Mr and Mrs K's New Journey to a Debt Free Life.

AlexLK

It's all rather complicated as business partner and his wife actually wants him to leave the company and offer his services on a freelance basis between my company and to independent clients, mainly because she thinks he could earn more (complicated scenario of three kids and little income, she's a hairdresser so doesn't exactly earn a lot either).

Personally, I'm fairly sure he wouldn't (make more money, as he is the sort that couldn't manage a p**s up in a brewery) and financially I would be better off purely just contracting his services for what I need. It would open up the opportunity to add more lines to my company as well because I wouldn't need to be loyal to him anymore.

Over this week we are having an "annual review" to consider the best way forward and whether him leaving is a viable option or not. If he does and things carry on the way they are my salary could quite dramatically increase in say a years time. However, as with anything in business it is a risk and frankly, as said before I don't trust myself with extra money really. In many ways it is much better left within the business.

ETA: I have resisted this for a while as I initially did not think I would be able to cope with knowing he could effectively put me out of business. However, Mrs. K. and I have come to realise that simply wouldn't happen. Recently, the business partnership has not been going that well either, so I am starting to come round to the idea.

theoretica

You know, Alex, you are making me really, really grateful that my family doesn't think money is a good way of keeping score and judging success!

kissjenn

Alex are you a Limited Company with a 50%/50% ownership?

I'd take some advice from my accountant before splitting the company as he may expect 50% of the residuals in your accounts plus you'll have to allow for any outstanding VAT, Tax and inventory.

If you do split you could make Mrs K company secretary and force dual signatures on accounts etc if you are that worried about going mad with the money.

Like you I'm really careful with my Limited company. Sole trader and partnerships are much easier in terms of recording keeping and accounts but Ltds need auditing, Directors liabilities, Companies House etc. Much more they can do to you.

Best of luck with review meeting...do you have it with accountant present too? Worth considering if the topic is dissolving the partnership?

LannieDuck

AlexLK wrote: »

... and frankly, as said before I don't trust myself with extra money really. In many ways it is much better left within the business.

Not while you have debts accruing interest (although I appreciate you now have interest minimised). If any extra money goes straight into your 'pay the debt pot', could you trust yourself then?

You also need to make sure you pay yourself enough (within the confines of the business) so that your SOA adds up each month.

I think your biggest challenge is going to be a change in lifestyle long-term so that your outgoings don't exceed your incomings. I think the current debts can be dealt with quite easily by selling stuff, but you need to make sure that you change enough of your habits that your future books balance.

It would be good to do a new SOA again once Mrs K goes full time, once you know what you're doing about nursery, now that you have a better idea about your actual spending levels etc. That would give you a much better idea as to what you'll need to take out of the business routinely each month to keep your heads above water.

AlexLK

theoretica wrote: »

You know, Alex, you are making me really, really grateful that my family doesn't think money is a good way of keeping score and judging success!

Luckily I have a small family, thus I'm only the "loser" of a son when mother is talking to her siblings.

kissjenn wrote: »

Alex are you a Limited Company with a 50%/50% ownership?

I'd take some advice from my accountant before splitting the company as he may expect 50% of the residuals in your accounts plus you'll have to allow for any outstanding VAT, Tax and inventory.

If you do split you could make Mrs K company secretary and force dual signatures on accounts etc if you are that worried about going mad with the money.

Like you I'm really careful with my Limited company. Sole trader and partnerships are much easier in terms of recording keeping and accounts but Ltds need auditing, Directors liabilities, Companies House etc. Much more they can do to you.

Best of luck with review meeting...do you have it with accountant present too? Worth considering if the topic is dissolving the partnership?

Yes, it is an official meeting between him, the accountant and I. Oh and his wife also.

LannieDuck wrote: »

Not while you have debts accruing interest (although I appreciate you now have interest minimised). If any extra money goes straight into your 'pay the debt pot', could you trust yourself then?

Yes I could. However, I am aware that is not going to be forever. Once the debts are paid I don't want to waste the money, not anymore anyway.

LannieDuck wrote: »

You also need to make sure you pay yourself enough (within the confines of the business) so that your SOA adds up each month.

I think your biggest challenge is going to be a change in lifestyle long-term so that your outgoings don't exceed your incomings. I think the current debts can be dealt with quite easily by selling stuff, but you need to make sure that you change enough of your habits that your future books balance.

It would be good to do a new SOA again once Mrs K goes full time, once you know what you're doing about nursery, now that you have a better idea about your actual spending levels etc. That would give you a much better idea as to what you'll need to take out of the business routinely each month to keep your heads above water.

New SOA is imminent, it'll either be up at the end of this week or beginning of next.

Me changing my ways (long term) is indeed the *real* problem here. In one way I don't see what choice I have as Mrs. K. seems rather serious that if I don't change my ways long term she is gone but on the other hand, it is just so difficult to do.

LannieDuck

So maybe a series of dividends rather than a pay rise per se?

Also, don't forget that once you've paid your debts off you'll need to get some savings properly invested. I can see that eventually you may prefer to leave the money in the business to grow, but you need to achieve a safety buffer first.

