Baby Steps With Variable Income

A question about : Baby Steps With Variable Income

Hello MFW's,

Can I join you lovely folk? We are just embarking on our MF plan but we have been building up to it for a couple of years now... Oh, I should introduce myself, shouldn't I? Erm, well, I am female, married to OH, with two teenage children, 13 and 15. My user name was my daughter's name for her imaginary friend when she was little. I have been reading these boards for eons but haven't posted for a long time. A serial lurker I am afraid, emerging into the light.

OH is 52, runs his own (very small) company, I am 51 and self-employed. We are both based at home for work, which has it's upsides and it's downsides!

So, back story is that two years ago we moved house so that we could go from a relatively large (Ј150,000ish) interest-only mortgage to a much smaller repayment mortgage (Ј80,000 at the time). You will see from my sig that we have made some inroads into this already, but this was all monthly repayments, no overpayments yet.

We moved from a lovely old house with big garden to a large modern house which is proving, as we had hoped, to be much cheaper to run and maintain

We still have a little credit card debt to pay off, which we need to do this year before the 0% runs out. We have already paid off c. Ј2,500 of credit card debt - it was run up as a result of moving; a calculated risk to get us to where we wanted to be in the long term.

It has meant giving up my garden (which I loved), my chickens (ditto, now with my friend) and dream country lifestyle, but we have gained in some ways so we are fine with our choice. Also we are now on a 15-year repayment mortgage, so even if we didn't do any more than keep paying the Ј550 per month payment we have currently (5 year fix) we will be mortgage-free in 2028 and certainly long before we retire (67?). We have pensions but I haven't paid into mine since the last ice age and OH stopped when he threw in his job.

So, inspired by all your stories and playing around with mortgage interest calculators, OH and I would like to get rid of the remaining debt and start making overpayments by the end of this year. We are using YNAB, which has been really helpful, particularly since our income is erratic and traditional budgeting has never worked for us.

I will post here and join some of the debt-free challenges (I always visit over there as well) to help me on my way. I enjoy the challenge of it all anyway; not sure why I feel the need for a diary now, suspect it might be because debt-busting and overpaying can be a lonely business. OH isn't very interested in the nitty-gritty of it all, though he is on board now, thank goodness. (It was a different story three or four years ago )

I think that's enough for now but just to say fellow-travellers welcome; I already 'know' many of you from lurking so happy to 'talk' to you at last though feeling rather shy...

Hollysan

Best answers:

