The cost of living

Goldiegirl

saver861 wrote: »

I'm not sure it makes any difference where the money comes from - either savings or income.

If you are costing out the cost of living for your personal circumstances you would need to include all costs. So a car costing say £20,000 new and kept for 15 years would be have lost about 95% of it value i.e. about £1,200 per year.

Similarly, replacement items such as washing machine, TV, Fridge Freezer, Cooker, Computer etc etc would have an average life of about 5 years. If you add up the cost of all those items you would probably get a total between £3k and £4k. This £3,500 for 5 years would be around £700 per year.

So with replacement domestic products and car depreciation that gives a total of around £2,000 per year. It has to be paid for, (thus added to the cost of living) regardless of whether it comes out of income or savings.

Then there are house repairs / replacements - e.g. double glazing would have a life span of 10 -15 years. So someone around 55 years of age putting in double glazing today could expect to replace it again at least once in their lifetime. All has to be factored in.

I don't think it matters where the money comes from either


The original poster asked a question - I answered it


I gave the level of income that we are comfortably living on a day to day basis

But, I said that, overall, I wouldn't be comfortable if we weren't backed up by savings


Incidentally, does your double glazing only last you 10 years? Wow - that's poor!

greenglide

replacement items such as washing machine, TV, Fridge Freezer, Cooker, Computer etc etc would have an average life of about 5 years.

Not in our house they don't.

While a computer would generally be replaced at the 3 year mark or so the fridge, freezer and cooker would certainly be expected to last 7 to 10 years or more.

What on earth makes you think that double glazing would only last 10 - 15 years. As long as you got a reasonable specification of units in the first place you would be looking at 20 - 25 years if necessary.

Having said that, as far as I am concerned, these costs would be met out of savings from income. I dont base things on "price of mobile contract, cost of food etc" I look at current total income and intend to replace all current income in retirement with a significant capital base as well. Nothing less would do.

Current net income against forecast net income in retirement is simple and obvious IMHO.

saver861

HappyMJ wrote: »

You make it sound very expensive to live in a property that you own.

I rent my property and very few of those costs are mine to bear.

Yes clearly there would be a distinction between costs of ownership and cost of rental. However, some of those costs would be borne in the rental amount. Equally, its likely you would not benefit from house inflation such that you would have equity at a later point.

But it is all relative, including location etc.

Goldiegirl wrote: »

I don't think it matters where the money comes from either


The original poster asked a question - I answered it


I gave the level of income that we are comfortably living on a day to day basis

But, I said that, overall, I wouldn't be comfortable if we weren't backed up by savings

Yes - the point being your current income alone would not be sufficient for your living costs without the savings. That will change when your husband gets his pension. That will change again when life ceases and the pension ceases. So, all relative.

Goldiegirl wrote: »

Incidentally, does your double glazing only last you 10 years? Wow - that's poor!

Well as it happens we had double glazing put in about 10 years ago. It is still spick and span so not ready for a replacement as yet. I don't doubt though that sometime in the next 10 years it would be a likely option though not necessarily essential.

Such expense occur in various forms, e.g. we were recently at a relative wedding ... costs including, travel, accommodation, wedding gift etc around £1,000. Had we not been able to afford it of course we would have declined.

maxie014

I went to spain last year the old couple next to me on the plane were going for 3 weeks,they got a cheap flight and rented an apartment was a cheap hol and they did it twice a year.
Compare that to the lake district which i live near,it is an overpriced tourist rip off! 3 days there would cost you probably as much as the 3 weeks the old couple spent.
Plus it rains a lot round the lake district!

coyrls

Goldiegirl wrote: »

I think you are talking about me.


We bought the car out of our savings, and intend to keep the car for at least 15 years. Our previous car was bought from new and we kept that one for 13 years.


We have no interest in upgrading the car every couple of years. We regard it as a means of transport, not an asset for resale.


The money has been spent, and we don't care that the car is going to depreciate in value. We're not going to sell it in the foreseeable future, so why worry about it Once you start going down that route, then surely you have to start worrying about depreciation on lots of other things, like televisions and other electrical goods.


Costs such as servicing, insurance and tax are met from our current income.


We've saved all our lives for retirement - and it has always been our intention to buy some of the 'big ticket' items from our savings.


When the time comes, if we want another new car, we'll buy one, from our savings.


With respect, you don't know how much we have in our savings, but it's more than enough, and we'll be adding to our savings from October - we don't have to have two cruises a year!!


Cars don't HAVE to be bought from income, that's what a lifetime's savings are there for


Furthermore, I did say that I wouldn't be comfortable with the prospect of an income of just £18500, with no increases when we get our state pensions, and no savings. £18500 and nothing else is a 'getting by' level

But you said:

For what it's worth, for the last 15 months, we've been comfortably living on an annual income of around £18500, giving us a monthly income of around £1500. (neither of us are currently tax payers)

My point is that this is a misleading figure, as you've also been spending your savings that aren't included in the £18,500 figure. Now you say that £18,500 is a "getting by" figure, not a "comfortably living" figure.

