These threads usually bring out a few postings along the lines of “What’s the point of saving, spend the money now as you might get hit by a bus tomorrow”. And indeed you might. However the reality is that statistically you are far more likely to make it into old age.
Making it to old age is a different thing than having current savings.. I have no savings now but in old age I will be very well set. No mortgage to pay and a VERY good pension as I put a lot of money into an already good company pension where my additional contributions are matched. So while I would make do while working I realise the choices once retired are more limited and I have taken care of that.
Friend of mine devised the following test-
How long would it take you to get in cash (in instant access) to the following so this is me currently
£10 - now
£100 - now
£1000 - now
£10000 - now
£100000 - 3 days
£1000000 - 6 months would have to sell house/pensions etc
Historically
£10 -
Already got a stash of something that will make my last sleep eternal.
Invalidates your life insurance if that was any part of your plan
Making it to old age is a different thing than having current savings.. I have no savings now but in old age I will be very well set. No mortgage to pay and a VERY good pension as I put a lot of money into an already good company pension where my additional contributions are matched. So while I would make do while working I realise the choices once retired are more limited and I have taken care of that.
Yes, that's pretty much what I was driving at. Had the question been put 25 years ago our answer would have been very different and we'd definitely have struggled to meet any substantial repair costs.
Invalidates your life insurance if that was any part of your plan
My plan is to take up hang gliding. Near some electricity pylons.
If we had a 5 figure bill turn up, we’d be a bit screwed.
This has been mentioned a few times, but what bill could possibly end up at 5 figures!
Home insurance, contents insurance & car insurance will cover the big things. I can't think of much reaching 5 figures after immediately after this? Critical illness would be a progressive cost, as would a death of partner with no life insurance.
We've got some savings that equals about 9 months salary, but only equivalent to one of us. Had various business ventures, some doing okay but many have lost a lot. I'd have a fair bit more if I was risk adverse. Wedding coming up so that's probably all the savings, and a bit more, gone.
<div class="bbp-reply-author">nealglover
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<div class="bbp-reply-content">Almost everyone I speak to through my job has nothing significant savings wise (it’s part of the process to assess financial situation)
Its a pretty broad cross section of the general public from people in rented one bed council flats to people with £1m+ mortgages.
There seems to be very few people from either end of the scale who could cope for more than a couple of months if they were unable to work or couldn’t find work after losing their job.
Its a scary thought, but from my experience, it is the majority of people that are in that situation. Either due to having no other option, or just presuming everything will be ok.
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That was my experience when I worked in finance, the change in regs that came about during the Credit Crunch really opened my eyes to it.
Pre-crash as long as you paid your bills on time you could pretty much borrow whatever you wanted, 105% mortgage of 8x salary, yeah why not, £25k of Credit Card debt over 4 cards, hell yeah, 2 cars on HP (PCP wasn't such a thing back then) of course, you've got to drive haven't you. Total monthly income £5k so they thought they were Loaded, total monthly expenditure £6k - possibly the only time in history people could actually live like that for years and years at a time.
Consumer confidence was riding so high that lots of people didn't just assume it would all work out, or "everyone does it" they KNEW it. Anyway, quick remortage every two years, release the equity they're 'earned' on it, pay off the credit cards and start the whole cycle again.
I remember fairly vividly the first time I had to complete a income and expenditure calculation for someone like that, they'd lied of course on their application because "everyone does it" (and they did) but being part of a larger banking group I had access to their statements and had to explain "Sorry Mr Flashgit, you can't have your new X5 from us, to replace the 18 month old one you're bored of, you can't afford it".
Luckily for people like that, at the same time they brought in (or rather bothered to enforce) the affordability calculation requirement, they slashed interested rates to stop them all ending up in Bankruptcy court.
Already got a stash of something that will make my last sleep eternal.
Invalidates your life insurance if that was any part of your plan
As fatalistic a proposal it seems, I am fully aware of the consequence of my actions.
the reality is that statistically you are far more likely to make it into old age.
The reality is that statistically, if someone is posting on this forum, they are probably already old aged.
