Author Topic: Reader Case Study - Low income UK Mustachian Wannabe  (Read 4902 times)

Grem

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Reader Case Study - Low income UK Mustachian Wannabe
« on: July 01, 2015, 09:21:45 AM »
Hi all

I've just spent the last few days reading all of MMM's Blog, and I need some help in how to get started living in the UK.

Currently my OH is the main earner, we have 2 kids (5&1) and I stay at home to look after them as well as working part time in the evenings when I can. Here's a break down of finances...

Income per month:
OH Wages - £1300 (after tax etc)
My Wages - £130 (average)
Child benefit/tax credits etc - £800

Total income: £2230


Outgoings:
I use YNAB, average outgoings for everything for the last few months has been around £2100 (trying to lower this)

We have a 2001 Volvo v40 which gets 35-40mpg depending if it's me or oh driving (he has a heavy foot!)

We also have a 1989 Ford Escort van...It belongs to my OH, I have nothing to do with it. It does 17mpg at it's best. Most of the time it's not driven as it's too expensive, but it costs a ton in tax and insurance....I have broached the subject of selling it as it's worth about £1000 due to it's rarity, but the discussion ended in a spectacular argument and nearly ended in us breaking up. I'd rather pay financially for the van and not emotionally. It's the only thing we've ever argued that badly about.

Rent - £650 (2 bed first floor flat with no garden)
Council Tax - £114
Electricity - £75
Water - £25 (on a meter)
Virgin - £75 (zero terrestrial signal here, am lowering the package asap)
Mobiles - £75 (2 contacts locked for another year - does anyone know of any cheap plans with lots of data?)
Food/Cleaning/Baby - £500 (need to get this down)
Fuel - £75
Car tax - £33
Car Insurance - £71
Contents insurance - £16
Birthdays/Xmas - £30
Entertainment - £30
Extras e.g school monies, uniform etc - £15
Random Crap we shouldn't be buying - £316!!!!!

Total spending: £1970

That leaves a total of £130....

At the moment that extra goes into paying off debt (£2250 currently on a 0% credit card until March 2016, and £1600 in an overdraft)

We want to buy a house eventually (I dream of a garden!), and when the debt is paid off we will be saving for a deposit to do that.

We live 4 miles from OH's work and 8 miles from mine in the opposite direction. We can't move from where we are in either direction as the rent prices shoot up in both directions.

I'm hoping I can work more when our youngest is at school which will be in 3.5 years time. Meanwhile I am trying to cut spending everywhere I can, and get rid of the extra £316 of random spending.

Right now I feel stuck. What have others done in similar situations?

x
« Last Edit: July 01, 2015, 10:11:00 AM by Grem »

Bracken_Joy

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Re: Low income UK Mustachians
« Reply #1 on: July 01, 2015, 09:24:31 AM »
If you read the "case study" sticky tab, it will help you break down your situation further and will help in getting better feedback. You can edit the original post with the additional info

=)

Grem

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Re: Reader Case Study - Low income UK Mustachian Wannabe
« Reply #2 on: July 01, 2015, 10:04:36 AM »
Thanks, I've just edited it x

ShoulderThingThatGoesUp

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Re: Reader Case Study - Low income UK Mustachian Wannabe
« Reply #3 on: July 01, 2015, 10:19:10 AM »
How much are the contents of your apartment really worth that you need to pay insurance on them?

Your water bill strikes me as high, but perhaps water rates are just very high where you live.

Grem

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Re: Reader Case Study - Low income UK Mustachian Wannabe
« Reply #4 on: July 01, 2015, 10:33:43 AM »
Before we had the meter our bill was £59 a month, which is average for our size of property in the area. We now have much lower than average water usage. That figure includes sewerage.