I can't see how it is helpful to quote an income figure that is supplemented by unspecified spending from savings.

Goldiegirl

coyrls wrote: »

But you said:

My point is that this is a misleading figure, as you've also been spending your savings that aren't included in the £18,500 figure. Now you say that £18,500 is a "getting by" figure, not a "comfortably living" figure.

I can't see how it is helpful to quote an income figure that is supplemented by unspecified spending from savings.

Perhaps you didn't all read my original post, when I made it clear what my 'getting by' level would be

Goldiegirl wrote: »

For what it's worth, for the last 15 months, we've been comfortably living on an annual income of around £18500, giving us a monthly income of around £1500. (neither of us are currently tax payers)


This includes all bills, food, general and day to day spending, days out and entertainment (we like theatre, cinema and meals out) We run one car, bought new last year.


Our household income will increase by about £10000 pa in October, when my husband reaches state pension age.


There's also the prospect of my state pension in 10 years time, and we have savings and 2 other pension pots, as yet untouched.


All this makes me feel comfortable, but my comfort level would be considerably less if our household income was going to stay at £18500pa with no savings and no prospect of large increases. That would be my 'getting by' level.

I'm sorry you didn't find my post helpful, but I hope I've been of some assistance to the person who asked the question in the first place

Triumph13

Getting back to the original question, if I was moving from Aus to the UK, I'd be budgeting for some serious heating bills!

robin61

Triumph13 wrote: »

Getting back to the original question, if I was moving from Aus to the UK, I'd be budgeting for some serious heating bills!

Definitely. But he won' t need air conditioning.

saver861

greenglide wrote: »

Not in our house they don't.

While a computer would generally be replaced at the 3 year mark or so the fridge, freezer and cooker would certainly be expected to last 7 to 10 years or more.

If you are getting 13 years out of a fridge freezer you are doing well. I really don't think that would be the norm. While a fridge might last longer than a washing machine they are in the 5-7 year bracket. Sure some will last longer but for budgeting estimates I'd be inclined to go with the worst case scenario e.g. 5 years.

greenglide wrote: »

What on earth makes you think that double glazing would only last 10 - 15 years. As long as you got a reasonable specification of units in the first place you would be looking at 20 - 25 years if necessary.

As stated above, I have 10 year old double glazing and its not near needing replacement at this stage, however, I am expecting to replace it within the next 10 years. So while 10 years for double glazing might indeed be low - make it 15-20 years if thats better. It still has to be replaced at some stage and has to be budgeted for. However, I'm guessing not many consider this in their overall costing when calculating cost of living.

greenglide wrote: »

Having said that, as far as I am concerned, these costs would be met out of savings from income. I dont base things on "price of mobile contract, cost of food etc" I look at current total income and intend to replace all current income in retirement with a significant capital base as well. Nothing less would do.

There are a couple of different ways to do it. As you say, one option is to look at current income and assuming for the last 5 years or so, that was sufficient to maintain your current lifestyle which you want to keep, then it is clear that current level of income needs to be maintained. That may well be a combination of actual annual income and some annual drawdown from a capital sum.

The other option is to cost 'everything' up - clearly it is necessary to make estimates so it can never be scientific. But it will give someone a clear idea of what they need to maintain their current lifestyle if thats what they want to do.

Goldiegirl

saver861 wrote: »

If you are getting 13 years out of a fridge freezer you are doing well. I really don't think that would be the norm. While a fridge might last longer than a washing machine they are in the 5-7 year bracket. Sure some will last longer but for budgeting estimates I'd be inclined to go with the worst case scenario e.g. 5 years.

I think you are very pessimistic.


My washing machine is 10 years old, and it is still perfectly functional.


In fact I'm waiting for it to go wrong, then replace it. But I've been thinking that for the last three years.


Of course, a new model will be more efficient, so I'm probably going to replace it anyway, but at 5 years, it wouldn't have crossed my mind to think it was on its last legs.


The rest of my kitchen equipment (hob, cooker, microwave and fridge) is 13years old and they all work fine. I know there's a risk that they'll all wear out at the same time, but I'm prepared for that.


I keep my freezer in the garage (yes, it functions at low temperatures). The first one I had lasted 28 years. The hinge on the door broke in the end, but apart from that it was a perfectly functional freezer. I had the next for 6 years, but sold it because it was too small for my needs, and my current one is a year old -bought from our current income, not savings!!


I think people will prepare for these expenses based on their own experiences, but I think you must have been very unlucky with your white goods!