Life in the ‘Squeezed Middle’

Thank you for the feedback from this post. All of those blog post ideas will most likely get published at some point anyway, but it has proved motivating to know which ones people are most interested in reading. And now for the first post from that list…

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Before I start, this isn’t a ‘feel sorry for me, how hard do we have things’ post. Sam and I are extremely lucky to be in the position we are in (homeowners, supporting ourselves, options available, etc), there are many people far far worse off than us, plus lots of people who can’t afford to get out of the renting trap, etc. This is just an account of how we organise our finances in our present situation.

We are both very much at the beginning of our careers (having had Arlo just a couple of years into our first jobs after uni). We are slowly but surely working our way up, but for the moment we are very much feeling the squeeze. I tend to be quite open when talking about our situation, and as a result of some of my ramblings on Twitter, I’ve had a few people ask for me to write more about how we budget and how we get by – especially as we live in London where living costs are not the cheapest, and when I give details of our earnings, people are often surprised that we can afford it at all.

I don’t really feel qualified to advise on budgeting. This is different for everyone and our version of budgeting is simply to not spend any extra or unnessecary money. But I can talk about what day-to-day life is like for this particular family in the ‘squeezed middle’.

First a few facts:

The only benefit we qualify for is child benefit (since the new cuts came in, we earn just over the threshold to qualify for child text credits, so if you are up to date with tax credits that should give you a rough idea of where our income might lie – for us it’s definitely not a case of higher salaries to reflect higher London living costs, not yet anyway, but as I said, we are hoping to work our way towards that).

I work from home with no childcare. Like many people, we can’t afford it. Even half a day a week is unaffordable. As a result, I don’t take on as much work as I’d like to. Catch 22 situation.

Our mortgage is very low for London. But it is still 60% of our income. Even so, we are better off as the cost to rent a similar house to ours in the same area would cost around £200 per month more than our mortgage repayment.

On a good month my sporadic earnings plus Sam’s salary will just cover all our bills & outgoings. On other months we don’t break even and the rest gets mounted onto credit card debt.

What I class as the basic essential bills are mortgage, Internet, phone, utilities, council tax, house and buildings insurance. We don’t have life insurance policies, nor insurance for my computer, camera and lenses (which aren’t covered by our basic household insurance as I use them for business purposes). This does make me very nervous, but the cost of this extra insurance would put us over our ‘break even’ budget so it’s not an option right now.

While Sam covers most of our monthly outgoings, child benefit and my small earnings cover the one-off yearly expenses, ie car tax. I also try to make ends meet to cover the horrifying unexpected costs like house repairs that keep cropping up, but most of the time the only option is for this to also go on the credit card. (All the sponsored links you’ve seen in the last few months plus the extra photography work I’ve taken on recently helped pay to fix the hole in our roof).

Our weekly shop is around £50. Maybe a little more if we need to buy nappies or if Sam buys beer.

At the end of each month there is nothing to save, nothing to put away for a rainy day, etc (which also makes us very nervous). If our debt hasn’t increased, it’s a good month.

Our biggest luxury is without a doubt our car. The cost to run it, tax and insure it sets us back a lot. And that’s just insurance for me as we can’t afford the ridiculous cost to insure Sam. However, it is becoming more and more essential now that I use it for work and have lots of photography equipment and props to take on shoots.

Day-to-day living:

I avoid public transport where I can to cut down costs. We’ve stopped going out to London to meet our friends and doing any activities that cost money. We still socialise, but find it’s far cheaper to invite people to ours. Friends have become used to me declining invites If I know something is going to cost money.

The car gets around £40 of petrol per month. I avoid long journeys that will use up more petrol than we can afford.

As the only regular money that comes into my account is the child benefit (half of which is used up by our monthly mobile line rental & house insurance costs), I try not to spend any money ever. Sam takes the ‘good’ credit card (the one that gets paid off monthly, which is how our fortnightly big food shop is purchased). If I need to get a bus, get petrol, get a few items from the Tesco express, I am usually dipping into my overdraft and incurring more charges, so I tend not to bother doing any of these things. I sort of see part of my role as a ‘Stay at home mum’ being not to spend any money at all during the week when it’s just me and Arlo. (Even so I usually manage to somehow spend around a fiver a week on miscellaneous costs).

