Another take on 'affordability'.

Cleaver

fc123 wrote: »

....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.

Thrugelmir wrote: »

In general people don't have the habit of saving.

What's the likelihood of them being together 20 years later?

92203 wrote: »

No doubt in reality, things would go wrong or circumstances would change while they were saving for their deposit.....

Also, it is very unlikely that both people in the couple would be earning quite that much. This is somewhat of a utopian scenario.

carolt wrote: »

V v few hairdressers earn 22K.

Plus fc is right on the issue of what happens if they have a kid.

Obviously, we've not touched on what happens when Shaznay's salon closes down, due to it being uncompetitive to paying it's staff more than all the other local salons.

And Shaznay can't get a job; can only get one that pays much less. And the boiler breaks; no landlord to sort it out for free now!

That's their emergency fun and holida fund cleared out; might have to borrow a bit from the bank of mum and dad, too...

And their short-term 5% fix runs out, and the only rates they can get are much higher (don't want to be on the SVR as they're bright enough to know that'll shoot up within a year or so...)

Emy1501 wrote: »

As for holidays they are likely to want at least 2 or one together and one with their mates.

Also highly likely they will go out most weekends if not every weekend.

Most will also think nothing of spending £100 on jeans £300 on a bag and shoes etc.

Most youngsters have not been brought up in a saving world.

Wow. What an interesting insight in to some of the physchology of this forum with only LIR and Joeskeppi actually looking at the figures and saying "you know what, it looks do-able if stuff goes averagely okay, like it does for most people."

Forget their job titles, I was just making stuff up. I just wanted to pick two salaries that were both well below the average UK wage.

And aside from the "well, it'll all go wrong", "they'll want 3 holidays a year not one", "they'll spend £100 a week on alcohol", "they'll lose their jobs", "their boiler will break down", "no doubt everything will go wrong" (what?!), "they'll spilt up within 20 years", "they'll never get a new mortgage"...

...let's not be optimistic or pessimistic. I've built in to the budget £500 between them for pure spending money each month, which is huge. They have a £800 a year holiday fund which is more than ample for two people earning under average wage that want to buy a house. I've factored in a contingency and savings fund of £150 a month which is used to fix things like broken boilers and cover har periods. I've even been pessimistic and assumed that they never better themselves and get higher paid jobs, which is hardly ever the case.

Most people don't lose their job. Despite the media image, young people don't spend £300 on trainers every week. Despite the media image, some of us twenty somethings get an education, care about our career and have okay jobs. Despite the media image we don't all have 5 holidays a year on credit cards. Some do of course, but it's a minority.

So I'll ask again. If you stop thinking "what if one of them breaks their leg" or "what if one of them develops a shopping habit of £200 a week, 'cos all young people do don't they?", how is it that two people earning under the average wage can buy a house that's close the average price and afford to pay it all off in just 16 or so years if they chose to just be a little bit disciplined? If they have kids, want more holidays, have some hard times then they pay it off in 25 years, like most people. Why can't this happen? Are my figures incorrect?

92203 wrote: »

Also, it is very unlikely that both people in the couple would be earning quite that much. This is somewhat of a utopian scenario.

And lastly on this point - you think two people both earning well under the average UK wage is a 'utopian scenario'?

Graham_Devon

Cleaver wrote: »

Forget their job titles, I was just making stuff up. I just wanted to pick two salaries that were both well below the average UK wage.

But they are not well below?

It's about 3k below.

2 people earning just below average wage, with no kids, who only go on one cheap holiday and don't spend beyond their means should be able to afford a house.

Trouble is, this couple you have invented are not the average household.

Like I said on the previous page, these two full time workers, kid free, not an expensive life, should be able to afford a house.

But I don't for one minute think they are average.

Why? Average household income is something like 35k, that's both working, thats people with / without kids etc.

The two you have created earn near 10k over the average household income and don't have any ties. They are above average in terms of household income.

Cleaver

Graham_Devon wrote: »

But they are not well below?

It's about 3k below.

Isn't the average 26k? So, more accurately, each of the couple earns 15% below the average UK wage. Whether you consider that 'well' below is subjective I suppose.