EchoDelta

You already are changing your ways. It's only been a short time and it will get easier as these new ways become a habit rather than something you really have to struggle with. You can and are doing it!

fc123

AlexLK wrote: »

Thank you all, not doing very well but I'll try to respond to your messages.

theoretica: In all honesty, I don't want her to leave her current job as she really enjoys it. However, she does need to have a word about the pay (which she is tomorrow). After she spoke to the person who works at the other company, I don't think it would really be ideal for somebody with a family but she seems rather determined to go and have an interview. If the work turns out to be interesting, I know she will go no matter my opinion. After all in the words of my wife somebody has GOT to "bring home the bacon". Furthermore, I understand it is her career.

readytobefree: I have a diary that gets put to good use. Now my parents know son is going to nursery next Thursday, they seem keen for him to go there when I'm at work. I do understand they wish to have a break but it did lead to a bit of a fall out over the dinner table. Also, they both seem to think I ought to go back to "work" now as I'm "better" and the business is "clearly" "not really working out".:mad:


.

Granaries: Thank you, I did myself few favours yesterday and the diary entry was posted quite a few hours after. A few years back I was having almost daily panic attacks so I suppose I learnt to live with it. I hope I can manage to carry on raising money and that once my son gets older he'll still want to know me. I'd understand if not though.

fc123: re. the watch: I don't things by half measures, you should know that now. :rotfl:

Indeed, I do understand where theoretica is coming from but my wife is rather determined to "prove others wrong" and "show them" she can "succeed".

Oh Alex, I feel for you as you are getting it from all sides.

My best advice for you is to divvy up each issue and jot down on paper A Plan of Action. This could be something you do with your one of your remaining special pens and if you have a bit of luxe parchment handy, even better.;)

The problems/issues seem to be;
Parents p** ed off as son is going to interact with 'strrrrrange children'.
I would suggest saying that you need to know your week-plan and they are welcome to look after him whenever it suits you both BUT on a regular arrangement. Agree days and times.

The Proper Job rears it's head again.
You have a proper job, it's just in the new way of working. That generation just can't see it from how it is nowadays.


The partner; I agree with his wife.......split now and you sub contract his services. I don't want to go into detail here but we had a 'shared' set up many years ago and it was the worst thing we could ever have been involved with. Run your own biz (Ltd is better if you can afford accountancy fees in your margin)


Wifes new job. She can go for the interview, get an offer and use it to negotiate a pay rise. Mrs K sounds like she's a very able person so I would let her use her own judgement on this one. If the childcare is in place and your son has enough time with one parent, he'll be fine. Trust me.:)

AlexLK wrote: »

Usually about four days per week for four-five hours at a time.

Yes, they do not know the situation in regards to the business, nor that the company itself is actually rather "rich" at least in part to me paying myself a £1,000 per month wage but also because believe it or not I can be rather ruthless when it comes to the company's finances. Business partner takes £2,000 per month and last year also took a £10,000 dividend whereas I chose not to, so we are not doing so badly. He is a skilled craftsman though and usually puts more hours in than I.

This affirms my view that you split and you run it yourself.
4-5 hours per day is a lot for them and I would share it out with nursery and with them if you can. Your son really needs to socialise with other children.

AlexLK wrote: »

It's all rather complicated as business partner and his wife actually wants him to leave the company and offer his services on a freelance basis between my company and to independent clients, mainly because she thinks he could earn more (complicated scenario of three kids and little income, she's a hairdresser so doesn't exactly earn a lot either).

Personally, I'm fairly sure he wouldn't (make more money, as he is the sort that couldn't manage a p**s up in a brewery) and financially I would be better off purely just contracting his services for what I need. It would open up the opportunity to add more lines to my company as well because I wouldn't need to be loyal to him anymore.

Over this week we are having an "annual review" to consider the best way forward and whether him leaving is a viable option or not. If he does and things carry on the way they are my salary could quite dramatically increase in say a years time. However, as with anything in business it is a risk and frankly, as said before I don't trust myself with extra money really. In many ways it is much better left within the business.

ETA: I have resisted this for a while as I initially did not think I would be able to cope with knowing he could effectively put me out of business. However, Mrs. K. and I have come to realise that simply wouldn't happen. Recently, the business partnership has not been going that well either, so I am starting to come round to the idea.

Do it....sort out an amicable split and sub-contract his services.
If it's confidence stopping you....still do it and we will give the confidence boosting pep talks when you need them....well, when we are not ribbing you for having such expensive watches and pens.......:D

AlexLK

LannieDuck wrote: »

So maybe a series of dividends rather than a pay rise per se?

Also, don't forget that once you've paid your debts off you'll need to get some savings properly invested. I can see that eventually you may prefer to leave the money in the business to grow, but you need to achieve a safety buffer first.

I'm really not sure what I ought to do at this moment in time to be honest.

Yes, I am aware of the need to have some proper personal investments. One of the reasons my wife and I are so interested in eventually getting into BTL houses is because I can hardly get hold of the cash invested easily. That and it's a known entity as my parents have 12.

EchoDelta wrote: »

You already are changing your ways. It's only been a short time and it will get easier as these new ways become a habit rather than something you really have to struggle with. You can and are doing it!

Thank you . The deep lethargic fog seems to have lifted a little, just in time for the evening and not being able to get any sleep tonight AGAIN! So I am beginning to feel a little more positive, until tomorrow morning.

fc123

AlexLK wrote: »

Me changing my ways (long term) is indeed the *real* problem here. In one way I don't see what choice I have as Mrs. K. seems rather serious that if I don't change my ways long term she is gone but on the other hand, it is just so difficult to do.

From a strangers perspective, it seems to be the easiest issue to deal with from what you have written about your life so far.:)

You have all sorts of things to deal with from diggy comments from Mrs K's family and your own parents sitting there hoping you will get a 'Proper job'. I feel soooooo :wall::wall: on your behalf.

Start dealing with the real things one by one and the yearning to spend (with money you don't have in hand) on luxe items will fade.......trust me.:)