2008 - Live on £4000 for a full year.

princess_leia_3

nykmedia wrote: »

£31,284 NET annual income)

Come on, own up - who, on this challenge, is actually paying 40% tax on part of their own or their OH's income?

On the NET and GROSS issue, we have now learned that NET = Non Essential Treats, so I am introducing GROSS as
General Rules Of Sensible Spending :cool:

Wow we earn about half that between us I would just love to be able to pay 40% tax :rotfl:

Frugaldom

Hi Liuhut, the article in question seems to relate to individuals, as in the average income, expenditure & debt etc is PER PERSON, so if you are part of a couple where both partners work then you double those figures to work out how close you come to the national average. Umm... that would mean my household, if it was average, would be BRINGING HOME almost £94,000 per year :eek:

IF ONLY!! :rotfl: :rotfl: :rotfl:

Apparently, IF you are earning that sort of money and you'd paid off your mortgage/bought your house outright and were able to live on £4000 for a year, you could dump most of your income into a pension fund (bear with me here and think seriously about this) and end up not paying tax on your earnings because pensions are like tax havens? You can save as much as you like into any number of pensions and you get tax relief on contributions of up to 100 per cent of your earnings each year! There is, of course, a limit to the amount you pay in each year. I believe it's, err... £225,000 for the 2007-2008 tax year! :eek: :eek:

As a standard rate tax payer, it works out that for every £78 you pay in, the Government pays in £22. AMAZINGLY, even if you DON'T pay tax (low income etc) you could aim for £2,808 a year and STILL get basic rate (22%) tax relief. In other words the government will 'top up' your contribution to make it £3,600. Coincidentally, this is the exact same amount you can save in your 2008/9 ISA to take advantage of tax free interest. I don't fully understand all of the implications as I like to be able to see and access my own money, however, there appear to be loads of ways of avoiding paying that 40% tax rate and it's all down to the GROSS (General Rules Of Sensible Spending) conduct of Frugalites :rotfl: Similar rules apply for standard rate tax payers - it isn't illegal to AVOID paying tax, you just need to be GROSS savvy, I think!! :rotfl:

liuhut

Oh Sorry hadn't read it properly!! Yes if only £94k......god I cannot even imagine that..
Will have to make sure I read things properly before I post...I'll blame it on lack of chocolate...I do actually think I am having withdrawel symptoms!!

LollopyBear

whitewing wrote: »

I know I suffer from frugalitis because I am completely shocked every time Lollopy Bear spends £5 on public transport. I absolutely can't get over it. (It's different when you have a car because you're not physically parting with the cash on each journey).

Believe me Whitewing, it hurts me an awful lot too! Every morning I think, how much?? That can't be right! At least I'm home today and not giving money to the train people

I'm quite enjoying frugalitis and I'm glad that people on this thread understand unlike my real-life friends and family. It is so odd to view the world with anti-consumerism eyes. I've never liked the extent of consumerism in the world but I always bought into it (pun not intentional) as unavoidable, UNTIL NOW! I want to go out and convert others to this way of living. Is that another side effect?

Frugaldom

Back again, sorry, but you need to remember that I have full blown, advanced Frugalitis - tax figures INTEREST ME!! :eek:

2007/8 year personal allowance was £5,225 and the 2008/9 figure is £5,435

Up until that point of your earning capacity, you pay NO TAX. If everything over that had to be put into a pension, you would pay the equivalent of NO TAX, other than all the 'stealth' taxes & VAT. I wonder if it's possible to avoid ALL tax? Someone on another of my challenges is aiming to live on a longboat - is Council Tax a dry land tax or does it cover water as well? I THINK I heard somewhere it was a land tax :rotfl:

Frugaldom

LollopyBear wrote: »

Believe me Whitewing, it hurts me an awful lot too! Every morning I think, how much?? That can't be right! At least I'm home today and not giving money to the train people

I'm quite enjoying frugalitis and I'm glad that people on this thread understand unlike my real-life friends and family. It is so odd to view the world with anti-consumerism eyes. I've never liked the extent of consumerism in the world but I always bought into it (pun not intentional) as unavoidable, UNTIL NOW! I want to go out and convert others to this way of living. Is that another side effect?

LollopyBear you are developing the extreme side effect known as Evangelical Frugalitis! :eek: :eek:

We all need to keep our wits about us and support you through this as any slight increase in the price of public transport (even although it looks unavoidable because of the oil prices and dollar exchange rate) could result in your going into anti-Frugalactic shock!! :eek: :eek:

missyg_3

Hi guys, I haven't signed up because I know I can't live on £4k a year, but I am really serious about cracking down on my expenditure.

I have spent £554.30 this month and I'm not expecting to spend any more. £334.08 of this was my household bills. The rest is food (£96.07 for two), a few small personal items, and a channel crossing for my summer holiday.

I haven't bought petrol, eaten out, or had any evenings out. I think if I had really cut it to the bone I could have spent £50 less this month but that still works out nowhere near as low as £4k a year... you guys have my respect - good luck to all of you

Frugaldom

MissyG, thanks for popping in and offering your support. If it helps, we don't count in the mortgage/rent or the Council tax and we haven't all started with the £4000 target (Although I will manage to tempt a few more next year, once their Frugalitis is full blown ) This is about spending awareness, living within a minimal budget and having fun in life at the same time - all basic essentials for living

LollopyBear

nykmedia wrote: »

LollopyBear you are developing the extreme side effect known as Evangelical Frugalitis! :eek: :eek:

We all need to keep our wits about us and support you through this as any slight increase in the price of public transport (even although it looks unavoidable because of the oil prices and dollar exchange rate) could result in your going into anti-Frugalactic shock!! :eek: :eek:

:rotfl: "anti-frugalactic shock" is name of pure genius! I don't want to be an Evangelical Frugalite! :eek: It sounds rather scary and would lead to me standing on a street corner proclaiming the joys of keeping your purse shut and counting every coin. I think I'd be led off to a nice padded room (but then I wouldn't be spending anything, hmmm...).

Do you really think the train prices are going to go up again? They only went up again (by 20p) on Jan 1st! I don't think I could cope with another price hike until Sept at the earliest. *deep breath* *another deep breath*

When I was sorting out the receipts for my friend's self-employed tax return I was so shocked at the amount she had spent on clothes, shoes, make-up etc. I know she was getting it back in tax but I just can't do that! And all the receipts that couldn't be counted as well. Such a waste of money (in my opinion) but I managed to keep my opinion to myself. It was tricky though.

affordmylife

Just received my credit card bill. at £1,300 thats a huge chunk of my living expenses for the year!!!! good job its not coming out of the £5,000 im going to live on this year.