My SOA - your thought please

Welshlassie

Merlot wrote: »

Are you paying for nursery fees just now? cause if not I suspect you are being over paid in Tax credits for one child, our joint income isn't as much as your take home pay and we do not qualify for extra working tax credit except the basic of £10.48 a week everyone is entitled to up to £58,000.

Just a thought. I would hate for you to have to repay it next year. I would check.

merlot.x.

no we're not paying child care costs at the moment, we're not getting working tax credits, but get a bit extra on the child tax credits because he is under a year old. You are entitled to child tax credits of some degree when you earn upto £66,000pa when you have a baby under 1.

The figure listed includes child allowance aswell.

Welshlassie

ms_london wrote: »

Hiya.

Sorry, missed the part about you having savings! I think its sensible that you are looking at the bigger picture definately.

Since there is no urgency, you are doing the right thing with not touching the pension & mortgage repayments.

It would be better if your annual bills were budgeted for monthly too - as surely you dont pay out all of these bills in one fowl swoop? If so, where do you get the money from?

I am sure you dont want to run your savings dry if you dont have to - you can cut expenses, just a matter of if you want to or not. xx

I do budget for our annual bills and transfer the monthly amount into a savings account so that when they need paying they money is already there. They are then paid for on the CC (to get the cashback) and paid off by DD in full when the bill is issued. That way I don't have quite so many monthly outgoings to deal with and if my quotes are lower than the previous year I have a little extra saved that can be transferred into rainy day savings. (Hope that makes sense, I know how I do it, just find it difficult to explain) :rotfl:

neverdespairgirl

Congratulations on the birth of your baby! You seem really sensible about money, it's far better to plan ahead as you are doing. I'm self-employed, as is OH, and our incomes obviously went down a lot the year our son was born, so I appreciate your need to plan carefully.

Welshlassie wrote: »

Income (per month)
£2,080 salary
£ 172 Child benefit and tax credits

Expenditure (per month)
£1,028 mortgage (IO)
£ 200 savings for mortgage repayment
£ 137 Council Tax
£ 34 Water rates
£ 38 Gas
£ 32 Electric
£ 32 Home phone, internet and TV
£ 35 Mobile phones (3 phones 2 PAYG, 1 contract for DH business)
£ 9 Window cleaner - I know it only seems like £9 a month, but that's £108 a year, can't it go?
£ 9.28 Pet insurance
£ 19.77 Life insurance
£ 260 Groceries (including pet and baby food & nappies) - Bet you could cut £30 a month off this with not much trouble.
£ 70 Going out - £95 combined on going out and entertainement does seem a fair bit, could you cut back to, say, £75 a month for the two together?
£ 20 parking costs
£ 80 Fuel
£ 180 DH pension
£ 11.61 TV licence
£ 25 Entertainment (big days out, music, films purchases etc)
£ 70 savings for christmas/birthday etc - this does seem a lot, do you really need to spend £840 a year on this? Could you cut back to a generous £50 a month?
£ 30 optical bills
£ 72 new clothes for all family - that's a lot for clothes. Babies don't need expensive clothes, I really think. I reckon in total we've spent £300 on all our son's clothes and shoes since he was born, and he's 2.5 now. And shoes is a lot of that! He's warm, dry, and comfortable, but we gratefully take hand-ons, stuff from ebay, etc. Save it for when the baby cares about style etc! Could you cut, say, £30 off this?

Annual costs
£ 225 Buildings and contents insurance
£ 110 RAC (although looking to to this with Tesco deals in a few weeks when it expires
£ 500 Car maintenance (2 vehicles)
£ 900 Car insurance
£ 300 Car tax
£ 100 Pet costs (jabs etc)
£ 100 Dentistry
£ 290 Haircuts

I work it out to be just short of £400 per month difference between what we're brining in and what's going out.
I know there are areas that we can cut back further (going out), but we wanted to realistic about what we were spending and then see how we went.
Any comments great fully received.

splishsplash

Hi Welshlassie,
Just a couple of things strike me, don't know if they're any use...

• you've based your SOA on the drop in income you will be absorbing once your OH finishes work
• you're banking that this shortfall will only last until July
• you're happy that you have savings to cover you for 18 months even if he doesn't bring in an income - I take it that's 18 x £400 = £7200+ in savings?

If it were me, I would be thinking that six months is a long time to be living beyond my means, and that self-employed income is notoriously unreliable for the first year or two. I know you say the order book looks good for the summer, but are you taking into account the extra expenses that will also be generated, before your OH can take any of that home? I mean things like childcare (he won't be available to mind your son once he's working, I take it?), extra fuel costs, extra on the phone bills, layout for any goods/materials - will this come from savings?, etc.
I would also think that one hefty unexpected car bill and one minor problem at home (think plumbing leak or something similar) would eat into your savings quite quickly.

For those reasons, I would be trying to live within my means as they are now for the next six months. Otherwise it's a bit pointless saving £200 towards mortgage in your SOA, but taking £400 from your savings account every month to cover it (By the way, I make it a £350 shortfall - am I missing something?)