The reality is that statistically, if someone is posting on this forum, they are probably already old aged.
with substantial savings
Like many others I was brought to the mindset that debt was not great and where at all possible I should limit it. I'm fortunate in that I have always lived approx within my means and had a few lucky breaks based on risks I took. Saying that even now when i have a very easy financial lifestyle I carefully consider what I spend. Not to the extent of day to day stuff which makes me fortunate more on fripperies. As I get older I squirrel away as much as I possibly can. Every single purchase I look at and consider how much time off my working life it will give me !
What I find incredible is people I 'know' who would be on what are considered massive salaries who are almost living day to day because they have massive outflows on absolute nonsense stuff - I have a colleague who runs 2 really expensive lease cars, massive house with an enormous interior design bill, 400k of landscaping FFS, 80 quid bottles of wine on a Tuesday etc etc Absolutely no need for 90% of the spending. He is going backwards and should be in a position of pouring cash into savings. It's a mindset and values frankly for people in that echelon.
Home insurance, contents insurance & car insurance will cover the big things.
Have a read of the small print on your house insurance, I bet it doesn't cover maintenance (or work that needs doing because of a lack of maintenance), wear and tear etc
Buildings insurance usually covers damage from an unexpected event,but not stuff that has happened because it's worn out/old.
So if you have an old house , and the roof starts leaking because the lead flashing is 100 years old and needs replacing, it's not going to cover it. We had a leaky roof a few years ago, insurance won't cover it, had to pay for repairs, cost about 2k. Insurance would pay to cover any damage caused by the leak, eg new carpets,but not to fix the leak itself.
I guess most (at least on here) peoples attitude to saving is heavily influenced by the long period of very low interest rates.
When I had my first mortgage in the 1980's, while the amount compared with today was tiny, it could, and often did, go up by a few hundred pounds overnight. When you can only just pay everything, this was a good incentive to put whatever spare you had away.
With interest rates so low, for so long, many don't see the point in saving.
Pre-crash as long as you paid your bills on time you could pretty much borrow whatever you wanted, 105% mortgage of 8x salary, yeah why not, £25k of Credit Card debt over 4 cards, hell yeah, 2 cars on HP (PCP wasn’t such a thing back then) of course, you’ve got to drive haven’t you. Total monthly income £5k so they thought they were Loaded, total monthly expenditure £6k – possibly the only time in history people could actually live like that for years and years at a time.
Consumer confidence was riding so high that lots of people didn’t just assume it would all work out, or “everyone does it” they KNEW it. Anyway, quick remortage every two years, release the equity they’re ‘earned’ on it, pay off the credit cards and start the whole cycle again.
I find it quite mind blowing that you can earn £5k a month and be that naive!
This has been mentioned a few times, but what bill could possibly end up at 5 figures!
I'm intrigued to hear from OP on this.
I think the 'unexpected' bill may be a maintenance bill. If a shared, managed company type flat, then bills can be eyewatering and above market rate for work on a freehold house.
Our buy to let flat had a new roof, £38k between 4 of us. Arguably, as one of the neighbours thought, it wasn't expected. We on the other hand had negotiated £9k off purchase price a few months earlier as I observed roof was poor condition, slate and bedecked in Victorian wood carvings in conservation area...
We have paid for two boilers in two years (our house and BTL), both all but cleared savings. We are back in a position we were before, so if car dies tomorrow we can sort it (etc).
Personally I would never buy a leasehold, managed property again for this reason.
Some retired people have savings.
The 1% are doing well
everyone else is in debt to the hilt, even the 40% tax bracket double income crew.
Don’t sweat it, and don’t compare yourself unfavourably to people who give the impression that their loaded.
Any data to back that up ? It's nowhere near as bad as that in reality. Plenty of disposable income out there. Plenty of chips on shoulders too.
I find it quite mind blowing that you can earn a salary a month and be that naive!
Its not what you earn, it’s how you choose the spend it.
And 5k a mth ain’t a lot when you are single breadwinner with a family..
And 5k a mth ain’t a lot when you are single breadwinner with a family..
If that's £5k net a month then that's over £80k pa gross, which is getting on for three times the mean full time wage, so a very good wage by UK standards.
savings yes, i have approx 2-3 monthly wages in savings, i don't save anymore than that as id be tempted to buy another bike, therefore if my savings get too strong i overpay the overpaid mortgage or go on a big holiday
but as you say a 5 figure repair would skint us, that is what 0% 24 month credit cards are for
And 5k a mth ain’t a lot when you are single breadwinner with a family..
