secondly, have you got a budget app? 🤔
I personally use FUDGET APP (the free version like my husband) to process incoming and outgoings on our mobile phones.
Also we live by the 50/30/20 money rule -that my own dad followed.
https://www.nerdwallet.com/finance/learn/nerdwallet-budget-calculator

I even opened a separate bank account and just used it as a monthly food shop account. So every month £300 goes in and all our food, toiletries and washing powder comes out of that money (not takeaways though that's a separate treat!) As there is only me, my DH and DS and small dog, so we try to stay in budget as much as we can. 💰

ETA: I hope this helps OP 🫂 it can be hard, but hopefully it will all come together soon ❤️
@rainbowbaby2