do many people go from nothing (which I am assuming from your figures otherwise they would have equity) to buying a 3 bed semi if they only have two children
Fair point. i guess not a huge number, but some do. Even if you'd owned a flat for 5 years and had £150k equity, that'd only drop the mortgage by £500 a month - probably less than most families spend on cars + food + holidays + savings + clothes etc.
It was more meant to illustrate the differences living a non-salubrious life in the south can make. Assuming that was a couple, compare to the north east (other extreme), then we have
3 bed semi @ £125k
Mortgage @ £500/month (£110k)
Childcare - free (1 partner not working)
Council tax £150
Other bills £250 (same)
petrol to get to work (in place of season ticket) - £50?
so what cost £5k/month in the south east is achievable on just £850 in the north east - even with other living costs that's not far off minimum wage once other benefits/assistance are added in. Obviously this is an extreme example, and most people will fall inbetween the two examples, but it goes to show what cost of living can do to an income
Well we did as I absolutely refused to get saddled with a flat that either doesn’t sell or is in *negative* equity.
To many of my friends became accidental landlords through inability to sell their flat without giving it away.
Round my way people are selling their 1 bed flats for £250k+ (neighbour has theirs at £270k). They don't sell though, but they don't drop the price. They just wait it out years until finally someone buys it, then within 6 months to a year or two it's up for sale again with another £50k on the price.
I guess most people outgrow a 1 bed fast (unlike me sitting on it for 20 years!), but few people can actually afford one starting out.
Oh and I see loads of sold, then back up for sale. They fall through time after time because the buyer can't get the mortgage.
My cousin is looking to move from his flat to a 2bed house so he can have a garden. He is looking at around 300k for this. Even with 2 salaries, equity from the flat etc he won’t meet the affordability criteria.
costs of owning and running cars plus all the other bits make him look like s high risk...
the numbers 5lab puts up are probably not too uncommon. If you are renting you might be below 2k on the rent but it’s not helping you get anywhere really.
as trail-rat says working in non ideal locations can help give you a boost that normal work won’t.
You london commutable families have nailed it. My first house was a 2 bed terrace in kingston which cost me 90k in 1989. 2 years work experience i was on 15k, interest rates were 13% so I was so skint i let a room and got a saturday job as well.
So now the same house was sold last year for 640k, first time buyer territory.
Rents are obscene, it's 1300 pcm for a 2 bed flat, 200 council tax, season ticket, utilities you are pretty much up to 2k pcm before you have eaten.
5labs figures aren’t unusual
Exactly my point 2 pages ago.
🤣
Interesting thread.
The millionaire next door is a good read. Amazing what some people can amass by consistently saving. On the flip side it is amazing what some can spend.
I try and create a habit of saving each month. Early contributions make the dough rise so I’m told.
someone with a young family as in the post above, likely to be mid thirties max.
I was 41 when my girls were born, I know others on here are in similar age brackets and i’m Not the oldest parent (mum or dad) at their school.
5lab
Serious question (as your figures make scary reading)
The numbers are realistic. The Northerners just don't get it.
The Northerners just don't give a hoot.
I earn £2.39 per day and own my own small town. It's so cheap up here they give houses away.
The whole episode has been a bit of a wake up call for me tbh. I have a tiny mortgage that is pretty much just over a tenth of my take home after tax, I have paid off 2 cars, and with no kids I pretty much have a very generous disposable income. I could easily save 1k a month, but I don't.. If I want something I buy it, have no need for a huge house for just me, and will have a decent pension when I retire.
But it's come back to bite my ass as that's the reason I'm having to spend my savings to fix my flat. It's so urgent 2 surveyors have told me not to sleep in my bedroom as the ceiling is structurally unsafe! I'm in the very lucky position that I can afford to pay the 10k + it's going to cost.. But it's completely wiped me out. I would not have a shred of sympathy if it happened to anyone else in my position if I'm honest .
I think I'll be taking a more responsible approach to my finances from now on.. The etap group set I was planning on buying myself for Christmas won't be happening.. That's for sure!