• Good luck and welcome to you :-)
  I'm self employed too have been so for 11 years now so feel your pain. I have a seperate business bank account and pay myself a salary of the same amount each week so I have a consistent income. I've found that a good way to do it, sometimes the business account is really full, other times not so but it evens out over time as long as you can afford your 'salary' based on your turnover. If not reduce your weekly amount. That way your income doesn't vary.
• Hello, resident of the Corner Cottage
  I was reading your thread last night. You are in Norfolk, like me!
  Yes, self-employment is great for parenting, not so good for steady earning. It is getting more consistent, our income; we have only been working for ourselves for a few years, and it takes a while, doesn't it? That's a good idea about paying yourself a set amount. I have a business account, but so far I have just taken money out when we absolutely need it.
  Very interested to read about your doer-upper - that's exactly what we did at the last place - babies and brickdust! OH and I hope to return to cottage life some day when the children are completely independent.
  Thanks for replying; I will add some more tomorrow and I will attempt to subscribe to your thread if I can figure out how - I will trundle off and have a look now.
  Have a good evening. Hello to other readers....
  Hollysan
• There are a few norfolkians on here! And some want to be norfolkians!
  When we started the business after a while we started to take regular amounts from the business account. I set up a standing order start it low and then increase it as the business grew. I've also done it weekly not monthly so it's easier to manage.
  This MFW forum is very inspiring, we had a plan to really save this year but this has inspired me even more! If only it could motivate with me on the ebay, it would be a miracle.
  To subscribe you need to click thread tools and then Subscribe. I find I follow a few likeminded people with similar mortgages to me. I have the attitude that if you can pay Ј1 that's great, any more is better but do something every month even if it is only that Ј1.
• Good luck with your plans. I'm also using YNAB and find it great as my income various a lot through out the year and I get the bulk of my money quarterly so it's really making it easier for me to budget and make sure I have enough in my account to cover 3 months worth of costs without dipping into my offset account.
• I'm a Norfolkian too, well haven't been for a few years now but grew up there
• Hi, and thanks for your posts:
  ourcornercottage - weekly is a good idea, allows for the ups and downs of cashflow! I might give that a try instead of 'as little as I can get away with for as long as it lasts'
  Yes, it's clear that the mutual support from these threads keeps people focused. I wish I could get more motivated re. Ebay as well - I have a few things to sell and I've even taken the photos but failed to list them. I think I will try and do one a day and see if I can manage that. The trouble is, there's always something more fun to do than Ebay (like reading all your threads!)
  egoode - thanks for your message. I must admit YNAB has really changed the way I budget and think about money. I always used to stress about how much we HAD spent and think that I could reduce expenses by setting a budget figure and having it on a spreadsheet but it just doesn't work! I love the flexibility of YNAB and the way that it just evolves as it needs to so it keeps you looking forward. Much more positive.
  turtlemoose - another Norfolkian! Hello to you too. I wasn't born here but OH grew up here, like you. I fell in love with Norfolk when I was in my twenties and used to visit a boyfriend who was up here at the UEA.
  So today I have managed to mostly spend money - I needed new glasses so that was expensive. However the frames were in the sale and they threw in the cost of anti-glare and anti-scratch coatings so reasonably MSE.
  Also OH and I had a talk about the fact that if we carry on as we are over the medium term, in terms of income this year, we should be able to pay ourselves Ј300 more each month (still tend to think in terms of months, a bit of a hangover from employment days, and also all the bills tend to be monthly). For the next few months that will go towards paying off the remaining CC but after that we should be able to put some of it towards an emergency fund (still thinking about that one; how much etc), saving towards a new boiler and some overpayments on the mortgage. The Ј300 will also grow to around Ј400 by the end of the summer, because we will lose an HP payment which we took out to pay for new furniture when we moved, and also we have a 'rainy day fund' in YNAB for the car which should enable us to pay our car insurance in full when it comes up for renewal in July, so we would lose the monthly direct debit on that as well. We gave up the second car last year. This was not an option before we moved (too rural) and it is working out ok, although there are times when one of us gets stuck at home through lack of transport
  I have also identified some monthly bills which need reviewing. Our water bill is Ј67 a month which seems high for a family of four (although that does include a 15-year-old male!) and I will shop around for car insurance when the time comes.
  Lots more ideas and things which I need to look at so will keep recording my thoughts here and welcome any suggestions from any of you as I pootle along.
• Don't talk to me about ebay. I just listed 3 things, it's like torture!
  it's good to go through your bills. I think I saved about Ј1000 per year going through every one with a fine tooth comb. I recently got some water saving devices free from Anglian water that might help a little. If your in the right postcode they will do a free water saving survey, you can google it to find the form to fill in. I'm too much in the sticks for them to come out but got some water saving stuff anyhow.
• I'm impressed that you managed to list three items in one go - torture is about right!
  Thanks for the tip about Anglian Water. I will go on the website and see if I can find the form. I will have some free time tomorrow so plan to check on some more bills - I'm sure you're right and I should be able to find some more savings. Then it's onto the grocery bill, which crept up horribly in December and January. We're a greedy lot!
  Hollysan
• Hello MFW's,
  Well I have been slow in posting but I have been busy doing things which should help us get to where we want to be i.e making overpayments by the summer. (Have just updated sig which now reflects the latest regular payment).
  Firstly, I have re-done my budget in YNAB. I have simplified it, ditched the two CC's which we have paid off, added the two accounts in which we currently have savings (car fund, Christmas fund) and ditched the cash account. Instead, I have two cash pots, and will withdraw Ј20 at a time which I can categorize as either groceries (small spends), school lunches (very occasionally when I forget to put the bread on! ), charity (often school non-uniform etc) on the one hand, and my own cash for parking, snacks in the city etc (I spend very little this way!). These can stay in my purse in separate compartments, until they run out, and then I can withdraw the next Ј20.