• By cutting out the entertainment allowance (on the basis that you can't afford it on your income for six months), you save £95pm.
• By cutting Christmas/savings to £30pm, you save £40pm.
• By doing your own hair and OH's hair you could cut that (whopping!) hair bill to about £50pa - thereby saving £20pm.
• If neither you nor your OH buy clothes for the next six months (because, on your income, you really can't afford to presently), and by only buying what you need for your son, you could cut that bill down to £22pm (and that's allowing for tights, socks and other unmentionables for you and OH!), so saving £50pm.
• Your husband isn't working for the next six months, so cut the contract phone, saving £35pm (He could use the PAYG for the business, couldn't he?)
• The window cleaner has got to go - saving £9pm

That's a total saving of about £250pm. If you can save another £30pm off your grocery bill (although I think it's very reasonable already!), then you're up to £280 per month saved, or a shortfall of £70 (by my reckoning).
Maybe your work expenses would cover that shortfall?
If you can make these cutbacks for the next six months, you would be able to save those mortgage repayments and your savings would be largely intact, which would leave you in a much more secure position in case things don't work out as planned.
Just look at it as a temporary thing - only until the summer. If your OH can generate enough to start taking money out of the business straight away, then you can allow an entertainment/clothes/hair etc. sum each month again, and re-hire the window cleaner!
Best of luck.

toria27

Hi there, I posted on here a while back due to the same thing. My OH was due to change his job and we were dropping about £700 a month. I think our overspend was £250 (cant remember exactly without finding my post). I was loosing sleep over this and became very ill due to feeling so run down.

OH has now changed his job and we are managing to have £127 left at the end of each month instead of overspending.
Things we have changed:

-we only get £10 each per month for luxeries, for example we go to the cinema on a wednesday night at the earliest showing we can and using orange 2 for 1 it costs £4.75 for both of us. We also use tesco vouchers for other days out and always take a packed lunch.
-I get my hair done at the local college for free and cut OH's myself
-we only save £40 a month for Christmas & birthdays (spending £5 on other people only)
-£30 a month on clothes and shoes
-£130 a month on food, there are 2 adults and a very hungry 2 1/2 year old who is still in nappies! it is tight but people on here do it for less. we eat very well though and cook everything from scratch and have at least 5 portions of fruit & veg a day.
I also got a second job cleaning a house 2 hours a week for an extra £65 per month, I do find it hard to fit in extra work though as cannot afford the childcare and I already work weekends until midnight.

Good luck with everything, I hope you manage to cut things further as it really would be a shame if you had to eat away at your savings.

locutus2003

Hi there

Thought I'd add my two-pennyworth - really because my DH gave up work 3 years ago to look after our son - and I had another baby in September and am going back to work at the end of Feb. Nice to know of someone else doing the same thing.:T

I don't disagree with the comments people have made here - but I budget for about the same amount for my hair as you do. I have a high-profile job and I consider that for me to do it properly I have to feel as good as I can - for me that's having a decent hair cut and decent clothes for work. I don't know if you've tried Ebay for your son's clothes or the NCT nearly new sales? They are really good - I had some nice stuff from Ebay for next to nothing and they are now doing my daughter to (as long as they aren't too boyish!).

The other thing you might want to consider is the pension? We have a pension for my DH from when he was self-employed before we had the children. However, this is a nominal pension because we are expecting to live off my pension (because I will have been working all the time until I retire) - so we pay about £30 a month. Might be worth a thought? When things get easier for you in a few years' time, you can always top up his pension then if you want to.

Hope this helps - and good luck going back. It's a wrench leaving them behind, but wonderful to know that they are being taken care of so well.

neverdespairgirl

locutus2003 wrote: »

I have a high-profile job and I consider that for me to do it properly I have to feel as good as I can - for me that's having a decent hair cut and decent clothes for work.

I have quite a high-profile job as well, though, and I spend very little on my hair - even though it's the nicest thing about my appearance, and I generally look like the back of a bus. Mind you, I have to wear a horsehair wig some of the time at work, and they play havoc with any hair style.

It's worth going for a style that doesn't need constant hair-dresser visits, surely? <changes avatar>

msmicawber

Hi there,

In addition to the suggestions other posters have made, your RAC subscription seems very high to me. I'm not sure what the Tesco deal knocks off the price, but have a look at Gem who are much cheaper (and good), especially if you use their Recovery Reclaim where you pay with a credit card and they credit you back.

With the car costs, could you sell one of the cars and car share for at least the 6 months that your husband isn't working?

I assume the £30 per month optical bills are for contact lenses. I've seen a lot of people mention buying contacts over the internet very cheaply. Or could you wear glasses temporarily while you're cutting back? If you don't have a pair at the moment, you can buy them for about £15 from places like Glasses Direct.

It strikes me you could pare down quite a lot of your spending so that you don't have to dip into your savings too much.

Welshlassie

splishsplash wrote: »

Hi Welshlassie,
Just a couple of things strike me, don't know if they're any use...