£2.39 a day!? Jeez! That’s more than I earn in a month!
I have an ok amount in fairly quick access. But also 'save' into my workplace pension and share schemes. Which just gives other pots for at different times.
Like a few never used to save much, my partner on the other hand always saved quite a bit. So when we decided to buy a house I buckled down and put enough away for 5% of the deposit over the previous year.
Both earn quite well (doing the working away/crap conditions for good money thing). So between us 1 salary covers everything, so from the start of this year, with baby no.1 on the way i covered everything going into the joint account for mortgage/bills/shopping etc, and she put the same amount into a savings account. This meant we quickly amassed a good wedge which is being used as an overpayment now that we are re-mortgaging.
Modest mortgage/house. Despite the bank saying we could have twice what we wanted to borrow.
We put down a 15% deposit and chose a short 14 year mortgage, so initially had a high (1k) monthly payment, but this was done so we could pay it off as quick as possible while we could afford to, with the view to having kids at some point. 2 Years later and a 3 month old now here, we are lengthening the term, and halving the monthly mandatory payment to give us some flexibility. but with unlimited overpayments allowed we will still try to overpay on a regular basis.
Not one for spending regularly on posh clothing and keeping up with the Jones'. Though if/when either of us wants or needs something we do tend to just go and buy it.
Interesting thread.
We currently have about 3 months worth of our combined salaries saved I think, did have a fair bit more but we both "needed" new cars this year and treated ourselves. It's slowly growing again.
We've also been spending a fair bit on doing up the house, just finishing the last room after 3 years so from next year hope to be able to save a reasonable amount pretty quickly.
We're not massively extravagant spenders but do like a holiday or 2. I am a pretty bad saver (Mrs 5556 is better) but apart from our mortgage don't have any debt.
Ah, but what if that roof develops a catastrophic leak that takes £’000’s to repair……. which is kind of where we came in.
Isn't that what insurance is for?
Isn’t that what insurance is for?
Why pay insurance when you can put the money away in savings
If you have a mortgage you need insurance as the bank want the house maintained... Just in case you default on the loan and it gets repossessed. They don't want you to devalue their asset.
Isn’t that what insurance is for?
I mentioned it a couple of pages back,but building insurance typically won't cover a lack of maintenance or expected wear and tear,it will cover unforeseen events. The fact that your roof is leaking because you didn't maintain it is not an unforeseen event. It is predictable that if you don't maintain something it will degrade with time.
The fact your roof is leaking because a tree fell on it,is unforeseen and will hopefully be covered.
If you have a mortgage you need insurance as the bank want the house maintained…
Insurance doesn't pay for maintenance,it typically pays for unforeseen events, tree falling onto house, fire, etc
<span style="font-size: 0.8rem;">it typically won't pay for replacing the 100 year old lead flashing that has gone brittle and cracked with age, or the tiles that have cracked etc.</span>
If you have a mortgage you need insurance as the bank want the house maintained
And does that bank need evidence of your continued insurance each year? Clue - mine has never asked me for proof of insurance at any time
Back to the savings thing, up until just over 2 years ago I'd never lived in a double income household & neither had my wife (both in our 50's) I was single with 3 kids for 20yrs & my wife had suffered marriage to a serial debtor. Both being the bread winners and fairly frugal too, a double income is a frigging revelation I can tell you - even if our 5 kids do put a dent in it. Not more than 2 months savings as yet but have put massive dent into other things that we hadn't been able to pay down before - one of which was to pay for a new roof for my wife's house...
In case you mistake us for property tycoons - my wife's house is still in her & ex's name, has an interest only mortgage plus second mortgage @ 10% interest but is still way cheaper to pay that than for our kids to pay commericial rents and we don't pass affordability criteria to get a new mortgage 🤔
And does that bank need evidence of your continued insurance each year? Clue – mine has never asked me for proof of insurance at any time
It's at least as much for your benefit as theirs. Sure, you could save the premium and hope you've got enough of a pot to cover repairs if and when/ replace items burgled etc. But what if your house burns down? You're homeless, you've lost the equity you had, and you still owe the bank a few hundred thousand pounds. What's your plan then? Sell the plot to a developer, pay the bank back with the proceeds and use your "insurance pot" to buy a caravan?
