How to calculate your disposable income 'safety net' when switching to a lower paid j

Nine_Lives

ob?

Basically we're FTBs. I'm about 10 mins from my work, the wife is about 30mins i think.

When we move, we'll be (likely) heading closer towards hers & obviously further from mine.

I'm not happy where i work - largely due to my foreman, but there are other factors too - one being you never ever know when you're going to finish Mon-Sat until you've actually got that clock card in your hand & you're clocking out. At 6:30pm you still don't know whether it's going to be 6:45pm or 7:30pm.

I'm sort of stuck in a rut - i've only ever worked here & i've been here for over 10 years. The thought of leaving is a bit daunting especially as i'm low (or rather not) skilled. I didn't want to make any moves though until we had moved out, secured the house & were settled in for a few months so that we had a feel of what the bills were totalling each month & therefore what we need to earn per month to cover this.


Let's say the household bills are, random figure, £1000 TOTAL per month. Obviously we don't want to just make £1000 between us as that'd be not living.

However, if i moved jobs & the change in pay meant that we'd only be earning £1100 (example) between us, then that's only £100 buffer. The way that everyday life is increasing & the way that wages are staying put (my last pay rise was 2007 which was 10p/hr. The one before that was about 2004 which was similar), it wouldn't be long before the bills were more than the income.



Therefore, how can you gauge what sort of buffer you'd require? I know "as much as possible" is one answer, but how can you calculate how much you should be looking at?

Or can't you?

Tried to make the question as clear as possible, but not sure i've done too well. Sorry.

Nine_Lives

Perhaps not the most helpfully descriptive of thread titles? Couldn't think of how else to put it.

Anyone?

japmis

I'm a FTB too and lots of people have said to me that my mortgage payments should be 1/3 maximum of my take home pay.

e.g. if my take home pay is £900, then my maximum mortgage payment would be £300/month.

Does that help?

katejo

japmis wrote: »

I'm a FTB too and lots of people have said to me that my mortgage payments should be 1/3 maximum of my take home pay.

e.g. if my take home pay is £900, then my maximum mortgage payment would be £300/month.

Does that help?

I agree and you have to allow for the fact that mortgage interest is now low . If interest rates go up again you might have to pay 6 % or more

Nine_Lives

As FTBs we would be looking at fixed term to get our feet on the ground, knowing what needs to be paid each month. I don't know whether it's a good idea, but i think we'd look to fix for as long as possible (5+yrs?).

japmis - thanks for the information, though not sure if that helps. The calculation there is that i could afford £366. We'd be looking at £250 each for a £500 combined.

That said, there's other bills - just your regular month-to-month bills. Once all of that is pooled, it'll come to an amount. I was wondering if there's a % over this that you're advised not to go below.


For example - If our monthly bills are £1000 (inc mortgage) & we earn £2000 per month, that's a £1000 cushion. If a job switch & pay decrease meant that the cushion was £900, it's only £100 loss per month. However if the cushion went to the other extreme & was only £100 then it'd be dangerously low - what with likely no pay rises & likely yearly bills increasing.


I sense i'm struggling to put into words what i'm trying to ask lol.

R_P_W

well it depends....

Do you have any other debts?

Are you able to to pay your bills, eat food, heat your house and have some form of life and save a bit too from your monthly income?

If you want to think about changing your job you really need to build up a miniumum of three months wages to support yourself while you look for a new job.

Slinky

One of the biggest factors eating into your money surely has to be children. Do you have any, do you want any/more?

Nine_Lives

Currently neither of us have any debts. I've never had any debts anyway & since meeting me my wife became debt free & now can control her money enough to not be another one of those in debt.

Though we've yet to buy our house.

Also, regards the 3 month thing - that was already going to be in place. My wife can pretty much walk into a job just about but i'm not so lucky. We'd be looking at 6 months & then slowly building this to 12. Excessive perhaps, but we know of people who've been out of work for this length of time, so we'd rather have the funds there than not. Once 12 months worth of bills have been saved - that's one concern over, sort of. I also wouldn't give a job up just to look for another job either.

Regards kids - we don't have any. We've discussed & have decided that we MAY have ONE in the coming years.
My concern is the affordability. Kids are obviously so damned expensive. I would really like a kid, but we could never afford to have one on our wage. I know you get allowances & benefits, but i don't know what these are.
It's a scary thought. As said, we'd like one, but the thought of the cost is offputting. That said, there's people in a much worse position than ourselves who have more than one kid & they also splash their money out as soon as they get it & they still manage. I don't know what these benefits/allowances are but i guess they must help a reasonable amount?