The contents of our home is everything we own. If we had savings in the bank I would cancel the insurance as we'd be able to buy everything again if we got burgled or had a fire. Without any savings I'd rather be safe than sorry. The insurance has helped us out - earlier this year our son pulled our 2 year old laptop off the table and it would no longer turn on - the insurance company decided it was not worth fixing and gave us a voucher for £900 even though the laptop had only been £500 when it was new! We bought a new £450 laptop with the voucher and also bought a fridge freezer to replace our under counter fridge and separate freezer - The fridge was cheap 2nd hand and the freezer was about 15 years old and very inefficient, the new one is already saving us money in electricity.
I know we have probably paid way more than £900 to the insurance company before we've ever had to make a claim, but we don't have £30000 in the bank to cover the cost of everything in case of fire etc
x
« Last Edit: July 01, 2015, 10:35:35 AM by Grem »

Bracken_Joy

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Re: Reader Case Study - Low income UK Mustachian Wannabe
« Reply #5 on: July 01, 2015, 10:53:04 AM »
Since you KNOW you need to reduce the food and "random crap" budgets, what is your plan for that extra 600 a month? That is a ton of dough. Are you planning to throw it at the CC debt until gone? Invest? I don't know what retirement type accounts are available in UK, but does he have access to any sort of retirement employer match through work?

Grem

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Re: Reader Case Study - Low income UK Mustachian Wannabe
« Reply #6 on: July 01, 2015, 11:14:35 AM »
Yes any extra money will be thrown at the overdraft and then the credit card.
Once those are paid off we will start saving for a house deposit..annoyingly in the UK once we have £6000 in savings or investments we will lose up to £670 per month in benefits/tax credits, which will be most of our spare income!
Hopefully I can work more by then, if not the second half of a house deposit is going to be really hard going....Once we've bought the house we would then be eligible for £510 benefits back again as we'd no longer have savings! How stupid is that system!? X

daverobev

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Re: Reader Case Study - Low income UK Mustachian Wannabe
« Reply #7 on: July 01, 2015, 04:17:22 PM »
75 quid on phones is horrific, as is 500 on food (/baby/cleaning? What does this mean?).

Maybe try the cash budgeting system... Take 50 quid to the supermarket and that's it.

Why do you need "lots" of data on your phone? There are plenty of prepaid/PAYG services that will give you a decent amount if you get the right pack/add-on or whatever.

I'd get rid of Virgin.. or can't you because it gives you internet... hmm. Well, look into ADSL, you should be able to halve that price and then just use iPlayer and Netflix (say).

PS - 2.2 grand a month is not low income. Really it isn't.

Grem

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Re: Reader Case Study - Low income UK Mustachian Wannabe
« Reply #8 on: July 02, 2015, 12:45:56 AM »
My oh is a coach driver, he needs the data for when he's sitting around for 7 hours while school kids are having their days out. He's dyslexic, so books and papers are out of the question - the Internet helps him sane while sitting around for hours. He uses about 10gb a month

Virgin is expensive. I'm phoning them today to reduce it down to the lowest package. Adsl Internet gets us about 1mb of speed whereas Virgin is 30mb...the 1mb is not enough to stream from Netflix etc.

We live on the south coast, in Poole, about 15 minutes drive where all those footballers live in their £3 million houses. The cost of living here is expensive. Our flat should be a hundred pounds more than we pay a month, but we've been here 4 years and the landlord likes us, so he keeps it cheap to keep us as good tenants... Unfortunately that now means if we want to move we'll need to pay around £800 for a 2 bed house, and we'll need a 3 bed eventually with a boy and a girl...

Food/cleaning/baby includes everything we buy from the supermarket that's not clothing or something house related, so all food, cleaning products, personal care, baby nappies, baby milk etc. I know this is way too high, we can definitely get it under £400 and closer to the £300 mark with proper planning.

I'm starting to sound like a complainypants :( £2200 per month sounds like a lot, but it's really not round here...

I think we just need to keep slogging away and cut our spending a whole lot more.
Once we know our minimum spending I can work out how.much we'll need to save/invest to be FI... I have a feeling it may only be a few years early, but I doubt we'll get much of a pension from the government when we're older, so we'll need to save as much as we possibly can.

