The IFS has reported that we will now have the greatest drop in disposible incomes since the war, with disposable incomes set to be lower in 2016 than 2006. It will hit lower income families with children the most and affluent pensioners the least.
Lots of facts and figures and graphs here:
So will this significant drop in disposable income affect what you do and how you live? Or has it already?
The growth in activities like mountain biking, skiing etc (especially the holidays) have in part been driven by the growth in disposable incomes - so are we likely to see a change in the biking industry as well?
Personally, it has made me think about making decisions based on a reduction in disposable income in the future. Things like considering buying a smaller, but cheaper to maintain and heat, house; planning for more cycle touring holidays etc. Actually the cycle touring choice makes me think we just need to rebalance what we consider to be 'fun' and quality of life is not necessarily dependent on having a high level of disposable income.
What have, or will, you be considering changing in your life?
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?
This^
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.
I assume the point being that they mean in 2016 we will only have, say, £200 in our pockets, the same as in 2006 and not allowing for inflation so the £200 will buy us much less.
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.
£180 a month? £2160 a year? 😯
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.