Graham_Devon

Cleaver wrote: »

Isn't the average 26k? So, more accurately, each of the couple earns 15% below the average UK wage. Whether you consider that 'well' below is subjective I suppose.

£25500.

Plus the average professional couple would have 2 cars. Don't know anyone like the couple you have created that share a car. Know some professional couples and they all have a car each. That's how professional couples, the types you have created, live.

More families IMO have one car.

Like I say, I'm not disagreeing with your initial post. I'm just saying that there really shouldn't be any issues for this frugal couple. But they are certainly not mr and mrs average.

Cleaver

Graham_Devon wrote: »

£25500.

Plus the average professional couple would have 2 cars. Don't know anyone like the couple you have created that share a car. Know some professional couples and they all have a car each. That's how professional couples, the types you have created, live.

More families IMO have one car.

We only have one car and we're a 'young professional couple'. So you now know one couple.

According to this source there are 27 million private cars in the UK, which is an average of 1.1 per household.

Graham_Devon wrote: »

Like I say, I'm not disagreeing with your initial post. I'm just saying that there really shouldn't be any issues for this frugal couple. But they are certainly not mr and mrs average.

You call a couple earning less than average wage, who have £500 free spending money per month, running a car, who have £800 a year to spend on holidays as 'frugal'?

Cleaver

Graham_Devon wrote: »

But they are not well below?

It's about 3k below.

2 people earning just below average wage, with no kids, who only go on one cheap holiday and don't spend beyond their means should be able to afford a house.

Trouble is, this couple you have invented are not the average household.

Like I said on the previous page, these two full time workers, kid free, not an expensive life, should be able to afford a house.

But I don't for one minute think they are average.

Why? Average household income is something like 35k, that's both working, thats people with / without kids etc.

The two you have created earn near 10k over the average household income and don't have any ties. They are above average in terms of household income.

I officially give up. You're right, the couple I created are massively wealthy, can afford a house and are not average or typical in anyway. I'll bow out and think about how silly I've been.

HAMISH_MCTAVISH

Graham_Devon wrote: »

Plus the average professional couple would have 2 cars. Don't know anyone like the couple you have created that share a car. Know some professional couples and they all have a car each. That's how professional couples, the types you have created, live.
.

"Professional" couples are also on a lot more than the wages in the scenario.

22K a year, 15% below average wage, is not "professional" territory. It's a competent secretary, a bus driver, a forklift operator, etc. Little need for a two car household, especially in the cities.

Emy1501

Cleaver wrote: »

Wow. What an interesting insight in to some of the physchology of this forum with only LIR and Joeskeppi actually looking at the figures and saying "you know what, it looks do-able if stuff goes averagely okay, like it does for most people."

Forget their job titles, I was just making stuff up. I just wanted to pick two salaries that were both well below the average UK wage.

And aside from the "well, it'll all go wrong", "they'll want 3 holidays a year not one", "they'll spend £100 a week on alcohol", "they'll lose their jobs", "their boiler will break down", "no doubt everything will go wrong" (what?!), "they'll spilt up within 20 years", "they'll never get a new mortgage"...

...let's not be optimistic or pessimistic. I've built in to the budget £500 between them for pure spending money each month, which is huge. They have a £800 a year holiday fund which is more than ample for two people earning under average wage that want to buy a house. I've factored in a contingency and savings fund of £150 a month which is used to fix things like broken boilers and cover har periods. I've even been pessimistic and assumed that they never better themselves and get higher paid jobs, which is hardly ever the case.

Most people don't lose their job. Despite the media image, young people don't spend £300 on trainers every week. Despite the media image, some of us twenty somethings get an education, care about our career and have okay jobs. Despite the media image we don't all have 5 holidays a year on credit cards. Some do of course, but it's a minority.

So I'll ask again. If you stop thinking "what if one of them breaks their leg" or "what if one of them develops a shopping habit of £200 a week, 'cos all young people do don't they?", how is it that two people earning under the average wage can buy a house that's close the average price and afford to pay it all off in just 16 or so years if they chose to just be a little bit disciplined? If they have kids, want more holidays, have some hard times then they pay it off in 25 years, like most people. Why can't this happen? Are my figures incorrect?