For now I look forward to being debt free and one day being able to buy our own home :)

deborah

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Re: Reader Case Study - Low income UK Mustachian Wannabe
« Reply #9 on: July 02, 2015, 01:01:43 AM »
The average wage in England is 26,500 quid so 2200 quid a month is almost exactly average for England. Because it's quid I like to multiply it by 2 to get the rough $ figures (1 quid = $2.04AU or $1.56US as of today).

I think you're right about slogging away and cutting down your spending. Keep your receipts and work out where you can cut easily. If you are like most of us, there are a lot of things you can cut out that really won't make any difference to you - you just spend the money on them without thinking.

Hope you keep at it!


shelivesthedream

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Re: Reader Case Study - Low income UK Mustachian Wannabe
« Reply #10 on: July 02, 2015, 01:13:24 AM »
Phone: the most I ever paid for a phone was £26/month for an iphone with unlimited data with T Mobile. When that contract ended I kept the same phone and got a sim only contract for £11/month and 500mb. What do you need lots of data for? I only come close to using up 500mb if I spend lots of time pissing about online on the bus. Use the website omio to compare contracts, and definitely go for sim only. Can't he download apps at home and then use them offline while waiting, at least a bit? If he's just playing games he doesn't need to be online for that.

Food: you have a car. This means you can do big shopping trips, perhaps on your own while yor husband watches the children. Find an Aldi or Lidl. Go there once a month and buy all your non-perishables there from a list. Also buy meat and cheese as they are very nice there and pop them in the freezer. Eat more beans. Meat is EXPENSIVE. If your family fusses, just cut down on the amount of meat in each meal. For example, instead of using a whole packet of mince to make spag Bol, cut it in half and stretch it out with lentils, grated carrot, vegetables... Read A Girl Called Jack for super-cheap meal ideas.

Minivan: if he doesn't drive it, get a SORN (I think that's what they're called). You can always tax and insure it again later.

Random crap: either budget for it (through personal allowances/fun money) or don't buy it.

brunetteUK

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Re: Reader Case Study - Low income UK Mustachian Wannabe
« Reply #11 on: July 02, 2015, 03:04:00 AM »
Hi Grem!

I live in the UK and I feel it's a bit harder here to save higher percentages of my income compared to the US stories. But let's keep going, we will get there!

First, for mobile phone, I use Giffgaff, it runs on the O2 network and works well for me. I pay the £7.50/month, have a look at their deals, I believe it's the cheapest on the market and you keep the same number if you switch.

Food: what works for me is to shop online at Asda and buy loads of cupboard and freezer food. This works for two reasons: one you can see how much you are spending and control that and the other is that you will have plenty of food at home and avoid frequent trips to the supermarket (I can't resist adding more and more things to my basket).
It's good to have staples like rice, pasta, canned beans, canned corn, tinned tomatoes, tinned tuna, frozen spinach, frozen courgettes, cheese like feta can last many months in the fridge if not opened.
As someone said, meat is expensive, I've reduced the amount of meat I eat but mainly to give space to more vegetables so it's healthier and cheaper in the end.
Don't think you are being cheap when you are food shopping, you might feel that you are depriving yourself and it will backfire; think instead that you are trying different things and being more healthy.

Now, it says a bit everywhere in the blog/forum that you should target your 3 biggest spends so I'll reeeeally look into that £316 random stuff, is it going out? house gadgets? kids toys?

Is £75 for virgin for TV and internet? I'd ditch the TV (so many ads!!!), watch stuff on the computer and payu maximum £30 for internet/landline.

I use moneydashboard to track my finances.

Hope it helps!

mohawkbrah

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Re: Reader Case Study - Low income UK Mustachian Wannabe
« Reply #12 on: July 02, 2015, 06:57:12 AM »
that rent's pretty high? where abouts do you live? i would try and buy somewhere and then just get a mortgage for it. likely you'll get a place with a mortgage of £400-£600


unless you're in the london area of course

tele25

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Re: Reader Case Study - Low income UK Mustachian Wannabe
« Reply #13 on: July 02, 2015, 07:32:00 AM »


So,

Hubbies pay               1,500
less
income tax                     123
national insurance          100
(employers ni                  113) for comparrison
You                                 130
child benefit                    149
tax credits                       458
housing benefit                193*   how much housing benefit do you get? Is this figure correct
                                      -------
                                     £2230

Hubbies van should not be too onerous on insurance and get about 30mpg unless something is seriouly wrong with it.

