It is warm and cosy in Charlie Gray's living room. There's a Christmas tree decorated with baubles and stars, cards on the mantelpiece and shelves lined with books. It has been a tough year financially for the Gray family – Charlie, husband Neil, a self-employed carpenter, four-year-old daughter Izzy and 18-month-old Jack – but there are certainly no plans to cancel Christmas.
"Of course not," says Charlie. "We will be having some wine and nibbles as well as Christmas dinner. And presents for the children, of course."
That said, the university graduate who is now a stay-at-home mum has had to watch every penny all year to ensure Christmas still happens for her family.
As the cost of living rises across the country, hitting food and fuel particularly, more and more people like the Grays, who would not have seen themselves in the poverty bracket before, are finding it a daily battle to make ends meet.
Because Neil is self-employed, the family's income fluctuates, but Charlie estimates it as about £20,000 a year. This is supplemented by £430 a month in benefits – child tax credits (a means-tested benefit for families on low incomes) and child benefit, but it is still difficult for the family to manage.
The mortgage on their semi-detached house on a small private estate in Fraddon, near Newquay remains a struggle, though the property's value has fallen since they bought it for £160,000 at the height of the house price boom. They would like to move to Newquay, where Izzy goes to school and many of the couple's friends live, and where there is more to do with the children for free. This would also mean they would no longer have to run two cars, as Neil needs a van for his work. But they can't afford to move until house prices improve.
"We are certainly in a trap," says Charlie, 37. "I wouldn't say we are poor because we do pay our bills – Neil works extremely hard and he's adamant that we are not going to get into debt – but there are no luxuries anymore.
"We buy the value stuff, and shop at Lidl. I make a menu plan for the week and I stick to it. I try to keep our weekly shop below £100 – that has to do for breakfasts, packed lunches for Neil and Izzy and lunches for me, and seven evening meals. I can't remember the last time Neil and I bought new clothes, and the children have hand-me-downs."
She adds: "You have to be very creative. I don't buy anything for myself, I have to make sure the children get everything they need. I can't remember the last time my husband had a £10 note in his pocket, because I'm the one who does the shopping and runs the house, and it takes every penny.
"We are warm, we are clothed, we are fed, but there is nothing left at the end of the month."
In her former life, working in marketing and promoting the experimental theatre scene in Cornwall, Charlie thought nothing of going out for dinner. These days, she can rarely even afford a cup of coffee out, though the family are very grateful for the Eden Project's "locals' pass", which has meant that their children got to meet Father Christmas and his reindeer. And they do enjoy a day at the beach with a picnic.
Finding work well-paid enough to actually cover housing costs is the perennial problem in Cornwall, and this has only been exacerbated by the recession. Charlie was made redundant from her well-paid job in arts marketing at Cornwall Council in March 2011, just before she was due to go on maternity leave to have her second child. She wants to work, but has struggled to find anything using her qualifications and experience since, particularly as she'd have to factor in childcare for her toddler son.
"There are very few job opportunities in Cornwall, and that is demoralising," she says.
In a way, Charlie has got a new job, the one of making sure she saves every penny she possibly can. It is something that takes time and persistence.
"What I have got really good at is standing up for my consumer rights," she says. "I take back salad that is going rotten but is still in date. I've just jumped through a lot of hoops to get council tax benefit, which is saving us £3 a week. Then with the water bills, I have found out that, because my daughter and I have eczema, we are able to have our water bill capped at £40 a month and we can use as much water as we want."
She's also negotiated a £300 rebate from her electricity company after arguing that an advert for a deal was misleading.
"It is my job now, to find these savings," she says.
For the middle classes, falling on hard times means abandoning ethical scruples at the supermarket checkout. Charlie says: "I can't afford to live according to what I believe in, and that upsets me. I can't afford to be ethical or moral in my choice. I want to buy Ecover dishwasher tablets but I can't afford them, and we can't afford Fairtrade coffee, so we buy the cheaper stuff instead.
"I would love to give my children organic fruit and veg, and I would love to support the local farm shops because I believe in what they do, but I can't afford to."
Charlie's husband is working six days a week to bring the money in to afford Christmas. One thing they haven't gone without is a Christmas tree, a real one. Christmas, for this family as for many others, is about taking a break from the wearing business of watching the pennies every day.
"I don't think there is anything wrong with a bit of a struggle, because you come up with creative solutions rather than just throwing money at a problem," she says.
"It is the constant struggle that gets me down, though, and the fact that the people who sit in power in parliament do not seem to have a grasp of the reality of the situation. They don't see what it is like at all."
