Another take on 'affordability'.

Emy1501

HAMISH_MCTAVISH wrote: »

"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.

Not in their early 20's they are not.

Graham_Devon

Cleaver wrote: »

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.

What exactly do you want us to say Cleaver?

Yes, Sir, you are correct? You have put the topic up for debate, or so I thought. Why spit the dummy?

Emy1501

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.

How many kids in their early 20's earn average wage? Most of the people who I know who got good degrees did not start to earn average earnings untill close to 30.

Cleaver

Emy1501 wrote: »

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.

At the risk of repeating myself, the imaginary couple in my scenario have £500 a month of personal spending money built in to their budget. Which is £6,000 a year. They can afford to buy iPods, PS3s, mobile phones, trainers, clothes etc. if they so wish and still (in the example given) afford a mortgage without getting in to any other debt whatsoever.

But I fully take on board your point about the 'youth of today'. Financial education in this country is poor and, as we've obviously seen over the last decade, this widespread, casual attitute to debt is dangerous.

However, my original point was not to say 'this is the real world'. My point was that can a couple, who earn less than the average wage, live a nice life and save for a house, then buy an 'average' house? My figures seemed to show that they could. You're saying that people don't live like that, which may be true. My situation asked what if people did live like that, which they obviously could if they wanted to.

Graham_Devon

Cleaver wrote: »

However, my original point was not to say 'this is the real world'. My point was that can a couple, who earn less than the average wage, live a nice life and save for a house, then buy an 'average' house? My figures seemed to show that they could. You're saying that people don't live like that, which may be true. My situation asked what if people did live like that, which they obviously could if they wanted to.

Yes, this couple could. Other couples the same as them also could.

Cleaver

Emy1501 wrote: »

How many kids in their early 20's earn average wage? Most of the people who I know who got good degrees did not start to earn average earnings untill close to 30.

This is where we get in to semantics I guess.

I would hazard a guess that quite a few people in their early / mid twenties earn around 15% less than the average wage. But that's just a feeling. Maybe someone can post up a graph that shows wage distribution.

I've been caught out before on here about wages, as I think I have a really distored view of jobs and salaries. I regulary appoint to £20k to £25k jobs in my office and we fill them with pretty young, ambitious, decent people who will go on to earn £30k and £40k within a few years if they show promise and hard work. I see a £25k job (which is apparently the average wage) as a role that someone with pretty decent qualifications, common sense and a few year's experience as pretty obtainable. It is at my place anyway. Most of the £25k a year jobs at our place (which are generally admin jobs) go to grads in their early twenties, or mid-twenties people with a couple of years admin experience under their belt. But the stats show that this is average wage, so I must have a distored view.

I'm 29 and my friends, most of which went to Uni, are pretty much all on £30k and way upwards so I just can't relate to most of the stories I read on here, but I'm quite happy to accept that my experience is maybe not 'normal'.

Really2

Graham_Devon wrote: »

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.

We also have a massive amount of professional people living in city's requiring no car?
But then they have to have 2 in graham's world because that is the only way they can fit his VI.

We have 2 cars (we dont live in a city, semi rural) Diesel is around £140 PM for the Two tax is £120 PA each Insurance is around £300 PA each other costs average about £100 PA (max)

So that makes £2620 PA

Clevers allowing for over £3,000K PA for 1 car.!!!!!!!!!!!

System

Graham_Devon wrote: »

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.

A bit like using average household income though really, a figure which includes people who are living on benefits for life and will never own regardless of how far prices fall.

Cleaver

Graham_Devon wrote: »

Maybe they will want a new laptop, or a new TV? Perhaps they would like to invest ina blu-ray player?

They save for these items out of their personal £250 budget each month.

Graham_Devon wrote: »

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?

They have a £100 a month car allowance which I think would be enough for a small care. Anecdotally, we've always had a £150 a month car allowance which tends to pay for insurance, tax, running costs and generally builds up to help us buy a new one every 5 or 6 years when we need one.

Perhaps they win a car in a lottery, perhaps their parents give them one, perhaps, perhaps, perhaps. My OP was just to point out that they have £100 a month dedicated to their car, which seems about right.

Graham_Devon wrote: »

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'm going to sound like Hamish, but sod it. They have a £150 a month contingency fund - this would pay for a new washing machine, boiler repairs etc. etc.

The computer, new TV etc. would be paid for out of their £250 allowance. I would have thought you'd be up for people saving for stuff Graham!

When we were saving for a house exactly what you described happened - my computer went kaput. We had our deposit money so I could have gone out and just bought another one, but instead I put aside £20 a week for a few months and bought one that way. Why is that not possible? To reiterate, these people are low earners yet want to buy a house. My OP was to show that with determination it's possible.

Graham_Devon wrote: »

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

I'm not just saying this, but I really, honestly think they do. And you know what, I took most of the figures from our own personal budget. I didn't really change much and that's how we live. Nice life it is too.

Okay, we have a rather bigger holiday budget, but the rest is about right in terms of outgoings.

Really2

Joeskeppi wrote: »

A bit like using average household income though really, a figure which includes people who are living on benefits for life and will never own regardless of how far prices fall.

Ah yes everyone forgets the average wage includes part time etc. Well by forget I mean when it suits them.;)