Your husband earns the median average of £18,000 whereas the mean average is £27,000.

Did you think about not having children until you were sorted out financially?

Rent - £650 (2 bed first floor flat with no garden)
Not much you can do about this apart from not voting for people who espouse planning laws
Council Tax - £114
Again, who do you vote for?
Electricity - £75 a bit too high
Water - £25 (on a meter) reasonable
Virgin - £75 (zero terrestrial signal here, am lowering the package asap) drop the telly, just get internet saves £45
Mobiles - £75 (2 contacts locked for another year - does anyone know of any cheap plans with lots of data?)
tesco 7.50/mth saves £60
Food/Cleaning/Baby - £500 (need to get this down) down to £300, saves £200
Fuel - £75
Car tax - £33
Car Insurance - £71
Contents insurance - £16 you clearly don't need this, saves £16
Birthdays/Xmas - £30 your kids are 5 and 1, £10 each for crimbo and birthdays saves £26
Entertainment - £30
Extras e.g school monies, uniform etc - £15 reduce to £5, saves £10
Random Crap we shouldn't be buying - £316!!!!!
what is this spent on? reduce to £116 saves £200

spend £1543, save £678

Assuming you get the MW you work less than 5 hours per week, is it really worth it? Either you or your husband can do more whilst the other one stays at home with the kids.

The thing you have most control over is your current spending so get control of that first.

Secondly, you don't need three bedrooms, when your children get old enough you and hubby can get a sofa bed in the living room.

Thirdly, you and husband should consider  how to get better paid jobs.

As an aside, your husband is a coach driver.  Can I seriously suggest he thinks about doing something else because we will see self driving commercial vehicles in the next ten years.

* Check with your local council, this might be too low.


tele25

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Re: Reader Case Study - Low income UK Mustachian Wannabe
« Reply #14 on: July 02, 2015, 07:47:24 AM »
that rent's pretty high? where abouts do you live? i would try and buy somewhere and then just get a mortgage for it. likely you'll get a place with a mortgage of £400-£600


unless you're in the london area of course

The OP lives in Poole in Dorset.

I've just checked on rightmove and the cheapest 3 bed semi (with garden) like the OP wants costs £175,000 which is going to cost rather more than £600 a month.

Of course, they could move to a park home but would face problems with living there all year or they could move to somewhere really cheap like Immingham (near Hull) but then the husband wouldn't be able to get a job.

Phil_Moore

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Re: Reader Case Study - Low income UK Mustachian Wannabe
« Reply #15 on: July 02, 2015, 10:17:22 AM »
I have a feeling you might be missing some expenditures in there. Car maintenance? TV License? Clothing? Shoes?

On the phone costs, I pay £8 a month sim-only on Virgin and I get 1gb data.  You should be able to negotiate something close to that as you are an existing cable customer (for now).  Personally I would be tempted to use your internet at home to download stuff to phones (podcasts/music/videos/audiobooks or whatnot) so your OH doesn’t need to rinse through 10gb of data while out and about.

There are some good suggestions above on areas you know can be trimmed (food!), then you can pay down debt and start saving for a house/investing! Good luck and all the best!

Did you think about not having children until you were sorted out financially?

Mate. Not sure how constructive comments like this are to be honest.

Grem

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Re: Reader Case Study - Low income UK Mustachian Wannabe
« Reply #16 on: July 03, 2015, 06:35:57 AM »
Thanks everyone for your comments.