  I was getting into a mess with the cash account, usually when DS asked me to buy something online for him and then reimbursed with cash. He how has his own debit card (he is 15 and quite responsible).
  I am now using YNAB properly, giving the pounds a purpose (anglicised version of give every dollar a job, for those who know YNAB ) and using the budget as my guide as to what we can spend.
  Grocery-wise, I always do a monthly plan but we still manage to spend around Ј400 a month on food, and another Ј100 on toiletries, household goods etc. This must come down! Everything else is categorized separately, including pet food, TV mag, household items such as lightbulbs etc, even if we buy them in the sm.
  So I have now gone back to some old cookery books which I used to use when I was single and living in London and saving up for a deposit for a flat (bought twenty years ago this month - ). One of my favourites is Rose Elliot's Beanfeast, also the Cranks book (original one). I am not a strict veggie, I eat white fish now and again, but we are a veggie household - OH is veggie, so is DS. However DD is a sometime-pescetarian like me.
  I am majoring on soups (it will be salad in the summer), beans and lentils, lots of curry, pasta etc. This is good old peasant food which can be delicious with the right ingredients and even fills up the kids! I have also been making time to bake more - I have always been a baker but in the last couple of years with work and moving house I had largely got out of the habit. I am back on the wagon.
  Could ramble on about food for ages but will resist
  I got in touch with An$!i@n water and have some water-saving devices on the way. Also read all the advice and have had a serious chat with DS, who is the main consumer of water in this house (apart from the washing machine). Thank you ourcornercottage for the suggestion.
  Also upgraded our joint bank account with L10yd$ to Club L10yd$ and hope to take advantage of the Vue tickets and the interest rate tier once YNAB has enabled us to build up some reserves.
  I am determined to get organised with Christmas this year. We didn't do too badly this Christmas but I'm sure we could do better if we bought during the year and made more. I have some materials for beading and a lovely book which has lots of small projects for brooches, hairslides, the sort of things my three nieces would love, and their mums - I just need to get cracking with it!
  As for earning money, I should be doing that right now, but the last few months have been very busy and I really want to concentrate more on the moneysaving etc for a bit, so I am taking the view that if I am spending my time in a productive way, that's ok. Having said that I did a load of invoicing on Monday and have more to do - it all helps to keep the money coming in. I have also started OH's accounts for his business so we know where we are with tax etc. It's all helpful.
  The next project is the garden. More of that in a while - this is a very long post. Well done anyone who has read this far!
  Hollysan
• Food bill arhhhh that's a lot.
  I was gutted when ours was Ј250 last month. We used to sit around Ј100 - Ј150 per month but we stopped all eating out and takeaways hence the increase.
  Have you found Aldi yet?
• Yes, I think it's too much as well. But there are four of us and the two who were the littlies are bigger than me and eat more than me! Also they have packed lunches and we work at home so nearly all our food consumption is at home and we rarely eat out.
  I have been to A1d) today. I have shopped at Leed1 for years but A1d) is closer now. However it only ever does some of the shop and I have to top up elsewhere. But as I said in earlier post, I'm working on it!
  Hollysan
• Hello again,
  I have been truly hopeless at keeping up with this diary - but I have been busy moneysaving, with some success, so all is not lost!
  A bout of lurgy followed by half-term and not having a computer for a few days has meant that I haven't been online much, but we have been discussing our MFW plan and I feel as if we are a bit closer.
  Last week I made a real effort to investigate all bills which I felt were too high:
  Rang Anglian Water and negotiated a reduction of our monthly DD from Ј67 to Ј60. Also had a long discussion with their guy who was very helpful, working out what our usage was, which areas were higher than usual usage and where we might be able to cut down. Seems our usage has gone down a bit, hence reduction, so that's good. Over-enthusiastic toilet flushing and washing machine seem to be the areas for improvement. So will report back on how we get on....
  Also rang NPower - we had an underpayment from the first 6 months in this house. That has almost been paid off. A bill is on it's way and then I am to ring back to discuss the monthly DD amount - currently Ј144 I'm sure that will come down.
  Best of all - I had a reminder from BT (landline, broadband, YouView) - our landline is paid up front in one lump and is due. I rang them to discuss and as a result we have a discounted package for phone and broadband for a year which is Ј15 cheaper! I must remember to ring back before it expires next year....
  So now I am moving onto insurance - house, car, pet, in that order, as they come due.
  Groceries-wise I am trying to reduce our monthly spend from around Ј500 (this includes toiletries, household goods, dogfood as well as food) to around Ј400. I have Ј1.72 left in the Feb budget! I find that termtime is fine - it's the holidays which are difficult. Two weeks at Easter will be hard - we are bound to have family visiting and although I mealplan and try to cook ahead and use what we have in stock feeding 9 or 10 people for several days is expensive.
  Income-wise, things are looking quite good
  OH has lots of work coming up this year and I am going to have my best year yet. It is a bit up and down, running our own businesses as we do, but we have decided that we can afford to pay a sizeable chunk towards the remaining CC debt in March, and the plan is to keep doing this over Spring/early summer and then when it's clear we will move onto the mortgage overpayments which are our real goal.
  The car is being serviced this week and we have Ј680 in our Car pot on YNAB. Hopefully that will cover any repairs but we will see...
  YNAB tells me that we spent less in February than we have during any month since we started using the software last summer. I know Feb isn't quite over, but my purse is shut tight until the weekend
  The next job is a mealplan for March, but I think I will catch up with some of your diaries first to see how you are all doing. Thanks for reading.
  Hollysan
• Go you!
  In terms of water saving we follow the 'if it's yellow......' (I won't go on its gross!) Approach but that's cos we have a septic tank.
• I'm immune to that - we've never had a septic tank but our neighbours did, so I know where you're coming from!
  Forgot to mention - I sold another item on Ebay - Ј10 in the pot.
  If the car service is pain-free we have decided to put the balance into paying off the CC. We have a service plan which will take care of the service and MOT, we just need the car pot for any repairs/parts. If there are none, that's Ј600 to pay off the card. Fingers crossed...
  Hollysan