Some types of insurance I get 'self insuring', buildings insurance isn't one of them. We pay £55 a year, it's a requirement of the mortgage, I don't really care that they don't check, why wouldn't you do it? Madness.
It’s at least as much for your benefit as theirs
Yes, I understand how insurance works and I pay £600 buildings insurance every year to cover my high risk building during down. The point was around the bank requiring it.
Why pay insurance when you can put the money away in savings
Insurance is about pooling the money of the many to spread their financial risk.
So you can 'self-insure' your heating system at home for example by having the cost of replacement in savings at all times - say £10k (that's a guess, I've never had the pleasure). Or you could pay British Gas £18 a month so if it dies, they fit a brand new one for you. That's only an example, I don't know the actually terms of their policies.
You could save that £18 a month, but with interest rates so low, it'll take you more than 8 years to save enough.
Insurance at all levels is one of the cornerstones of our economy.
Or you could pay British Gas £18 a month so if it dies, they fit a brand new one for you.
No they won’t. They will however keep fixing it as long as they can source parts for it and as soon as they deem it to be obsolete they’ll refuse to cover it at all.
Then they’ll quote you six grand for a two grand replacement.
Insurance is about pooling the money of the many to spread their financial risk.
I though my comment would be seen as an obvious joke in light of a thread about savings but clearly not.
Re: insurance
It's really for nasty things like windstorms and flooding. If you buy a house for £100 with a 90% mortgage and a big storm caused £50 of damage but you are not insured and can't pay to repair it, then it's a big problem
Worst case scenario is you lose the house and the bank are left with something worth considerably less than the £90 they lent to you.
It's sounds unlikely but it does happen and with economic problems, climate change leading to increased flooding, underinsurance, or lack of affordable insurance etc. It is likely to increase in the future.
No they won’t. They will however keep fixing it as long as they can source parts for it and as soon as they deem it to be obsolete they’ll refuse to cover it at all.
Then they’ll quote you six grand for a two grand replacement.
Yep. I had to get British Gas round 3 times to look at my boiler before they would change the part that fixed it. I had a good idea from googling the symptoms but they were not interested. They really didn't want to change the part in case it didn't fix it and it would have wasted their money. Plus it costs me much more than £18 a month.
Ah, but what if that roof develops a catastrophic leak that takes £’000’s to repair……. which is kind of where we came in.
Isn’t that what insurance is for?
No. That's the point.
say £10k (that’s a guess, I’ve never had the pleasure).
I just keep repairing ours, probably spent under £500 on it over the last 20 years, new Circuit Board (£120 IIRC), new pressure sensor (£15), two CH pumps at £100 ish each and a couple of solenoids at £50 each.
Reading this thread with interest...
I'm pretty careful with money to the point my wife regularly calls me tight - which means that we tend to keep the car at least 5-7 years, don't have Sky and don't have the flashiest phones etc.
For years I've recorded everything I've spent using a simple spreadsheet or budgeting app and when I'm "overspent" I bring the shutters down until I'm back in control. The by product of this is that I've almost always been able to save (albeit often only a little bit) and I've managed to avoid taking on any debt. This approach drives a certain behaviour that hopefully means I'll avoid the "panic" sensation when the next big unexpected bill comes in.
Speaking of which... after a really dreadful year in my current job, I'm planning on quitting without another job to go to and then taking 4-6 months off to re-charge, get fit, do some learning etc.
I'm at the point now where I know I'm almost certainly heading towards a breakdown (or worse) if I continue with the level of stress and frustration I've been dealing carrying for the last year.
The cumulative effect of c6 years of job insecurity, a "nightmare" job at present which means a 12 hour day every day including travel AND effectively working in a pressure cooker - combined with the challenges of a young family and literally months of no regular sleep has left me feeling like day to day life is just too much.
