Another take on 'affordability'.

Cleaver

I never start threads on here, but I'm stuffed full of curry and the best thing on the telly seems to be Chris Moyles Quiz Night (how can you have 1,625 channels and end up with this?). Anyway, just as another take on the affordability thing, as I like causing trouble...

Let's take a lovely young couple called Geoff and Shazney. They are in their early twenties and madly in love. Geoff even goes clothes shopping with lovely Shazney, that's how much he loves her. Geoff works as a supervisor in an insurance sales centre and earns £22k. Shazney has trained as a hairdresser, works on commission and also earns £22k. They both earn below average wage, but they don't care as they love each other. Ahh, bless.

They decide they want to buy a place together. Their net combined income is £2,704 (as they are both sensible and pay 5% in to a pension) and they currently live in a bit of a pokey 1-bed flat which they rent for £500 a month. Their outgoings are as follows:

Home Insurance £10.00
Mobile Phones £60.00
Broadband £10.00
Water £45.00
Gas and Leccy £150.00
Council Tax £110.00
TV Licence £12.00
Home Phone £20.00
General Home Maintenance £80.00
Petrol £150.00
Food £220.00
Holiday Fund £80.00
Contingency and Savings £150.00
Car Upkeep / Fund £100.00
Geoff's Personal Spending Money £250.00
Shazney's Personal Spending Money £250.00
Rent: £500
TOTAL: £2,247

This is great news for them, as despite both earning below the average wage they can still have a pension, pay £100 a month in to a contingency fund, have £800 a year for a holiday, afford to run a small car and have a good amount each for having fun. And, here's the best bit, they have £457 a month left over.

They decide to save for five years and with a bit of interest they have £30k as a deposit. Wahey!

They decide to buy a place for £150k, which is pretty cool as even though they both earn under the average wage they can afford a place close to the average UK price. They take out a mortgage of £132k which is 5%, so the monthly repayment is £780 a month.

So with no rent to pay, their new monthly outgoings is £2,477. But our Geoff and Shazney aren't stupid. They decide that as they earn £2,704 and their outgoings including a pension, emergency fund, mortgage, holiday, food, petrol, car, going out... etc. adds up to £2,477, they are going to throw the additional £227 each month at the mortgage.

So, that's what they do.

They're disciplined with their budget and it means that they will own the house outright in 16 years.

If they were in their early twenties before they saved for five years for the deposit, this will make them mortgage free in their early forties. This is if they stay in their low-paid jobs.

So the question...

I'm going to just play devil's advocate and ask..

How is it that, theortically, a couple who both earn less than average wage can:

• Save a 20% deposit for a house in 5 years whilst still having a yearly holiday?
• Afford a house that is only just below the national average?
• Afford to pay off the mortgage in just 16 years if they were determined enough?

People on here know that I'm not Hamish. I think houses are stupidly priced on the whole and they look really unaffordable to me. So how is this scenario possible for me to type out? Aside from Cornwall / Devon, London, South East and posh places this would surely be a real-life case right? And remember, these are a couple of kids on £22k. I can be awful at sums, so please pick me up if I've got any of them wrong.

I'm off to bed but I expect 526 pages on this by the morning. Here's looking at you Mr Devon. "Please think of the children!".

fc123

....2 years later they decide to have a baby and Shaznay doesn't really want to go back to work but the budget doesn't balance despite Geoff gettting a £5kpa pay rise.
So she goes back to work but has to shell out £800pcm on childcare and is exhausted much of the time.

I know tax credits and things kick in but I am going back to watch G Ramsay Nightmares now.....

Cleaver

fc123 wrote: »

....despite Geoff gettting a £5kpa pay rise.
So she goes back to work but has to shell out £800pcm on childcare and is exhausted much of the time.

Well, they currently have £500 going out / fun budget. That's not going to be spent on you when you have a kid.

nearlynew

I thought you were off to bed?

Cleaver

nearlynew wrote: »

I thought you were off to bed?

I can't stop thinking about that 'Inflation is theft' phrase. It's so deep that I just can't sleep for thinking about the poignancy of it all.

1984ReturnsForReal_2

Cleaver wrote: »

Well, they currently have £500 going out / fun budget. That's not going to be spent on you when you have a kid.

Geoff gets !!!!ed off with his lazy assed wife & spends it down the pub or on prostitution.

nearlynew

Cleaver wrote: »

I can't stop thinking about that 'Inflation is theft' phrase. It's so deep that I just can't sleep for thinking about the poignancy of it all.

'tis true my friend.

As you lay your head on that soft pillow, think of a place where there are no lying thieves - and your money retains its value for generations.
A place where money is not created from nothing but is a tangible representatuion of the wealth that the earth has to offer.

Sweet dreams.

sss555s

fc123 wrote: »

I am going back to watch G Ramsay Nightmares now.....

I love Ramsay's nightmares

fc123

Cleaver wrote: »

Well, they currently have £500 going out / fun budget. That's not going to be spent on you when you have a kid.

The £500 will disappear on nappies, baby things, equipment etc. They may go out less but when they do (to de-stress) it'll cost an extra £20 to pay for a babysitter and her cab home.

markharding557

whether you consider their income to be good depends where in the country they are.
Their income would be quite good in the north,crap in the south.

fc123

markharding557 wrote: »

whether you consider their income to be good depends where in the country they are.
Their income would be quite good in the north,crap in the south.

In the London suburbs (cheap ones) they wouldn't be able to buy much more than a 1 bed flat plus there would be travel/commute costs too.