[Closed] Record drop in disposable income - will it affect what you do?

Nowt.

disposable incomes set to be lower in 2016 than 2006

You see, this is where I begin to lose the plot. Does anyone remember being especially poor in 2006? I certainly don't remember selling fewer bikes than I do now. So while it might be a drop in disposable incomes, it's not exactly getting us back to post-War levels, despite all the hyperbole.

I earn about 30% less than I did 10 years ago. For doing the same job. Looking at the jobs advertised in my field, I reckon that's the level salaries have dropped across the board in the last few years.

Capitalism innit? Loads of people looking for too few jobs. Its going to get a lot worse before it gets any better too.

You learn to live with it. In fact, in a lot of ways it can be quite positive. It makes you prioritise things, and appreciate things a bit more. I have a totally different lifestyle than I used too. But its not like I'm starving or living on the street.

Does anyone remember being especially poor in 2006?

bencooper - Member
disposable incomes set to be lower in 2016 than 2006
You see, this is where I begin to lose the plot. Does anyone remember being especially poor in 2006? I certainly don't remember selling fewer bikes than I do now. So while it might be a drop in disposable incomes, it's not exactly getting us back to post-War levels, despite all the hyperbole.

You see, this is where I begin to lose the plot. Does anyone remember being especially poor in 2006? I certainly don't remember selling fewer bikes than I do now. So while it might be a drop in disposable incomes, it's not exactly getting us back to post-War levels, despite all the hyperbole.

Equally, why is it a God-given right that incomes should rise year-on-year. For whatever reason, growth cannot, surely, continue on an upward curve indefinitely?

Yes, and has done.

While not at all poor, we definately note the hit on our 'surplus', consequential no change of car since nor (expensive) holidays.

I might stop buying Apple products or I might just carry on as normal.

I've already changed, my partnership drawings dropped by £500 per month at the middle of last year and haven't risen since so my only MTB is a SS to keep costs down, I was planning on a 29er next month but I've scrapped that as I really can't afford it.

Conversely I have moved into a bigger house this year so that of course is having and effect on disposable income as well.

Think i'm feeling the pinch more now that I've got two sprogs and my Mrs only works 2 days a week compared to 2006 !

The difference between stuff I want and stuff I need has become clearer!

And I'm trying hard to limit impulse and bogof 'bargains' in Tesco.

Not necessarily a bad thing though is it? People will just have to learn be more careful with money that's all.

Hopefully the greedy 'have it all now' and 'borrow to the hilt' culture of the last 10 years that has lead to this whole sorry mess will be replaced with an 'I'll buy it when I've saved for it' or a 'do I really need it' attitude.

Hopefully people will now realise that if they want something, then they might actually need to work hard to get it. That can only be good for the UK in the long run.

The difference between stuff I want and stuff I need has become clearer!

Well put.

Thomas Cook on the brink - less money and things are more expnsive, so people are cutting costs where ever possible, holidays being one of them.

My diposable income has dropped a lot in the last 3 years,though having 3 children and then my marriage ending might have had an effect.......

However,pretty much everyone I know is in the same position,and there is a certain sense of achivement in learning to live frugally and within one`s means.

I paid off my credit card last month,now pay insurance premiums up front to save on the horrendous interest charges you otherwise pay,shop aound for utility,and insurance deals, have signed up for topcash,use a taste card or sign up for deals when eating out,etc.

Im still riding my 5 year old hardtail,and have sold off 2 of my surplus bikes,which in turn has saved money Id otherwise spend on unnecccesary upgrades.Now it more about the ride than the bike/kit.

I`m quite ashamed of how much money I used to fritter away now.

What have, or will, you be considering changing in your life?

I'll be buying more stuff I don't need, going on more expensive hollidays, buying a bigger house and probably be contemplaing kids by 2016.

It's an avarage, it includes everyone from people on JSA (which isn't going up), to trust fund managers (who are making less than they used to). Looking at that slideshow people arround the 8th decile (which I'd hazard a guess is the STW demographic) we'll be 0.25% worse off, and most people would be aiming for some kind of career progression in 5 years so 0.25% shouldnt be hard to get past.

thisisnotaspoon - yes, it is an average and it won't affect more affluent demographic groups as much as lower income families. The impact that seems to be hardest in the increase in child poverty by 100,000 - certainly puts the ability to buy a new bike into perspective.

