The Most Important Document You Will Never Read....

Graham_Devon

RenovationMan wrote: »

You said that "I 'chose' to put a roof over my families head?", so I did the calculations for someone who was putting a roof over his family's head.

Are the parameters changing now?

No, the parameters are not changing.

I did the sums based on Wotsthat's 30k a year and saving 4k a year.

You introduced CTC and WTC, I hadn't done those sums. But obviously, the parameters would HAVE to change if you are bringing kids into the equation. Kid's cost money, money which I hadn't allowed for in the initial figures.

If you honestly want to sit there and just pluck figures out of the air, and not look at how these figures align with the reality of living costs, then fine......but don't bother claiming I'm changing parameters by adding in costs for kids if you bring benefits which require kids into the equation!

Until you produce some actual living cost figures alongside your income figures, you are just living in a fantasy world. There are loads of real world living costs on the debt board SOA's you can use as a baseline....just strip out the debt payments if you like.

RenovationMan

Graham_Devon wrote: »

It is a simple concept, and that's the problem.

The net wage on 30k is £22,762, or £1,896 a month.

If you are going to save 4k a year, then you leave yourself with £1,550 a month to live on.

Using an online PAYE calculator: http://www.uktaxcalculators.co.uk/

I get a £30k per annum salary to £22,932 using tax code 810L. If you are receiving £22,762 and receive no taxable benefits then you need to query this with your payroll dept. I work in payroll and I check results all the time with these online calculators, they are really accurate.

If you contributed £4k to a pension, your net salary would be: £19,732.84.

So a contribution of £4k to a salary would reduce your net salary by £3199 or £266.59 per month.

You calculated your pension reduction using net pay, when pension deductions actually come from gross pay, hence why you reduced your income too much:

£1,896
£1,550 -

---

346 x 12 = £4152.

For some reason, you are contributing an extra £152 above the agreed £4k figure.

wotsthat

Graham_Devon wrote: »

Sometimes you need to leave your "I've just bought a holiday home or 4th BTL" bubble to realise what you are talking is nonsense. You need to look at how others live. Not at how you live, as quite obviously, quite a few around here are very privileged compared to general society. It's usually those people suggesting airy fairy nonsense. You with your 450k mortgage and high flying job (allegedly), wotsthat with his holiday home, Hamish with his 100k income, others with BTL portfolios....not just one house, but many. They are all the people who seem to suggest everything is a lot easier than other people appear to suggest, and theres a lot in that.

I'll be the first to admit that I sometimes take my current circumstances and extrapolate backwards but maybe you're guilty of that too?

I'm 'fortunate' in that I have actually lived both sides of the argument. I'm almost certain that many of the people who say it's fancilful to save could if they wanted to.

It really isn't rocket science. Pretending that there's a simple life and death choice between housing OR saving for example is over-egging it.

wotsthat

Graham_Devon wrote: »

I did the sums based on Wotsthat's 30k a year and saving 4k a year.

...and I did ask how, if they can't save £4k out of £30k, it's possible for other's to manage on £26k.

Turn it around if you like. If £30k isn't sufficient to save £4k/ year then what is? £40k? £50k?

RenovationMan

wotsthat wrote: »

It really isn't rocket science. Pretending that there's a simple life and death choice between housing OR saving for example is over-egging it.

Over egging it is when you lose £170 in tax, add £152 to the annual pension contribution and then subtract this from net income instead of gross.

And then have the gaul to moan at someone else for not producing realistic figures. :eek:

kabayiri

CLAPTON wrote: »

rather a bizarre way of expresssing it; comparing the age range 60 to 100 with what exactly?

It is indeed, but voting power comes down to numbers and propensity to vote doesn't it?

What is to stop the voting power shifting to the larger growing group in society?

RenovationMan

Graham_Devon wrote: »

It is a simple concept, and that's the problem.

The net wage on 30k is £22,762, or £1,896 a month.

If you are going to save 4k a year, then you leave yourself with £1,550 a month to live on.