The above points mean that I do sometimes feel a bit isolated, especially during the week when it’s just me and Arlo. But there is enough going on locally to keep us happy enough, and it’s much nicer in the warmer months when we can spend most of our time in parks. (There will be more on this in another blog post).

As a rule, I don’t go to any baby/toddler activities that involve a fee. Arlo’s swimming lessons were a birthday present from his grandparents. We do go to one group a week that we pay for, Arlo has been going since he was five months old, he loves it, and it’s his only regular opportunity to socialise with other toddlers. So we do pay for that, but it’s pay as you go and therefore affordable. Last year, Sam and I were doing football and choir (respectively), but we have stopped both as we couldn’t justify the costs.

Except for birthdays and special occasions, we don’t eat out. We don’t buy snacks, drinks or food for Arlo whilst out, we take a lunchbox for him if needs be. I avoid taking him to places where he will see and ask for snacks. We don’t buy any food marketed for kids in our supermarket shop, it may be the healthier option but that stuff is way overpriced.

Sam will often buy fruit and veg from the market as you get a lot more for your money than at the supermarket.

Sam is really good at meal planning which keeps the cost of our food shop down. Arlo eats what we are eating (he is a typical fussy toddler though so in the event he doesn’t want to eat, he gets peanut butter or spaghetti hoops on toast. This happens a lot). We all eat the leftovers for lunch the next day.

Apart from mince meat, we don’t usually buy red meat. Too expensive.

The only person who gets new clothes is Arlo and 90% of those are bought during the sales or given as presents. I always buy a size or two up and he wears baggy clothes for half a year or so – as a result of buying large, at two and a quarter he is still in clothes that he started wearing at eleven months old.

Holidays and trips away don’t happen. We’ve turned down many invites to visit friends as travel/petrol costs for a weekend away are unaffordable. But with a new baby on the way this is not exactly a priority. I’m hoping we might be able to have some sort of break in 2014 when the baby will be a toddler and life might be that little bit easier. In my opinion it’s not worth paying for a holiday before toddler stage/the stage of sleeping more reliably, as it would probably be more exhausting for me than staying at home.

Budgeting for Christmas was fairly simple this year. We managed to buy most things in the Tesco Clubcard exchange using our points. I also used Tesco points to buy Sam’s birthday present, and his birthday meal out. I am fiercely protective over my Boots advantage card points and use those to treat myself occasionally when I’ve run out of face creams, etc.

You may be wondering why we would choose to have another child when we are barely breaking even each month. It is true that the cost of childcare for two children puts a stop to any ideas of me going back to a full-time salaried role, but it was barely achievable even with the cost of childcare for just one. I have discussed childcare cost and ‘going back to work’ lots in the past, and I don’t want to go off on another tangent about that in this post, but the gist is that, in my case, there is not much difference in being a self-employed photographer with no childcare than working full-time plus paying Arlo’s childcare. Except the photography is flexible and something I can see expanding into a more secure income over the years. In this situation we weighed up the pros and cons of giving Arlo a sibling now VS waiting for a more financially comfortable time to expand our family. As we can’t predict when or if that will happen for sure, we decided to follow our hearts.

It’s very hard to predict what the future holds in terms of financial mobility. Ideally, we would like to upsize from our two bed house, have a third child, and (if it’s not too much to ask, which I fear it could be) move to a more family friendly area. If I think about it too much, I’m constantly stumped by questions such as How will we ever afford a bigger mortgage? How will we ever get approved for a bigger mortgage without me having a proper salaried job? If I found a proper salaried job, how would we ever afford childcare? But I’m thankful that there are options there, the most likely being that we would move out of London to an area where Sam could still commute and we could get more living space for our money. We’ll cross that bridge when we come to it.