If that’s £5k net a month then that’s over £80k pa gross, which is getting on for three times the mean full time wage, so a very good wage by UK standards.
I know.
But without detailing the thread TJ and I had a right old belter of conversation on that same topic in a thread about a month or so ago.
🤣🤠
I always have it in the back of my mind that I'd happily spend the rest of my days living out of bothies spring, summer and autumn in Scotland and camp in the wild somewhere warmer for winter. No bills, plenty fish and rabbits to eat, grow my own veg, buy what else I needed. I've got enough tucked away to enable me to do that if needed. As long as I had my health I'd be fine. When that goes, I'd be happy to do the last walk into the hills with a bottle of whisky and succumb to the elements.
And 5k a mth ain’t a lot when you are single breadwinner with a family..
It is a lot, don't kid yourself otherwise, it's a lot even if it's split over 2 earners with a family. For the vast majority of families it's more money than they could ever hope to having coming in a single month.
Yes £5K a month is a lot, but once a person is used to it (has a mortgage and outgoings to match it) it may not seem like a lot. People tend to live up to whatever they earn...
Myself and the wife are in a pretty good position due to a combination of stinginess and me having a pretty good job and working away a lot whilst we lived in Australia. Although its currently taking a significant hit as I am at university full time now so down to one income at the moment and MSc courses are not cheap!. The current GBP-AUD exchange rate is not flattering us either as a significant chunk is still in Australia. Still renting though which is not ideal! and due to the fact the wife's on a partner visa which seems to complicate mortgages that might not change soon 🙁
Does seem a lot harder in this country that Oz though. Before I started studying we were not saving much despite having ok jobs and I don't think particularly extravagant lifestyles (I really should have bought a full suss whilst I had a job dammit). We do not have a TV or much in the way of gadgets and share one slightly rubbish car which I think helps enormously. We are starting to consider kids and that is terrifying!
Should we have the same argument all over again?
I’m not getting dragged into it, but IMO 5k ain’t a lot when some people’s expenditure reaches 3.5k min a month without food..
Annnnd before anyone asks me what I earn or take home I ain’t telling, it’s private as it should remain.
Already got a stash of something that will make my last sleep eternal
The Corrs back catalogue?
Cut your cloth etc.
Maybe south of the Watford gap that is the case but should never be forgot that a huge if not significant number of people don't have the choice but to live on significantly less than 5k a month.
5k a month is alot and puts you in a privaledged position.
I’m not getting dragged into it, but IMO 5k ain’t a lot when some people’s expenditure reaches 3.5k min a month without food..
Surely by that logic though a salary of £1 million a year then isn't a lot if your expenditure is £999,000 before food?
Whether or not a salary is big, or small, is relative to the average, or median, salary for that country, profession, age, whatever. Expenditure isn't a factor.
Hey, I know how this countries salaries are based regionally.
I’m not an ignorant idiot.
I do know that poverty in this country is only getting worse, that the pay gaps are widening and food banks for the many are becoming the norm.
I am totally aware of all of that.
My comments are based largely on what I perceive (from my peers) expenditure for thier households. It’s not uncommon for them to have mortgage payments in the 1-2k an month bracket..
As is said in the last thread...
And don’t think that I don’t sympathise with the less fortunate either... before that argument gets lain against me.
I’m not getting dragged into it, but IMO 5k ain’t a lot when some people’s expenditure reaches 3.5k min a month without food..
this ^
i know somebody running their own business with 3 mortgages, 2 kids, a partner and a ex-wife and to keep everything running he needs to see 7k a month out of his one man business.
it’s all relative to your situation and increasingly where you live and the living costs that result. see the fish and chips thread a while back some were paying £4.50 others £14. apply that to housing/transport/childcare/food etc in different regions.
personally i’m in the ‘comfortable’ bracket and could live frugally/pay mortgage for a year if i had to, and with Brexit looming i need to know i can do that otherwise its becomes a worry. not got a huge pot to dip into and if i did the kitchen/bathroom and lease extension all at once (35-40k) i would be penniless and in for a bit of finance.
being self employed all my life means you get used to the feast/famine and budget accordingly. never understood the salaried people who run out of money at the end of the month when you can easily see your income and expenditure and adjust accordingly.
maybe thats why i don't have a silly priced motor sat outside and numerous entertainment/gratification DD’s (sky/gym/4k enduro bike/etc)
I’m not getting dragged into it, but IMO 5k ain’t a lot when some people’s expenditure reaches 3.5k min a month without food..
wellI though i was doing alright in life. looks like i'm just scraping above the poverty line by some estimations...