And lastly on this point - you think two people both earning well under the average UK wage is a 'utopian scenario'?

Your take on the matter is not reality though in this day and age. Yes that is probably how my parents would have done it 40 years ago but not how it is done now.

The vast majority of the under 25 do not live the way you are suggesting. If they did then fair enough. Society though has changed even in the last 10 years. its all about borrowing as much as you can and living above your means.

it will take years to change. Go into any school today and its all about owning an IPOD, PS3 the latest mobile phone, HD ready TV etc. These all cost money and the attitude is taken on into later life.

fc123

zappahey wrote: »

Heh, I guess you haven't booked a babysitter recently

I confess..no I haven't as they are 16 + 22...am I way under or over the current rate?

I forgot another thing...when Shaznay has 2 kids.....then get's preganant accidentaly for the 3rd time ...and it's twins so having 4 kids in the household. Happened to one on OH's side of the family and put them into a real financial hole...but was before tax credits in the olden days.


Affordability...being serious for a mo.....the same house in area we bought in 1990 would add up to a couple in a similar position we were in back then. Cheap suburb S E London.

We could afford less in 1990 than what both our sets of parents could afford in the late 1960's.

And my grandfather had a huge pile in Windsor bought on, perhaps, the equivalent salary of 100k....based on what he did back in the 40's/50's.
I am guessing those houses are about 1.5 million now? He sold it in the 70's, dowsized to the coast and 'lost' the equity gain to inflation.

Graham_Devon

Yes, I call it frugal.

Just on the car thing for a second....it gives you an average of 1.1 cars per household yes. But the weighting of those owning 2 cars, compared to those owning no cars are ignored. We have something like 8 million households on benefits. Many of which will own no cars at all. We have a massive population of OAP's, many of whom own no car at all.

Which means theres a lot of households owning 2.

Right, I'm going to make this as short and sweet as possible, though its difficult as I need to get my point across. But I want you to know I am not disagreeing with your initial OP.

MR & Mrs Average, maybe even another version of the couple you have provided will also:
- Get married, paying for a wedding, wedding rings etc at some point
- Have parents, siblings, nieces, nephews, all of which, for most people, demand some expenditure at various points in the year.
- Have unexpected expenditure, such as the washing machine breaking down.
- Have some form of debt from previous or current years, student loans, car credit etc.
- Don't just get a rented place and all the associated furniture given to them, so they will have had to buy this in the first instance and the average couple upgrade as they go.

This is my issue with your couple. They appear to have a fixed income and fixed outgoings. These outgoings do not allow for any unexpected expenditure. They appear to have a flat with everything in it not needing anything. Do not allow for them to have any debts from previous years. Do not allow for them to have any children from past relationships. Do not allow them to upgrade any of their personal belongings.

Maybe they will want a new laptop, or a new TV? Perhaps they would like to invest ina blu-ray player? Perhaps their car is 10 years old and they need to fine 3k to upgrade it to another 6 year old model? Perhaps their car needs 2 new tyres and brakes all round?

The initial sums allow for none of this. The £500 they can save per month could easily be spent on a new computer, new TV. That's one months saving towards a deposit gone. Upgrading the car for a newer version at 3k expenditure plus part exchange? 6 months saving behind. Washing machine need replacing? Half a months savings gone.

I know you have allowed for personal expenditure, and I would regard this as clothing, haircuts for the lady, manicures, lunch at work, magazines, alcohol, a day out to the zoo with family. Things real people do. So you couldn't take the big items out of this personal expenditure.

What I'm saying is, your sums do not allow for normal, working and living lives.

On that note, I must go out today and purchase something for my dad's birthday. On the way I got to go get my steering alignment checked and probably sorted as a tyre is wearing excessivly on the outside.

£100 gone most probably just in one day.

Your post made out that for the next 20 years, they will live life basically static. Never buying anything outside of their outgoings. Well good luck to them trying to get on the internet on their 23 year old PC in 2030.

Life is not as black and white as you have made out. Never wanting to upgrade anything in life, never needing to buy a present for family, never needing to maintain your items. I did a big job not too long back. £1500 I got for it. Lovely, extra add on to normal income. The entire lot went on baby gear. That's life!