Third-Life Crisis

wishingthemortgaheaway

When my hubby first went self employed, he put 20% of all earnings into his 'tax account' when he does his tax return he treats the over save as his end of year bonus. He usually spends some on new work equipment, some goes into long term savings and some we use for a family treat.
He doesn't have the ongoing expense of materials though, but I'm sure a similar system would work for your hubby to replace tools etc.

enthusiasticsaver

I think wishingthemortgageaway has a good suggestion. Much as you want to use all your spare income to decrease the debt the only way this will be cleared is to have a long term sustainable budget as the debt figure is so high. People have got into dreadful problems when self employed with unexpected tax bills, unpaid invoices and large jobs with needing to pay costs upfront for materials etc. Some of your DHs income should be allocated to self employment costs.

Treadingonplaymobil

I agree with enthusiasticsaver (for once! :rotfl: ). One of the biggest turnarounds in managing my finances has been about being more realistic about my SE income. I used to look at an income of say £1,000 and think 'Ooooooh, I've got £800 to play with there, even if I'm sensible and deduct 20% for tax!" Now I look at £1,000 income and see £370 that needs to be put by for stock/supplies, £50 I need for a contractual levy, £100 for misc business costs (website updates, fuel, future training updates), £100 for work clothes, £100 for tax/NI/accountant costs and a paltry £280 of actual profit. Doing that means I am able to buy stock up front rather than put it on a CC (which always, without fail, led to problems in the long term for one reason or another) and have a genuinely realistic, albeit slightly depressing, gauge of my income.

As long as your DH isn't able to pay for supplies up front (or at least have a buffer to pay back a CC before the interest kicks in, if he chooses to pay for things on a CC) or cover his own training/insurance rather than borrowing from FIL, he isn't being realistic about how much profit he is making. I know this because I've been there myself, for YEARS, before I admitted that I wasn't being realistic about my actual income.

enthusiasticsaver

TOPM is bang on the money with the above post. I agree 100% with that and that is something I never thought I would say:rotfl::rotfl::rotfl:

Chrystal

The above 2 posts have really made me smile.

On top of which, I actually agree with them! :T

Goingroundincircles

One crisis follows another. It looks as though the contractor OH has been working for recently is about to go into administration. The kitchen company have stopped paying them as they were doing a terrible job and now the contractor is saying there is no money to pay OH. To be honest, we're not surprised they're in this situation, quite frankly the most poorly managed company we've ever come across. Anyway, it means that it's unlikely that the last two invoices will be paid - around £3,500 :mad::mad::mad:
Any advice would be most welcome!

Goingroundincircles

Husband has been in contact directly with the kitchen company and is hoping to get on their books, which would actually be a bonus as he would earn more. Fingers crossed everyone.

Thank you for all the self employed tips. We've always put 20% aside in a separate account, or tax has been deducted at source, so no issues there. We've recently put money in the budget each month for replacing tools so we're getting better on that front. Our biggest issue is materials for jobs. I was wondering if it might be appropriate to ask for customers to pay these upfront before the jobs starts? I'll need to sit down and look at what materials are on an average month and work out what percentage of income to allocate towards them. I also need to do this for holidays as we used to just scrape by on a smaller budget (or use credit cards) on a month when OH took some days off.

Working_Mum

I was going to suggest that he contact the main company directly and see if there is any way forward - he may be able to get his invoices paid via that route than through the initial company (if that makes sense).

I think it is a smart idea to take a deposit up front for jobs - does he use T&C's?? I have a friend who is a builder and he has a 3 stage payment programme (more for larger/longer jobs) which he agrees in advice and it includes a deposit which covers the materials and day rate until he will get his next tranch of money in. He says he discusses things right at the quoting stage and he hasn't experienced any issues.

Good luck with his next steps - he has skills which are in demand and he needs to get himself out there!!

enthusiasticsaver

Can your OH not get a trade account with local suppliers? I would certainly be asking some money upfront for materials. We have often had to do that with local builders. Sorry about the company going into administration. Was OH contracted to work for them? Can he put in a claim to the official receiver so at least his debt is acknowledged even if he does not get the full amount. How incredibly annoying.

Goingroundincircles

Hi Working Mum, that's a good idea thank you. And worth a try at least!
One of his T&C's is that money may be requested in advance for materials, we just rarely do it! So I think that's the way forward from now on.

ES, they haven't officially gone into administration yet but they have no money coming in and therefore aren't paying anyone. He was told to contact his solicitor! We're not really sure how to proceed at the moment.