I’ve just completed my third year of accounts. And I’m starting to get itchy feet about having my own home because I’ve now been living in houseshares for 8 years. But whichever way I look at it, the possibility of being able to afford my own place is remarkably bleak.
On the face of it, and looking at simplified figures, business is up. I’ve doubled my net profit every year. That has to be a good thing right? But once you delve a little deeper (much like looking into Government employment figures) you see things are a little close to the mark. I am beginning to wonder how on earth I am surviving. Even so, I never question my decision to go into business. And I’ve never wanted to quit.
Each year my business has relied less and less on short term PAYE work and has dipped into emergency savings on fewer occasions. This tax year I am hoping to leave my savings well alone and not have to take on any PAYE work at all. So far it looks good.
But things change fast in the world of self employment. And when you look at the overall picture of business and personal spending all together it looks scary because adding the outgoings of your business to the outgoings on the rest of your life does not make for pretty calculations.
Whllst renting my own place is financially out of bounds, buying is do-able. Especially when you couple my personal rent costs with what I spend renting a studio. Those combined costs would be significantly less than a mortgage if I went back to working from home and probably equals a mortgage plus all my new household bills if I had my own place.
But banks don’t look at those figures. They look at net profit. And when you’ve been combining PAYE with self employed income it doesn’t balance up. Other figures make your profits look pretty pathetic. Like mileage – something you can claim and which comes off your net profit, but not necessarily something you would spend on your vehicle. This last year my mileage made a £3,000 difference to my net profit but my car did not cost that to run and maintain.
I don’t think my situation is rare by any stretch of the imagination. Given the number of self employed people currently propping up UK employment figures, I would hazard a guess that many of us are living on the edge financially or worse. I also suspect a good chunk of us sit there dreaming of our own personal space. Not having to share bathrooms, and kitchens and manoeuvring our social lives around relative strangers.
Money wise I have got used to living on less. I don’t feel anymore as if I am going without. It’s a way of life. But when you look at it as numbers on a spreadsheet, you do wonder how on earth you remained sane.