Other life changes can have a greater impact - for me going from a household with two reasonable incomes and no kids, to a single person (and therefore single income) household has been significant (and greater than the changes bought in by the government).

But, the response to biking is an intereting one. For me, it can be an activity that I'd increase as my bikes are as much a form of (very low cost!) transport as they are a leisure pursuit. Maybe the biking industry will alter to focus on the 'money saving' aspects of cycling, rather than it just being seen as a rich man's plaything?

so the drop from grossly inflated by personal debt bubble disposable income to the below normal disposable income brought about by repaying for the good years leads to a large drop in disposable income figure shocker

slow news day ?

so the drop from grossly inflated by personal debt bubble disposable income to the below normal disposable income brought about by repaying for the good years leads to a large drop in disposable income figure shocker

+1

Given the limited resources in the world, is having to learn to use less of them actually a bad thing?

I skimmed the presentation... doesn't it say 7.4% drop in median real income?

My income's up significantly. But the tax I pay has also increased (no personal allowances, highest rate of tax on a good chunk of income). Net position is that I'm still better off than 2006.

Overall, I'm not spending disposable funds on toys and fun - it goes into pensions, properties, investments. I'm earning well, but I can't guarantee the future.

Some of the people working for me are running really nice cars, still take very expensive holidays. I can afford to do this, but actively choose not to. That's a real behavioural change for me.

Personally I'm better off cause I'm working, but I'm saving like crazy. We've cut a lot out, drinking, clubbing, gigs. Food shopping has taken a hit as well

Having said all that I was still at school in 2006, so I've got loads more money than I had then. I don't have credit cards or a car to run as well

Hard for me to tell relative to 2006 - back then I worked full-time and had no kids. So my disposable income is way down whatever's happening in the rest of the world.

Hmmm... does this mean you'll have to return to wearing a uniform?

I guess I am realy lucky that by 2016 our household income will have roughly gone up 100% from what it is now. What that equates to in disposable income is unclear though.

Hmm. Just did a comparison of my disposable household income today versus 2006. My disposable income today is 251% [b]higher[/b] than it was in 2006. No complaints from me.

[i]*cocky smug mode on*[/i]

Just got a new car with much lower CO2 emissions than the previous model, saving me around £180 tax a month.

[i]*smug off*[/i]

We've been cutting back for years. Non-essentials mainly, petrol, holidays, that sort of thing. It's not that difficult, we've been resource greedy for far too long.

[i]Given the limited resources in the world, is having to learn to use less of them actually a bad thing? [/i]

+1

My income has more than halved since 2006 but no worse off. I had a mortgage, a buy to let mortgage and a daughter in university (5k just for accommodation ffs).

Daughter qualified, both mortgages paid off I have been able to retire on an index linked pension so ok. Can still afford to go to USA every other year but likely to take more bike touring holidays in future rather than with holiday companies. Not working I can make other economies by shopping around. Not to worried about the future really.

People have overspent in last few years and are now cutting back. While people are paying off debt they are not buying new stuff therefore a slowing of the economy will result, certainly for non essential stuff.

Just got a new car with much lower CO2 emissions than the previous model, saving me around £180 tax a month.

I was going to ask how much this "cheaper" new car cost you to buy, but I presume if it's costing you in tax it's a company car?

On the bright side it might be a positive outcome for the bike industry - maybe a few more commuters buying bikes to save on their petrol costs, maybe folders to get to the train station rather than driving etc.

The 'dentists' bikes will still keep rolling in, money no object as long as it's the latest must have electronic shifting thingies.

I suspect the middle ground might take a hit - people choosing SLX over XT maybe

From Guardian :-

For a couple with two children the weekly income falls from £612 in 2002 to £606 in 2015.

In the nine years since 2002 the cost of living has increased 30%.