I'm very glad that my parents got me into the discipline of budgeting early on and I've been fortunate enough to be able to stash some cash away for the "rainy day" that is now arriving more quickly than I'd ever thought possible.
Or you could pay British Gas £18 a month so if it dies, they fit a brand new one for you.
Or they will declare it obsolete after 2 years, charge 4 times the price for a replacement, install it poorly and it will never work correctly until you have it ripped out and a new system installed by someone who is not British Gas...
Insurance is about pooling the money of the many to spread their financial risk.
I though my comment would be seen as an obvious joke in light of a thread about savings but clearly not.
Sorry, this thread is so full of opinion masquerading as fact I missed the joke.
I'm 45 and my wife 43.
We've both got decent jobs (me a bit over the 40% bracket, her just under) but we've got no savings.
I'm hoping to rectify this when we stop paying for childcare in 3.5 years time but until then i doubt anything will change. My Brother died a few years back at 36, since then i've been a bit 'live for the moment - tomorrow might never come'
It doesn't really stress me out - we'e got £250k equity in our house so the final solution if it all goes to sh*t would be sell up, downsize and start again.
It doesn’t really stress me out – we’e got £250k equity in our house so the final solution if it all goes to sh*t would be sell up, downsize and start again.
Of course, if the shit affects the country as a whole (e.g. Brexit), that equity could fast disappear.
Of course, if the shit affects the country as a whole (e.g. Brexit), that equity could fast disappear.
Any savings in GBP would probably be equally affected, now might be a good time to invest in Matagolian gumbo beads.
The government would never be stupid enough to let that happen.
Wait, what's that you say? Offshore trust funds?
Of course, if the shit affects the country as a whole (e.g. Brexit), that equity could fast disappear.
You're right. but if >50% gets wiped off the house prices in London and i find myself in negative equity then i'd say we've all got bigger issues to worry about.
You’re right. but if >50% gets wiped off the house prices in London and i find myself in negative equity then i’d say we’ve all got bigger issues to worry about.
Mark Carney recently suggested a 33% drop in values due to a 'bad Brexit', but it's okay because in the last 10 years the Banks have got their house in order and can survive it no problem at all.
I'd personally advise against thinking "safe as houses" is an absolute rule, the market has been propped up for a long, long time, but that time is coming to an end, Brexit or not.
Mark Carney recently suggested a 33% drop in values due to a ‘bad Brexit’,
It was a worst case scenario though and if that happens we'll have bigger problems to worry about than finding £10k to fix the roof.
It was a worst case scenario though and if that happens we’ll have bigger problems to worry about than finding £10k to fix the roof.
Exactly.
If there was a 33% drop in house prices, we wouldn't have to pay my wife's ex any equity and could afford to buy him out + my kids might be able to buy places of their own - every cloud & that 😉
Yes I do realise the economy would be buggered & those outcomes would be massively unlikely
"I’d personally advise against thinking “safe as houses” is an absolute rule, the market has been propped up for a long, long time, but that time is coming to an end, Brexit or not"
I've been hearing that for 20 years now and been no sign of it - I can see any real time drop in house prices. A stagnation of the market - absolutely possible but too large a proportion of the population, including the middle classes have such debt/asset levels that it would not be allowed to happen.
<span style="font-size: 0.8rem;">TheTories know that if they allow that to happen and hurt their core voters so hard, they would never be elected again! </span></span>
I’m hoping to rectify this when we stop paying for childcare in 3.5 years time
LOLOLOLOL - for a long time I thought PerchyPanther was the funniest person on here but that easily tops anything he's said in the last 6 months.
When the childcare stops, school starts. And with that comes clubs, and hobbies and sports, and the list goes on. We currently save £500 a month *just* to pay for the regular club fees for our girls - music (x2 piano, flute and drums), sports club, singing lessons, dancing, gymnastics, horse riding, art... And that's before the clothes, books, tech, bikes etc etc etc.
Basically what I am saying is *DO NOT* expect it to get any cheaper until they have stopped becoming dependent on you and that may well be well into their 20s...
