Understanding my relationship with money – and taking back control!

thriftmonster

ceridwen wrote: »

I am interested to know how people who earn "surplus" income justify to themselves keeping all of it for themselves - I know there are some notable exceptions - but, by and large, most people will spend whatever money they get on themselves (even if they earn £100,000s per year or more) - or perhaps they don't even think about whether they feel "comfortable" with keeping that sort of money for themselves. I have never been in that position myself - I have yet to earn anything remotely like the national average wage - but would like to think that if I earned "surplus" income I would give it away in worthwhile directions.

I started reading this on the OS style board and would like to answer this bi at least. Hope it doesn't annoy DFW too much - I am so impressed by what you are all doing.

I guess you could say that dh now has surplus income - he certainly didn't use to. However we now live on about half his salary and save the rest.

Our first choice was to pay off the mortgage which we did by a huge amount of cutting back, including when he was on a lower salary - ds1 is nearly 12 and has never been on a holiday that isn't staying with my parents for example. For various health reasons, it was incredibly important to us that we were independent of that. Next we have spent money on "greening" up the house a bit and mending stuff we couldn't afford to do before.

Our next ambition is to save enough to put the kids through university with no debt - 20 years ago dh and I got degrees with no loans, but with help from parents and we were money saving then - we want the kids to be in the same situation - they will also be expected to be careful with their money.

After that we want to buy some extra years for dh for his pension - there is a huge amount of early death from heart disease in his family.

We do give to charity, sponsor a child etc as well, but we do that on the Half salary that we live on - prob will get shot down, but you asked.....

ceridwen

Was thinking to myself that current British houseprices are lending somewhat of a (hopefully temporary?!) dimension to what salary one needs to live on debate - as in to afford even a cheap house at present means a salary of £60,000 if one is buying on ones own - as even "cheap" houses now cost about £180,000 I believe is the national average price - and of course £60,000 is way over national average salary (which I believe is currently about £23,000 pa). It does add difficulty to this question with current state of our "welfare state" - where one is very conscious of having to subsidise the State Pension (as its not enough to manage on) and having to subsidise the NHS (due to level of healthcare provided - not so beneficial "bugs" anyone? - and having to wait for most treatment one requires if one goes through the NHS for it). How do you define surplus income in a society where we increasingly have to do our own "catering for all eventualities". If you know your healthcare and pension are safely being dealt with anyway - then it is easy to give away surplus income. When you know you have to help cover these yourself - how on earth do you work out what is surplus income and what is needed to cover the deficiencies of our "Welfare State".

Is surplus income when one uses money for a McMansion instead of an ordinary house, has a car one doesnt need, has 3 or more holidays a year................

lady_fuschia

I've always thought people expand to fill their incomes. A lot of the time the more someone earns the more debt they have. I've noticed this watching programmes like "Spendaholics" - some of those people earn three times what I do, but also have three times the debt I have - so really aren't any better off for it.

Ms_Piggy_2

For me, money definitely = security. My parents both died when I was relatively young (I was only 13 when my father died) and I now have no family. I'm well aware that if the !!!!!! ever really hit the fan, I've got one less layer of support. Most of my friends still have at least one parent around, and could (and in some cases have!) live with them, which gives an extra layer of 'safety' IYSWIM.

(Now I'm aware that many people don't have parents who would be willing/able to help out, but this is how I feel!)

Nancy888

I picked up this thread in the OS board and I'm completely hooked on all of the hints/tips/inspiration on there because I need to break my current relationship with money. I'm an only child and my father has his own very profitable business. Money was never any object when I was at home and I went on every school trip/holiday that was available.

When I got married my husband was earning well above the average wage at the time due to work that he did and I spent money like I had seen my parents do.

My marriage broke up 5 years ago and I'm now a single parent to my 2 boys (12 and 9) and I continued to spend money like I always had - with less than half of the incomings and all of the bills on my shoulders). I had spent all of the money from the divorce settlement (£24k) and run up a loan of £17k and 3 cards with a totla of £6k on there - about £50k gone in 5 years - an obvious overspend of £10k more each year than I was earning.

What did this money go on? I have a house with a mortgage that has had a new kitchen - it didn't NEED a new one - I just didn't care for the colour of the doors but I spent £6k on a new one. Holidays - I don't NEED to take my children for 2 weeks all inclusive in the Carribean but I did - 3 years on the trot...

My LBM came not so long ago and I've now re-mortgaged so that I have no unsecured debt but a helluva a lot bigger mortgage that I fully intend to pay down as soon as humanly possible.

I believe that I have broken my need to spend money as others that can afford it do and taking great delight in HM food for my boys - and a cheaper bill in ASDA...!

moanymoany

The 'what is surplus income - and what should be done with it' is quite a hornet's nest.