• you've based your SOA on the drop in income you will be absorbing once your OH finishes work
• you're banking that this shortfall will only last until July
• you're happy that you have savings to cover you for 18 months even if he doesn't bring in an income - I take it that's 18 x £400 = £7200+ in savings? Just over this amount
  

If it were me, I would be thinking that six months is a long time to be living beyond my means, and that self-employed income is notoriously unreliable for the first year or two. I know you say the order book looks good for the summer, but are you taking into account the extra expenses that will also be generated, before your OH can take any of that home? I mean things like childcare (he won't be available to mind your son once he's working, I take it?), extra fuel costs, extra on the phone bills, layout for any goods/materials - will this come from savings?, etc.
I would also think that one hefty unexpected car bill and one minor problem at home (think plumbing leak or something similar) would eat into your savings quite quickly. It isn't actually his 1st year trading, he has been running the business whilst working full time for the last 18 months, knowing that we would need the cash once I went back to work. There shouldn't actually be any extra expenses as his business is evenings and weekends, when I'm home and should he need to do anything during the week we have family who have said they can help. All materials to run the business have been purchased 18 months ago and the business has enough in the account to cover fuel and phone costs presently.

For those reasons, I would be trying to live within my means as they are now for the next six months. Otherwise it's a bit pointless saving £200 towards mortgage in your SOA, but taking £400 from your savings account every month to cover it (By the way, I make it a £350 shortfall - am I missing something?) I knew it was just under £400, think I've missed a couple of little things from the SOA.

• By cutting out the entertainment allowance (on the basis that you can't afford it on your income for six months), you save £95pm.
• By cutting Christmas/savings to £30pm, you save £40pm. We still have to buy for people and have already cut back significantly on what we usually spend.
• By doing your own hair and OH's hair you could cut that (whopping!) hair bill to about £50pa - thereby saving £20pm. This isn't an option for me because of my job, but we could for DH.
• If neither you nor your OH buy clothes for the next six months (because, on your income, you really can't afford to presently), and by only buying what you need for your son, you could cut that bill down to £22pm (and that's allowing for tights, socks and other unmentionables for you and OH!), so saving £50pm. As I've just had a baby I need alot of new clothes for work, I'm trying to use as many of my old ones as possible, but still need quite a bit to replace things that don't fit. I'm getting them in the sales, but buying on the internet isn't any option at the moment due to my odd shape.
• Your husband isn't working for the next six months, so cut the contract phone, saving £35pm (He could use the PAYG for the business, couldn't he?) We're looking to drop the PAYG one for him, the contract one is only £15 pm. We're then budgeting £10 each pm in credit.
• The window cleaner has got to go - saving £9pm - definately

That's a total saving of about £250pm. If you can save another £30pm off your grocery bill (although I think it's very reasonable already!), then you're up to £280 per month saved, or a shortfall of £70 (by my reckoning).
Maybe your work expenses would cover that shortfall?
If you can make these cutbacks for the next six months, you would be able to save those mortgage repayments and your savings would be largely intact, which would leave you in a much more secure position in case things don't work out as planned.
Just look at it as a temporary thing - only until the summer. If your OH can generate enough to start taking money out of the business straight away, then you can allow an entertainment/clothes/hair etc. sum each month again, and re-hire the window cleaner!
Best of luck.

Thanks for your comments, hope I don't sound look negative, but we really thought about what we were doing before we got to this point and I think we can do it, but wanted to make sure I wasn't missing any obvious savings.

Welshlassie

locutus2003 wrote: »

Hi there

Thought I'd add my two-pennyworth - really because my DH gave up work 3 years ago to look after our son - and I had another baby in September and am going back to work at the end of Feb. Nice to know of someone else doing the same thing.:T Well done its great to hear of other people who have done it and made it work.

I don't disagree with the comments people have made here - but I budget for about the same amount for my hair as you do. I have a high-profile job and I consider that for me to do it properly I have to feel as good as I can - for me that's having a decent hair cut and decent clothes for work. That's exactly how I feel.
I don't know if you've tried Ebay for your son's clothes or the NCT nearly new sales? They are really good - I had some nice stuff from Ebay for next to nothing and they are now doing my daughter to (as long as they aren't too boyish!). We've been really lucky and had loads bought for him, I'm buying bigger sizes as I see them in the sales and do visit the NCT sales, when I can. We've had a few bad experiences buying stuff of ebay, so tend to avoid clothes now.

The other thing you might want to consider is the pension? We have a pension for my DH from when he was self-employed before we had the children. However, this is a nominal pension because we are expecting to live off my pension (because I will have been working all the time until I retire) - so we pay about £30 a month. Might be worth a thought? When things get easier for you in a few years' time, you can always top up his pension then if you want to. Something we'll look into, but don't want to have to touch this if we can help it.

Hope this helps - and good luck going back. It's a wrench leaving them behind, but wonderful to know that they are being taken care of so well. That's the only thing that's keeping me going knowing he is going to be with his Dad, don't know if I'll be able to do it otherwise.

Thanks for your comments, have really boosted by confidence that it can be done.