Self employed with debts

mrssarahh

Hi, firstly sorry, this might go on a bit! My hubby is self employed (for 2 years or so) and it is seasonal work so winters are difficult. We have two kids so I work part time.
We both have overdrafts which are always up to their limit, 4 credit card debts between us (from everyday expenses through the winter) and 2 loans (one for car, 1 year left and one from consolidating cr cards and buying van for business, 3 years left) and a mortgage.
We are paying alot of money out each month for the credit cards and loans and don't seem to get out of the mess we're in. I also owe my parents a fair sum for bailing us out a few times.

I have tried and tried to budget, write a SOA, etc but it is impossible as we have NO idea how much money is going to be coming in and when!

We are looking at remortgaging to clear the cr cards and loans, but I don't think they will let us because self employed.

Are there any other options, or does anyone have any advice to help me out of the rut we are stuck in? How do others who are s/employed manage with the uncertainty?

Thank you for reading!!!

Barbeduk

Hi, I'm sure the more knowledgeable will be along soon but just wanted to say you're not alone! We usually spend jan living off cards as our small business takes virtually no money in dec. luckily we were able to save last year to tide us over.

I take it you have both tried to get more hours elsewhere during the winter?

Although your income is up and down, your expenses are probably more or less the same so a good place to start is to get out all the statements and receipts to see if you can make savings anywhere. Also, are you being smart in the way you repay your debts, ie biggest interest rate gets paid off first (see the snowball calculator).

An SOA is a must, horrible to do but a great learning experience. I was horrified when I did mine but it changed the whole way we deal with our money. Whether you wish to share it is up to you (I was far too scared to!).

Good luck.

mrssarahh

Thanks so much for your support.
Unfortunately both my part time jobs are also seasonal so overtime in the winter is not an option! Really need to find something that pays in the winter (buy some baby turkeys and xmas trees???!!!!!!)
I am going to try and do SOA tonight if I have time. Every summer we say we will put enough away to see us through winter, but we end up only having enough to live on and pay off LAST winter's debts!
Currently we have enough of the o/drft left to last about 2 weeks, and no work coming up. I just don't know what to do.

iwannastopworrying

Hi Mrssarah, you are not alone!!! We have the same issues - self employed and we BOTH work for the business - talk about eggs in one basket! .On paper, the business should support us and we have been trying to take wages of £2000 a month (£1000 for each of us). This hasn't been possible, due to the way the cash flow works (or doesn't!) We also have debts (family and business overdraft which we are right up to the limit on).
We seem to always be paying catch up - is that your experience? When the money finally comes in, it all seems to disappear on paying overdue bills etc and we are back to square one, scraping by. Last week, a client didn't pay on time and we had £28 left. the heating oil ran out, I got a tax bill and the car broke down, but we had NO emergency money whatsoever.

Having managed to feed the family (of 4) on precious little, I am determined to get on track. My first priority is to get an emergency fund. I will take £500 from the next payment that comes in, even though the money is needed elsewhere, then try to forget we have it. Secondly, I need to build up a buffer, so that we get away from the deep dark gloomy depths of our overdraft limit. The only way I can think to do this is to syphon off money from each payment or wage, and put it in a different account.
Doing an SOA is tricky when you don't know what is coming in or when, but do it, Mrssarah, even if you don't put ANY income in - you will be able to see all your costs and know how much you need to find each month. I did one and now I keep a running total on a spreadsheet of how much I need and how much I have left to spend in the bank. ( I made the mistake of considering the overdraft to be "spendable" money though - I need to change this, as this attitude doesn't help get rid of the debt.).
I have cut down on all other costs - doing a weekly menu, bulk cooking, shopping in Lidl/trading down brands etc. It's hard, but once you start cutting costs, you feel really proud of yourself and it becomes an enjoyable challenge in a perverse kind of way! One tip, which I have discovered to my cost (no pun intended) - If you are managing to spend less, work out what you would have spent and try to put the difference in a separate account, or in an envelope in your underwear drawer! Otherwise, you will be making the sacrifices but the small savings will get lost in the bigger picture and you may get discouraged.

In the meantime, until you get your next payment or wage, try to stop all spending other than ABSOLUTELY necessary food (cancel haircuts etc) and if you know direct debits aren't going to be covered, phone the companies and tell them - I got a 4 week extension on my tax bill, by explaining that we had a cash flow problem.

Hope this all makes sense and that that you might find something helpful. Hang on in there, you are not alone!

mrssarahh

Thanks for your reply, it helps to know we're not the only ones. I have cut down on absolutely everything already, groceries, hair cuts etc - even squeezing the kids into clothes that don't fit :rotfl:
We overspent last year on a holiday and kitchen decorating and I regret that now, but we did have the money at the time and weren't to know what situation we'd be in now - again it's the not knowing that is so hard.
I have listed our outgoings a few times, probably due to do it again to make sure. We worked out how much we needed coming in on a weekly basis so that we knew how much to charge for jobs.
We have had a phone call today from someone wanting a quote for some work, so maybe things will start looking up a bit now!

Sometimes wish we'd never bothered and he just worked in a factory for a normal wage each week - bet you are the same!

iwannastopworrying

I have lost count of the times I have scanned the online jobs boards - the thought of a "proper job" would be lovely, with a lovely regular wage and some lovely stability and some lovely nights sleep!

But then, I guess you have to take the rough with the occasional smooth and keep faith! Hope the phone call turns into a bit of good news - is there anymore you can do to get more business in?? Good luck, I hope things turn around quickly for you x

mrssarahh

Well I have just listed all our outgoings etc and split them into household, debt repayments, business, personal and cars. Too scary to put on here though:)
By far the biggest monthly (or yearly) category is debt repayments.
All the others I have either already got down as much as possible (like car insurance and food), or can't change (like council tax).

I know that consolidating is really not the done thing on here, but it might just sort us out for good. If any of the banks will touch us being self employed that is!
Going to make appointment tomorrow to talk to existing mortgage company and see what our options are.

Also going to do absolutely everything possible to get more work in this year - off I go delivering flyers again!

This has made me more angry in a positive way - I will not give in!!!! and less upset and depressed.

Thanks for the support:j