We had our daughter while we were both in full time well paid jobs. While I was pregnant my entire office was closed and I was made redundant. No-one wants to hire a 5 month pregnant lady so I worked on supermarket checkouts until our daughter came. Our son was not planned and I was on birth control. He came along almost 4 years later after my OH had got well and truly fed up in his old job and trained as a coach driver as a change in career.
Between kids I was working 30 hours a week (opposite to Oh) so there was always someone home. With his change to coach driver he now works unpredictable hours and I cannot guarantee that I will be free for work. I work 4 hours a week doing care work, and do as much as possible when they need cover if I know I'm available. It's probably not worth me working, but it doesn't affect our benefits and it's a bit of extra money. Also it means I will have a continuous career on my CV when I want to get a full time job, which is always favourable.

The Virgin had now been cut down to the lowest package.
We are working on lowering the electricity cost - buying some LED bulbs for the most used lights asap and drying washing on our tiny balcony even though we're not supposed to.

The random spending - looking more into it its a few direct debits like TV licence, also clothing (almost all second hand), bits for the house (need to stop this), and other stuff we shouldn't be doing such as a couple of drinks round the pub and meeting friends for coffee. The rest is random little spends in various shops, probably mostly food items, or cash withdrawals that I can't remember what they were for :(

I'm going to start food shopping with cash. I tried it a few years ago but found I'd spend on card by mistake and then not go to the bank to pay in the cash, or use the cash for parking etc and not pay the food budget back... I think if I am more disciplined I can keep better track and save some money here.

House prices are very expensive round here. We will have to save a large amount of money before we have enough for a deposit. Even after that we may have to wait until both kids are at school.and old enough to look after themselves in the afternoon so I can work full time again. If not the mortgage we would be able to get with our current earnings wouldn't even buy us a bedsit.
We love this area and want to stay round here, however if it gets the point where we can afford a house in a different area then we will think of moving.
All of our family lives in the south east of England in Kent and Sussex - an even more expensive place to live! So we would have to look north or west of where we are now.

For now I'll keep reading the forums and make savings as much as possible.

I'm also looking into some work from home ideas to.earn extra money like selling on ebay/amazon etc

Thanks again everyone x

Bracken_Joy

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Re: Reader Case Study - Low income UK Mustachian Wannabe
« Reply #17 on: July 03, 2015, 07:54:30 AM »
Thanks everyone for your comments.

We had our daughter while we were both in full time well paid jobs. While I was pregnant my entire office was closed and I was made redundant. No-one wants to hire a 5 month pregnant lady so I worked on supermarket checkouts until our daughter came. Our son was not planned and I was on birth control. He came along almost 4 years later after my OH had got well and truly fed up in his old job and trained as a coach driver as a change in career.
Between kids I was working 30 hours a week (opposite to Oh) so there was always someone home. With his change to coach driver he now works unpredictable hours and I cannot guarantee that I will be free for work. I work 4 hours a week doing care work, and do as much as possible when they need cover if I know I'm available. It's probably not worth me working, but it doesn't affect our benefits and it's a bit of extra money. Also it means I will have a continuous career on my CV when I want to get a full time job, which is always favourable.

You don't need to explain to ANYONE the choice you and your partner made about children! Frankly, it was at best in poor taste and at worst incredibly mean spirited for anyone to ask.

I'm glad to read about all your progress! Seeing WHERE your money is going is definitely a huge first step!

Grem

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Re: Reader Case Study - Low income UK Mustachian Wannabe
« Reply #18 on: July 03, 2015, 09:27:17 AM »
Thank you Bracken_Joy x

shelivesthedream

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Re: Reader Case Study - Low income UK Mustachian Wannabe
« Reply #19 on: July 03, 2015, 10:00:27 AM »

You don't need to explain to ANYONE the choice you and your partner made about children! Frankly, it was at best in poor taste and at worst incredibly mean spirited for anyone to ask.



+1

tele25

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Re: Reader Case Study - Low income UK Mustachian Wannabe
« Reply #20 on: July 03, 2015, 03:49:46 PM »

[/quote]

You don't need to explain to ANYONE the choice you and your partner made about children! Frankly, it was at best in poor taste and at worst incredibly mean spirited for anyone to ask.

I'm glad to read about all your progress! Seeing WHERE your money is going is definitely a huge first step!
[/quote]

I disagree.