Rent at £600 a month
Council tax at £120 a month
Gas & Electric at £60 a month (generous)
Water at £30 a month
Food, clothes, other general living items (toothpaste, over cleaner etc) £150 a month (very generous).
Car & Other related car maintenence (without any unforseen bills) £150 a month
Fuel £150 a month (for anyone travelling the average 30 miles a day).

Oops, I've only got £200 left to pay for everything else, including any items I need to buy (bed, fridge, literally anything).....any child maintenance payments, any telecommunication payments, any debt payments, any health (dental etc) payments, any car parking charges, any prescriptions, literally anything.....

Any two or three of those things crop up....car needs a new tyre or two? Oops....I'm in debt.

As I said....too simple...and void of reality.

Anyway, so taking Graham's figures, but calculating the annual salary correctly, calculating the £4k annual pension contribution correctly and deducting the pension contribution from GROSS pay instead of NET pay correctly, we end up with this:

Gross Pay: £30,0000
Net Pay: £22,932 / £1911 (No pension contribution)
Net Pay: £19,732 / £1644 (£4k pension contribution)

Rent at £600 a month
Council tax at £120 a month
Gas & Electric at £60 a month (generous)
Water at £30 a month
Food, clothes, other general living items (toothpaste, over cleaner etc) £150 a month (very generous).
Car & Other related car maintenence (without any unforseen bills) £150 a month
Fuel £150 a month (for anyone travelling the average 30 miles a day).

Total outgoings: £1260.

With no pension contribution you will have £651 left at the end of the month.

With £4k pension contribution you will have £384 left at the end of the month.

The difference between the two is that for £333 a month pension contributiuon you are losing £267 out of your disposible income.

wotsthat

RenovationMan wrote: »

With no pension contribution you will have £651 left at the end of the month.

With £4k pension contribution you will have £444 left at the end of the month.

The difference between the two is that for £333 a month pension contributiuon you are losing £207 out of your disposible income.

The key from there is to increase the savings rate. One way is to put significant proportions of bonuses, pay rises and promotion increases to savings. What you've never had you don't miss.

The other way is to regularly take a long hard look at the expenses. Could they cycle to work a couple of days a week? Negotiate the rent down? Rent closer to work? Be fanatical about saving on utilities? This site is good for moneysaving tips.

RenovationMan

It gets worse! Devon has also 'lost' £90 from the end of his calculations!!!

£1,550 a month to live on.

Minus his outgoings of £1260 (600+120+60+30+150+150+150)

Leaves £290 not:
"Oops, I've only got £200 left"

So to recap, Devon:

misscalculated the net salary down by £170,
misscalculated the pension contribution up by £152
Deducted pension from net pay instead of gross.
misscalculated the outgoings by £90.

And he throws around accusations that people are not creating 'realistic' examples!!! The gaul of the bloke!

It's an outrage!

RenovationMan

wotsthat wrote: »

The key from there is to increase the savings rate. One way is to put significant proportions of bonuses, pay rises and promotion increases to savings. What you've never had you don't miss.

The other way is to regularly take a long hard look at the expenses. Could they cycle to work a couple of days a week? Negotiate the rent down? Rent closer to work? Be fanatical about saving on utilities? This site is good for moneysaving tips.

Well using the CORRECT figures, it seems that the example bloke has £384 left to save up after all his outgoings and contributing £4k to a pension, which is a decent enough amount to build up as emergency savings for car troubles, etc.

Most people, who are being honest, could find some surplus cash by cutting back. They do it all the time over on the DFW board with their SOAs. Perhaps not having that friday chinese takeaway, taking packed lunch to work, not visiting starbucks, having freeview/freesat instead of Sky, stopping smoking, wear jumpers around the house and turn down the central heating, drive your vehicle more conservatively and save fuel, the list goes on. This will free up cash to get rid of debts, then build up emergency savings and then to tackle the pensions savings.

Given that we have shown that pension contributions come from GROSS pay, and that tax credits are calculated using NET pay after pension contributions, the amount you actually lose from your spending money by contributing to a pension is actually a lot less than people think.