Disposable income

dano17439

I thought long and hard whether to post our situation or not...but here goes


After all our DD's have been accounted for, including fixed commuting costs, me and my wife have £4,550 per month disposable income


£1,750 of this goes towards savings so we can pay down our mortgage quicker, leaving us with £2,800 per month


We use this for food, petrol, general living expenses, and any one off bills in the month (i.e. last month we had my wifes car insurance) and this month I have my car service and MOT, and I just bought 4 new tyres


Any money we have left at the end of the month gets saved. This can vary month to month...in July we didn't save anything as we had a really busy and expensive month, whereas I can remember back at the start of the year I think we saved over £1,000

System

A lot of posters in this thread think that disposable income is before debt, fuel and food. These are commitments that you cannot avoid and are therefore not disposable. Disposable income is after everything is paid for.

System

midlander81 wrote: »

left with about £1000 per month that is disposable. We use some of this to overpay on debts.

Then you haven't got £1000 disposable income...

PasturesNew

andydownes123 wrote: »

A lot of posters in this thread think that disposable income is before debt, fuel and food. These are commitments that you cannot avoid and are therefore not disposable. Disposable income is after everything is paid for.

The official figures put it as "after housing costs", meaning mortgage/rent/council tax.

If one has £1000 disposable income at that point, but pay £800 on debts, that's still £1000 disposable income - but, in a conversation about money the £800/month would also need to be mentioned.

If you count things after bills etc then two people starting with the same amount would declare different amounts if one's running a hot tub and shopping at Waitrose -v- the one who just buys cheap food.

The debt amounts are important, but they are paid out of disposable income.

dano17439

Agreed, if I choose not to put any petrol in my car one month, my disposable income would still be the same


Food however is harder to gauge as you are bound to have a minimum spend. Yes it is a necessity, but if I choose to buy reduced items every night from a lower market food chain, rather than go to a restaurant every night, again my disposable income per month remains the same


I would class it as regular fixed monthly commitments - mortgage/rent/council tax/utilities/monthly insurance/fixed travel costs such as season tickets, mobile phones & Comms etc. Items that don't change cost every month

trailingspouse

I've always thought of disposable income as 'income to do what I want with, after everything else is paid for' - I didn't realise there was an official definition of it as 'income after housing costs'. That makes a huge difference to the figure!!


My 'income to do what I want with' is currently zero - everything that comes in is either going out on bills, essential living costs, debt repayment or savings. There isn't a penny that I could look at and say 'I can do whatever I want with that'.
My 'income after housing costs' is about £1500.

But the income is going up, slowly, and the debts are coming down (currently only paying £57 a month), and my savings are starting to look quite healthy. So hoping to have some disposable income (by my own definition!) some time soon.

theoretica

andydownes123 wrote: »

A lot of posters in this thread think that disposable income is before debt, fuel and food. These are commitments that you cannot avoid and are therefore not disposable. Disposable income is after everything is paid for.

Debt is an interesting one, because for many people it is sort of pre-disposed of. If I save £100 a month and buy a new ipad that would definitely be disposable income in my books. If I bought the ipad on tick and paid it off at £100 a month my life or finances wouldn't be much different except less choice available to delay saving/payment and getting the ipad sooner. Is disposable income a matter of freedom in finances from month to month or of spending power?

midlander81

andydownes123 wrote: »

Then you haven't got £1000 disposable income...

Perhaps 'disposable' was the wrong term to use then. For us, it's money that we have a choice over how it's spent. We choose to use some of this money to overpay our debt but don't have to do that - it's a choice.

getmore4less

To put it in perspective.

Once a property is paid for mortgage rent

A retired couple can live on £1k per per month

running one cheap car and have a holiday.


I realy is about choice if most things are already paid before the £1k is left have a good look at where it is going

If you don't know then start the spending diary and find out.

You can make better choices if you k ow where it goes.

System

trailingspouse wrote: »

I've always thought of disposable income as 'income to do what I want with, after everything else is paid for'

Exactly, what I call mad money.