Yorkshire Farmer once told me "only borrow "money to buy things that make a profit"
wellI though i was doing alright in life. looks like i’m just scraping above the poverty line by some estimations…
Just to give some context, here is a graph of the latest salary data from the ONS...
£5k a month net (roughly £80k gross) would put you in 96th percentile.
[url= https://farm2.staticflickr.com/1957/43718215300_d4dc6a5d35.jp g" target="_blank">https://farm2.staticflickr.com/1957/43718215300_d4dc6a5d35.jp g"/> [/img][/url][url= https://flic.kr/p/29BehhL ]UK Gross salary percentiles 2015-2016[/url] by [url= https://www.flickr.com/photos/brf/ ]Ben Freeman[/url], on Flickr
"If you want flashy cars, the latest phones, huge TVs and expensive holidays or kids in the South East then fair enough, but don’t complain when you’re spending the last 40 years of your life eating tins of cold beans and huddling up to your one bar electric fire for warmth."
FTFY
As per loads of posts its all about disposable income - of which I have very little despite what some would say a very comfortable combined salary. We still have savings and to some on here they would represent enough not to worry for some time but combined with our outgoings would prob only last a month for us. Thats not a situation I'm happy with or proud of but its very difficult to reverse out of a chosen path in life. Hard but not impossible I grant you.
Should we have the same argument all over again?
If you like, I wasn't in on it last time so it's not again for me. But I'd prefer discussion over argument, if you've done this all before though you should be well prepared and perhaps could have put your point across more clearly rather than assuming prior knowledge of your viewpoint from other participants.
I’m not getting dragged into it, but IMO 5k ain’t a lot when some people’s expenditure reaches 3.5k min a month without food..
That's two different statements conflated into one.
5k a month is a lot, especially compared to most peoples earnings
3.5k a month min expenditure is also a lot.
5k may not leave much spare if you have very high outgoings but that does not mean 5k a month is not a lot of money, and it's spurious to suggest that it isn't. Also, it's not intrinsically 'the family' that make the outgoings so high (plenty of families have lower outgoings), it's personal circumstances that do that, some of which they may have control of, some of which they may not. It doesn't change the fact that 5k a month is a lot of money and would put someone in a very privileged position compared to most families, even if the privilege is where and how they live rather than rolling in spare cash.
I’m one of the people Angeldust is hinting at. I agree that it’s hard to come on this thread and admit it without the smugness.
I was £28k in debt at the age of 29, the resulting hard work I set myself to clear that carried on to the point that 15 years later I'm in a position to adequately support our family without work for a year should I need to. Not enough to make retirement comfortable though.
Not having a pop at Kryton...honest I save that for the rugby thread!! But its amazing how many here have "worked hard" to pay off the mortgage or build up savings. I also see it about school fees too. No doubt they do work hard and I'm a lazy arse so it doesnt bother me but do you think a lot of people dont work hard whilst not even being able to afford a mortgage in the first place or or just to get to the end of the month?
FWIW we have about 3 months of combined take home in savings currently. But Brexit would have to be apocalyptic for me to not have a job.
I think working hard has very little to do with financial wealth, more luck in terms of the profession you choose / qualifications you achieved etc. Some professions pay handsomely, some don't e.g. care industry. I suspect most care workers work very hard for their meagre salary.
I find it quite mind blowing that you can earn £5k a month and be that naive!
My experience is perhaps a bit skewed because 1) I was a finance broker and only spoke to people who borrowed 2) only the 'bad' ones are memorable but...
It was the 'big earners' who were the worst. I'll try to give you an example of the 'type', I met LOTS of people like this, if you've ever had to suffer one of my rants about how 'middleclass' is a construct to fool working class people into thinking they're rich to vote for people who only look after real rich people, this sort of thing created this thinking.
