Where does all the money go?

[trickywoo]

Lots of people blow huge sums on holidays. Mate of mine can only afford to live in a flat but goes on a week long £5k+ skiing holiday every year.

My mrs hasn’t worked for 6 years and I pull down less than £50k but still think I’m doing ok with life and pension planning etc.

[The Gauge]

Similar situation here, wife and I both earn £45k each which combined seems a lot of money to me, but I often end up in overdraft leading up to the next pay day and don't really have anything to show for the expense, just everyday costs. We don't have holidays (last year we had our first holiday abroad in 15yrs), never eat out or buy ourselves anything nice and it just seems to get spent on getting through the month.

Edited by The Gauge on Friday 1st March 17:35

[borcy]

I think it's managed expectations you need rather than looking at others. You seem to have a pretty comfortable life with spending matching your income, it seems about right. I'm sure there's plenty in your situation.

I wouldn't worry too much about how people fund their lifestyle.

[Mr Whippy]

All the money goes on paying for a toilet swirling economy bloated with liabilities to the extent it’s stunted growth and there is no way out without real investment and stimulus, which rich people don’t want to see as it’ll cost them money, so your elected representatives won’t provide.

[The Gauge]

alphanumeric said:

So how the hell is everyone else doing it? How are our neighbours ferrying their multiple kids around in fancier cars than ours? Paying for their gardens to be landscaped? Going on their trips to the Spanish islands every summer with the whole brood when our trip to Gran Canaria later this year has required dedicated planning and saving for just two of us?

They've probably had £500k+ of inheritance dropped into their banks, making their lives very comfortable.

Alternatively they probably have increasing debts of staggering levels, anticipating that inheritance, which might not come?

[timberman]

Glosphil said:

mario328 said:

Chipstick said:

£32.50 for a sim only? Sounds excessive.

It does, I pay £6 /month for 2Gigs of data plus unlimited calls with Giffgaff.

Fot the wife & me - £14/month total for 2 phones, each with unlimited calls & texts +20GB of data.

similar to us

both me and my wife are on the same sim only contract

£8 per month for unlimited calls, texts plus 25Gb of data on a 12 month contract

I was even offered unlimited minutes, texts and over a 100gb per month including a new smartphone thrown in for £9 a month and no upfront fee,

[okgo]

The Gauge said:

They've probably had £500k+ of inheritance dropped into their banks, making their lives very comfortable.

Alternatively they probably have increasing debts of staggering levels, anticipating that inheritance, which might not come?

Or they earn more money. £50k isn’t a large salary in the SE for someone in their 30’s who is a homeowner. People may not want to hear that but it is the reality.

[bloomen]

I'm confident that most of them are actors paid by businesses and the state to provide the illusion of prosperity.

[otolith]

G-wiz said:

If you can avoid it, don't do the mortgage thing.

Buy property with cash.

Even if it's a stty 3 bed end-terrace, like mine.

Don't forget to look down the back of the sofa.

[Caddyshack]

otolith said:

G-wiz said:

If you can avoid it, don't do the mortgage thing.

Buy property with cash.

Even if it's a stty 3 bed end-terrace, like mine.

Don't forget to look down the back of the sofa.

We are not alive very long, I would prefer to have a mortgage and a nice house to be honest.

[Fusion777]

Firstly, you're probably spending more than you appreciate/need to. Secondly, it sounds like you've still got a decent amount left at the end of the month- much more than many households.

What are your expectations regarding lifestyle/living standards?

I earn less than you, but my mortgage is sub-£500/month. No car finance, no gym membership, very few direct debits. I'd consider myself comfortable. Key differences are probably much lower housing costs (3-bed semi, inexpensive area) and generally fewer items of expenditure. I also have no debt other than mortgage and student loan, and I could easily pay off the balance of the student loan if I desired.

Maybe try and be a bit more ruthless with the expenditure, it's generally easier to cut that side of the equation than increase income. Again though- what kind of lifestyle do you want?

[Caddyshack]

Fusion777 said:

Firstly, you're probably spending more than you appreciate/need to. Secondly, it sounds like you've still got a decent amount left at the end of the month- much more than many households.

What are your expectations regarding lifestyle/living standards?

I earn less than you, but my mortgage is sub-£500/month. No car finance, no gym membership, very few direct debits. I'd consider myself comfortable. Key differences are probably much lower housing costs (3-bed semi, inexpensive area) and generally fewer items of expenditure. I also have no debt other than mortgage and student loan, and I could easily pay off the balance of the student loan if I desired.

Maybe try and be a bit more ruthless with the expenditure, it's generally easier to cut that side of the equation than increase income. Again though- what kind of lifestyle do you want?

I am glad that I stretched in my 20’s, 30’s and 40’s as it helped build assets that I can downsize from.

[anonymous-user]

OP: I was earning mid 50k in my early 30s, and that was 20 years ago. Struggled then (wife was on about 40k too), so the only answer was work harder and earn more, not save/spend less. If you feel poor now, it’ll only get worse as wages fail to keep up with inflation. Earn a lot of money, you’ll feel better and be able to afford the things you want. You have between now and about age 45 to maximise what you can earn by climbing the greasy pole, if that’s what you want.