OS'ers who live well below their means to accumulate money for whatever they want, it may be to pay a mortgage early, to save for an easier retirement (me), pay for children's uni or simply to watch the balance go up at the bank. If they choose to save rather than spend, is that surplus income?

ceridwen

I would say surplus income is when one gets paid an exorbitant amount in the first place. It is a different question to ask what one does with the income (of whatever level) after receiving it. Whether one basically spends or basically saves what one receives is more a personal choice thing - and I admit to personal annoyance that one tends to be penalised for choosing to save it - all those maximum amounts of capital one is allowed to have before benefit/help with Council tax/whatever ceases - when if one had just spent the money in the first place the question wouldnt arise of being means-tested out of due income.

I am well aware that I - and I imagine most of us - take on board our parents attitude to money. My mother is very conscious of financial security/doesnt want to do paid work if she can help it/does do an element of unnecessary spending/puts holidays as low financial priority. I look in the mirror - and I could be looking at her. Oh dear! Also when it came to the decision as to whether to rent or buy a home for myself - there was no decision - of course I was going to buy a house for myself - taken as read. And then I got into all the different financial circumstances I have to my parents - as in earning a lot less than my father and living in times when houses are much more expensive in real terms than my parents experienced - got one in the end, but had to really fight for it, compared to my parents experience.

I can sympathise with Ms Piggy - as I cant really imagine what it is like not to have the little thought at the back of your mind that my parents would not see me starving or homeless - as, despite my advanced age, they are both still alive. And - yes - there has been odd bits of help over the years - not a lot (as they only have a pretty ordinary set of circumstances - I am not from a wealthy background or anything - I wish!). I am aware that I am luckier than many people (despite a very ordinary background).

rozeepozee

lady_fuschia wrote: »

I've always thought people expand to fill their incomes. A lot of the time the more someone earns the more debt they have. I've noticed this watching programmes like "Spendaholics" - some of those people earn three times what I do, but also have three times the debt I have - so really aren't any better off for it.

I was considered rather eccentric when I didn't upgrade my lifestyle when my income increased significantly. There were comments such as "why are you still driving that [relatively inexpensive] car/living in the same place?" and remarks like these came from all types, including my accountant. It was as though because I was earning a lot of money [given this thread's on money psychology, I'll do an unusual and unBritish thing and disclose; up to £300K a year] I was wierd not to be driving a luxury car, living in a plusher house in a better area. Showing off my "trappings" of wealth (and that's what they would have been). I did have huge splurges which I never would have done before or been able to since (going to Spas, expensive holidays, designer clothes) but I didn't want to over extend myself with a huge mortgage just because I could.

It's strange how we accept debt as natural state of being. Even those who are not in debt will still generally have a mortgage rather than live in a smaller property without. I now consider a mortgage to be something that enslaves a person to full time work. Yet it seems that most people would choose to have this form of debt than have a smaller mortgage and more time via, say, a part time job.

ceridwen

C...r..i..k...e...y. My mind absolutely boggles at thought of earning £300,000 odd per year - automatic reaction "Chance would be a fine thing". Second follow-up thought was "parable of the talents" from the Bible (no - I am not a Christian). This is where my personal thought would be that you had been given such a large income as a test - what choice would you make? Would you take the path the vast majority of people would take - and think "mine, all mine - I earned it, so I will spend it - on myself - every last £ of it" or think "Right - I have been given such a high income to test me - and see whether I will have the strength of character to take of it only what I need for myself - and then try to use the rest for the greatest benefit possible - charities, helping people one knows personally, whatever". Like most of us - I would love to be in such "testing" circumstances and see what my own reaction would be!

(By the way - anyone know what Saturday's lottery numbers are? I am sure the chance to "test" myself would be a good learning experience!)

rozeepozee

ceridwen wrote: »

C...r..i..k...e...y. My mind absolutely boggles at thought of earning £300,000 odd per year - automatic reaction "Chance would be a fine thing". Second follow-up thought was "parable of the talents" from the Bible (no - I am not a Christian). This is where my personal thought would be that you had been given such a large income as a test - what choice would you make? Would you take the path the vast majority of people would take - and think "mine, all mine - I earned it, so I will spend it - on myself - every last £ of it" or think "Right - I have been given such a high income to test me - and see whether I will have the strength of character to take of it only what I need for myself - and then try to use the rest for the greatest benefit possible - charities, helping people one knows personally, whatever". Like most of us - I would love to be in such "testing" circumstances and see what my own reaction would be!

(By the way - anyone know what Saturday's lottery numbers are? I am sure the chance to "test" myself would be a good learning experience!)

Well, I suppose it does give me a pretty unusual perspective on the meaning of money. I went from £25K per year to £300k a year in the space of 3 years and it did feel a bit like winning the lottery at times. However, the crazy thing is, these sums are not uncommon in London. I think one of the reasons why people are often cagey about how much they earn is because of how high they earn. I used to give a lot to charity but ultimately used it to get out of that life because it was so stressful (working very long hours) and so shallow (people judged on their acquisitions, not on their deeds). I also felt that had I continued earning that kind of cash, it would eventually, inevitably change me into the sort of person I didn't want to be.....