Also bear in mind, I live in Cardiff, so were my clients, this ain't London.
Anyway, example, Mr. Bigswingingdick.
Earning £90-£100k a year, which is about £5k take-home so a 'serious' wage, but he wants to fit in, in the nicer parts of Landaff, Pontcanna, Lisvane (the leafy suburbs of North Cardiff). So he's going to need a few things.
1) a Wife who likes to wear Gymwear to drop the kids off to school in the 4x4, then go home and watch Loose Women, or perhaps go to the gym, sadly single income families are at a serious disadvantage the way our economy currently works, so his 'serious' wage is now only equal to an couple on 'all-right' wages in-fact because of the way tax works 2 people on £40k will collectively make about as much as one person on £90k, he'll also lose other things like Child benefit.
2) His and Hers PCP cars (or HP with a balloon back in the day) the £500 a month PCP market is where it's at for Mr. BSD, so that's a grand a month for the X5 and the ML.
3) You'll need half a mill to buy anything 'decent' in any of the above suburbs, but ideally double that if you want everyone to know you're a Player, so that'll be another £2500 a month, but it's a saving really because now you can access the best state schools, you don't need to drop another £10k a year in school fees.
4) Mrs BSD will want to hang out lunchtimes with her friends as they humblebrag each other for 2 hours until they can't take it any more, that'll cost you £200 a month, well as long as she sticks to the single coffee and a sandwich.
5) You'll need the rest of your grub delivered by Waitrose or Ocado lest your neighbours start leaving food parcels on your doorstep if they see a Tesco truck turn up. That'll be another £600 a month for a family of 4.
6) add in the boring stuff like Council Tax £250 a month, Utilities, £200 a month, that £200 pile of stuff everyone seems to have to suffer for decent TV, connectivity, Water, Insurance and whatever else and you're left with...
£50 a month to keep you in Stainless Steel Kitchen devices you'll never use, 2 holidays a year, the latest stuff for the kids, small-branded clothing,etc etc etc.
I would hope things have changed in the last 5 years, but I some how doubt it.
but do you think a lot of people dont work hard whilst not even being able to afford a mortgage in the first place or or just to get to the end of the month?
Its a fair point, perhaps "worked hard" is the wrong phrase to use. In my case, I set myself the task to use my career to earn enough money to pay off the debt. Since the age of 29 all of my Jobs have had some element of a performance bonus attached, so I worked to ensure I earned or exceeded that to its maximum each and every year. Once I'd paid the debt, I kept going, and started saving.
I'll admit happily that I've perhaps as a basis of that performance also been lucky enough to have been offered changes/advances in job roles based on that performance level which each time has grown my Salary/OTE ceiling.
So, so hard work, some luck, some risk as I jump across teams etc. As a counter, in my 20's - the 1990's - I had £16 a week remaining for food for 2 of us and spending after all the bills were paid and was shitting myself daily dreading repair bills, house interest rate rises etc that might impact that.
So spending 5k on a 'pushbike' is ok but spending similar on lunch, gymwear and stainless steel kitchen gadgets makes you a BSD.....
I think your figures are pretty out of date as well - these days you need more than 5k take home to afford the lifestyle in your description!
I reckon people in Super Chat (that give away silly amounts of money just to comment) Have plenty of savings.
Its a fair point, perhaps “worked hard” is the wrong phrase to use
I get what you mean you worked hard to pay off the debt and save, even if your job was easy!! Like I said I wasnt having a pop at you, its just the sort of phrase Tories use to justify shitting on the poor!
In a word, No. Both our salaries are fine, combined they are pretty sweet on paper but I still put money aside each month only to hack away at it over the next 30 days or so - robbing Peter to pay Paul. In a word, we should have a few months costs in savings but we've lacked discipline the last 5yrs. It was time to change that this year.
All being said, whilst I'm in the South East, it can be tough anywhere if rate of inflation exceeds inflation of salaries.
To add. Some people have some crazy outgoings. Have seen a few episodes of the BBC show "eat well for less" and I have been utterly gobsmacked by how much money some of these families are spending.
Family of 4. Nearly £300 a week / £14k a year.