2011 1.045 1.24
2010 1.03286 1.20
2009 1.021662 1.18
2008 1.036132 1.14
2007 1.02321 1.11
2006 1.023335 1.09
2005 1.020497 1.06
2004 1.013446 1.05
2003 1.03629 1.01
2002 1.012562 1.00

Although I make it 1.24 or 24%

This means that £606 in 2012 is the equivalent of £489 in 2002.

Providing the money still keeps coming out of the hole in the wall, that's all that matters.

As a single blerk with few responsibilities, I dinnae really care - as long as I have access to trails and a decent library.

That will all change when Sandra Bullock wants kids with me, of course.

I earned more in 1994 than I did last year
I don't feel any poorer but I'm less tired for sure 🙂

I think my biggest single disposable/luxury expense is beer each month. To be honest I have in the last 6 months begun to wince how much a pint is now (I drink real beer in real pubs so not thinking of places where you can get god knows what at dirt cheap prices). Plus I have been of work 4 days this week ill (hopefully will make it in tomorrow) with what I hope is no more than IBS which I am sure is linked to going out more than my usual once per week in the last 5 weeks or so. So I think I will be needing to be more sensible about how much I do drink at a time which will hopefully increase my spending power for other things. Though to be honest following 20 months unemployment I have learned to buy far less unnecessary crap. I'm lucky in that I am a life long single so my personal financial position only affects me, I'd hate to have others relying on me.

My life has changed massively (similar to some above). Self employed on earnings half what they were pre-recession, at the same time two children came along, wife working part-time and term time (so earning 1/4 of what she did before we had children).

We have gone from saving £1k a month and buying what we wanted when we wanted (within reason - never being ones for fancy labels and expensive luxuries) to having spent all our savings.

Fortunately our one loan (apart from our mortgage) finishes in February and we have no other debts.

That and given I am about to come into an inheritance that will mean I can substantially reduce my mortgage is making me look at life entirely differently (having lost both parents, a much-loved auntie and my last remaining grandparent in the last few years) as well as currently going through some worry over the health of one of our daughters as I type is meaning I am now of the view I don't want or need nice things and that I would rather enjoy my life for what it is without undue pressures from work and/or debts.

And I do honestly think the world would be a much better place is a significant number of people start to have similar views.

I'm going to find it really tough. How can I fund all the borrowing I did.

One thing I do think this is going to seriously impact on is the housing market. To a huge degree

First time buyers are virtually non-existent now. So with a real-terms decrease in income for most people, year-on-year, for the foreseeable future, then even the prospect of owning a home is going to become an impossible dream to an increasingly significant percentage of the population

Earlier this year I had a huge cash-flow impact after two very well-paying corporate clients strung me out then didn't pay at all. I learned how to pare everything back to the bare minimum, I still had a nice life but based on doing things rather than buying things. And also IME the iDave diet is pretty cheap to follow. Applied the Pareto principle to most things in terms of what I need and what work I did. That also helped.

House prices will have to come down if people need to sell, they are only worth what people will pay. Most properties have been over valued for years for various reasons (mainly easy credit) but now it's time for a revaluation and it could be a big one. For some of us this will hurt if we want to move (like me) but for those that intend to stay at the same house in the long term then it will make little difference as long as they can pay the mortgage. Perhaps the time of mass house ownership is ending, perhaps house prices are going to drop massively. Time will tell...........................unfortunately.

But (according to Nationwide BS) house prices continue to rise...

Not caused by demand, but limited supply. Increase the supply & prices will start to fall. But because an awful lot of people are in negative equity, or very low LTV, they can't move & therefore supply is restricted.

If interest rates stay low, then house prices will be reduced in real terms (by high inflation) & eventually become "affordable". If interest rates rise then the sudden increase in supply (from reposessions) will push the prices down.

"But (according to Nationwide BS) house prices continue to rise... "

certainly not coming down thats for sure ..... im looking at the moment.

if its not dross then it sells quick .... i looked at a nice house on tuesday. went on the market last thursday - closing date today.

looked at one that went on on saturday and its closing next wednesday !

only stuff i see not selling is the ex council in complete dives of areas/folk who cant sell as they dont have the right paperwork in place for extensions or people trying to sell up to escape the incoming dual carridge way - but for the top dollar that they paid for their house it seems !