By asking questions the OP and anyone ele reading gets to consider their decision making process and this will lead (hopefully) to them making better decisions in the future.

OTOH, anodyne comments which only amount to "I sympathise" add nothing to the debate, do not propose further action to consider and merely waste bandwidth.

former player

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Re: Reader Case Study - Low income UK Mustachian Wannabe
« Reply #21 on: July 03, 2015, 05:41:33 PM »
Are you on the housing list for council housing/housing association housing?  If you got on the lists now, you might be some way up the list by the time your kids are old enough to need separate bedrooms (I think the rules tend to be that kids of different sexes need separate bedrooms once the eldest is about 10 years old).  If you got on the list now, you could have a decent chance at a 3 bed home in your current area by then, with cheaper rent than in the private sector and the possibility of right to buy after a few years.

tele25

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Re: Reader Case Study - Low income UK Mustachian Wannabe
« Reply #22 on: July 03, 2015, 09:04:55 PM »
Are you on the housing list for council housing/housing association housing?  If you got on the lists now, you might be some way up the list by the time your kids are old enough to need separate bedrooms (I think the rules tend to be that kids of different sexes need separate bedrooms once the eldest is about 10 years old).  If you got on the list now, you could have a decent chance at a 3 bed home in your current area by then, with cheaper rent than in the private sector and the possibility of right to buy after a few years.

You shouldn't think that council houses will always be the cheaper option

For example a 3 bed with garden from the Stonewater housing Ass in Herbert Ave - Poole is £174 a week and thats marked as being affordable rent.

When I was looking through Rightmove last night, I noticed a lot of mobile homes in Holiday Parks starting from 15k. Now as far as I understand the law you can only live there 11 months of the year and the park owners will probably be even more strict but how about buying two and alternating a month in each? If this is possible you should be able to pay off the cost of purchase in about 4 years.

Grem

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Re: Reader Case Study - Low income UK Mustachian Wannabe
« Reply #23 on: July 04, 2015, 01:34:48 AM »
Are you on the housing list for council housing/housing association housing?  If you got on the lists now, you might be some way up the list by the time your kids are old enough to need separate bedrooms (I think the rules tend to be that kids of different sexes need separate bedrooms once the eldest is about 10 years old).  If you got on the list now, you could have a decent chance at a 3 bed home in your current area by then, with cheaper rent than in the private sector and the possibility of right to buy after a few years.

We've been on the list twice, and been kicked off twice....There's such a demand for council houses round here that they take everyone off the list every 3 years or so and if you're adequately housed (as we are until our daughter is 10) you have to reapply only to get kicked off again a few years later. Reapplying means collecting all the evidence and getting a letter from the landlord to confirm we live here etc as our contract is over 6 months old. We've done it twice and honestly there's no point doing it again unless the landlord wants to evict us or my daughter has her 10th birthday.....meanwhile I know of plenty of single people.in their 80's living in the 3 bed council house they've been in for years even though all their children have grown up and moved out, and they can't climb the stairs anymore so only live in 2 or 3 rooms downstairs...
The rent on a council house is around half the cost of private rental round here. We will reapply when our daughter is 8 or 9.

As for holiday parks, there is Rockley Park up the road. You can only live there for 9 or 10 months of the year, and you have to have a permanent address as well. There are also monthly fees to pay, plus more bills for heating, and the cost of renting somewhere for the months we can't live there. The caravans that are of a good enough standard for a family of 4 are at least £40,000...if we had that much money we could buy a house...

former player

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Re: Reader Case Study - Low income UK Mustachian Wannabe
« Reply #24 on: July 04, 2015, 01:45:12 AM »
We've been on the list twice, and been kicked off twice
Bummer.  I know its a pain, but in order to give yourselves the best chance I'd say keep applying, so that you are already on the lists in case the council's policy changes before your daughter reaches 10 (or perhaps apply as soon as she turns 7 so that you have been on the list for nearly 3 years by the time she turns 10), and keep the basic paperwork from previous applications so that you can demonstrate how long you've been resident in the area.