Edited by anonymous-user on Friday 1st March 18:19

[ChocolateFrog]

Still £500 a week that you haven't accounted for even after everything else is covered including the holiday fund.

We're on a good 50k less than that and manage OK with 2 kids although no mortgage helps but until recently we had well over £1000pm in nursery fees.

[Mr Whippy]

wormus said:

OP: I was earning mid 50k in my early 30s, and that was 20 years ago. Struggled then (wife was on about 40k too), so the only answer was work harder and earn more, not save/spend less. If you feel poor now, it’ll only get worse as wages fail to keep up with inflation. Earn a lot of money, you’ll feel better and be able to afford the things you want. You have between now and about age 45 to maximise what you can earn by climbing the greasy pole, if that’s what you want.

I love these solutions.

Just work harder

All these years, and I just needed to work harder.


Interesting on the ‘afford the things you want’ and ‘if that’s what you want’ points though.

I think a lot of people have lost their way in life and end up measuring their success/happiness against consumerist goals.

Just the other day I was reading, iirc, design etc magazine.

£200.sq.m tiles. £5,000 coffee tables, etc.

It does make you realise beyond a certain level it’s just the same old st, just more exclusive/fancy marketed versions… quite often the really good stuff can be had free, or not much cost, going to charity shops, or making it DIY etc.

Edited by Mr Whippy on Friday 1st March 18:41

[anonymous-user]

Mr Whippy said:

wormus said:

OP: I was earning mid 50k in my early 30s, and that was 20 years ago. Struggled then (wife was on about 40k too), so the only answer was work harder and earn more, not save/spend less. If you feel poor now, it’ll only get worse as wages fail to keep up with inflation. Earn a lot of money, you’ll feel better and be able to afford the things you want. You have between now and about age 45 to maximise what you can earn by climbing the greasy pole, if that’s what you want.

Edited by anonymous-user on Friday 1st March 18:19

I love these solutions.

Just work harder

Worked for me, moved job every 2-3 years. Learned as much as I could, then bullstted myself into the next, more senior role on a higher salary. Senior exec by mid 40s working in IT/Digital. Now mid 50s, thinking about retirement. Probably jack it all in by 60 if I live that long. Once you have “enough” you stop worrying about money. My cars are old and I don’t spend much n shiny stuff, but I don’t envy anybody else either.

Edited by anonymous-user on Friday 1st March 18:49

[fat80b]

It's inflation and tax (and the associated fiscal drag) that are the comparison killer to the past here.

If you work out what your salary would have been 20 years ago and also work out the tax level then and now, as well as the cost of things, you will discover that there was a lot more headroom (disposable income as a percentage) than there is now, and that it also went much further then.

i.e. a pair of 40K earners in 2000 were way better off than a pair of 65K earners today when measured in how many pints they could buy each week.

Especially when you consider that back then, your middle earner didn't pay the higher rate tax but now they do - This means that stuff costs you way more as a percentage of your gross than it used to.

If you think about it, it is the disposable income piece that really is taxed at your marginal tax rate and it's the marginal tax rate that makes you feel poor.

[dave123456]

Fundamentally you can split your spend in the following ways:

What you absolutely need to live
What you need to earn money
What will be worth something in the future
What you’re spunking each month

It’s pretty obvious then where you can make a difference. There’s no point comparing what your mortgage payments are, someone could be making interest only payments on a penthouse in a block that’s turning worthless, another person could have a low fixed rate on a house in an up and coming area, headline monthly spend the same, future value very different.

At the end of the day these threads all end up the same, it’s a marathon, not a sprint and only you know if you are headed in a direction that you are comfortable with.

[dave123456]

fat80b said:

It's inflation and tax (and the associated fiscal drag) that are the comparison killer to the past here.

If you work out what your salary would have been 20 years ago and also work out the tax level then and now, as well as the cost of things, you will discover that there was a lot more headroom (disposable income as a percentage) than there is now, and that it also went much further then.

i.e. a pair of 40K earners in 2000 were way better off than a pair of 65K earners today when measured in how many pints they could buy each week.

Especially when you consider that back then, your middle earner didn't pay the higher rate tax but now they do - This means that stuff costs you way more as a percentage of your gross than it used to.

If you think about it, it is the disposable income piece that really is taxed at your marginal tax rate and it's the marginal tax rate that makes you feel poor.

I actually think that accidentally, the point you make about marginal rates is what makes income tax fair. The fixed costs of living are the same for a £25k earner as they are for. £60k earner so it feels fair that tax bites more on there portion of income that is disposable, rather than the portion paying the living expenses.

[Sebastian Tombs]

You're doing fine. You're even saving £300 a month.
You're really only about 20 grand in salary from being 1%ers.
Once student loans are paid off you will feel richer.

Stop comparing yourself to others and do what makes you happy.

The only financial advice I have is sack off the car leasing and instead save up and buy something nicer that you actually want. Cars do not have to be new. A perfectly decent Porsche can be had cheaper than a new Hyundai i10

In a few years you will inherit from your families and suddenly you will feel loaded.

Edited by Sebastian Tombs on Friday 1st March 19:05