Do you think that's because of people with money investing in property? Return on investment is pretty minimal on most things. Interest on savings is nowt. I'd imagine if you're looking long-term, the right property might still be a fairly safe investment. Well... as safe as anything at the moment.

i wouldnt have said they were your average buy to lets really ...

country/suburb 3 beds with garages and gardens - sounds like my idea of hell for a rental .....

Well... as safe as anything at the moment

We might have to re-think the expression 'as safe as houses...'

'As safe as old school deore XT thumbshifters' would be my personal preference - they are the only things of lasting value in this world.

trail rat - 3 bed houses are apparently what the rental sector is short of, and prices are rising accordingly. I suppose it stands to reason at the moment

City centre flats being somewhat over supplied

House prices round here are falling, some looking stupidly cheap like the bottom is about to drop out of the market completely. Fixer-upper three bed semi in cheaper but not disastrous area going for £60-65k, two bed terraced for £45-50k.

As for disposable income, not a vast change, but noticing some things getting dearer, but mostly the effect of keeping three growing kids going that grabs my cash mostly. Trouble is with these studies, people move on, what we're doing now with our money isn't going to be exactly the same as five years ago. Teenagers cost more to run than younger ones

how am i going to afford my iphone and starbucks?

Depends if its a 4s os some povvy, council 3g thing 😉

"certainly not coming down thats for sure ..... im looking at the moment"

Oh really, are you a BTL landlord or Estate Agent by any chance?

You might want to take a look at the Land Registry figures, not some skewed Nationwide/Halifax/Rightmove index with all their vested interests.

Alternatively this report from Moneyweek seems to sum up the situation perfectly:

[url= http://www.moneyweek.com/investments/property/uk/how-much-further-will-house-prices-fall-56028 ]How Much Further Will House Prices Fall[/url]

Still think house prices are going to rise? Pull the other one!

Don't feel as if my disposable income has dropped that much.. If anything earning more now than ten years ago.
But then my life has changed almost immeasurably, married with a young child, a bigger mortgage and more outgoings..
Never been loaded but consider ourselves well off in other ways. I have a nice bike but just one, sold others to fund the purchase of it just prior to the wee one arriving. Upgrades are usually taken care of easily by Christmas and birthdays so all good in that respect.
Have noticed increased cost of living though, food prices, petrol, bills, all going up. Shame about the wage freeze/cap....

I've always disliked consumerism (other than bikes) and always thought we were in an unsustainable boom throughout 2003-2007 so saved as much as i could. I just dont get designer labels, fancy restaurants, flash cars, new kitchens, white hgoods, consumer electricals etc etc.

I still fear my job imploding but so far its gone fine over the last 4 years since recession / credit crunch started and if it does implode i will be debt free, house owner so should be able to survive.

I have loads of clients who are worth tens of millions and its a myth that such people all flash it about. Most of them drive old cars, wear M&S clothes, eat out in Harvesters (really amazing I know) and holiday in Spain or Cornwall etc, not Necker Island!

Intesting read northernstar but very london centric life does exist outside the bubble

Ive been looking at the figures for the area which i live in ....

In the last year its up 0.2% in the last quarter its up 3.9% and the average price of a property is 190k......taken from the registars scottish executive agency

Oh and no im not involved in finance all just an engineer trying to buy my first house ... Doing the engineer thing of looking at facts and figures first .....

I'm working away more - thus wearing out less drivetrains.

Actually I think I need less and less new stuff as this decade wears on.

holiday in Spain or Cornwall

I don't know M-F, we had a week's camping holiday in Cornwall this summer and i think we spent just over £300 between the two of us!
Weren't skimping either.

I WAS being slightly tongue in cheek! But we did decide against Cornwall as 2 weeks in a holiday cottage was around £2400+ for a nice 2 bed with views. Ended up going off-season to Devon.

Selling my t4 camper in the new year which i've spent 1000's on getting to my spec 🙁 My enduro full suss has been split ready to sell

Fixie has gone to my mates shop to get sold.

So yes, i'm tightening my belt and thinking about my spending a lot more.