If you wait for the price crash...

neverdespairgirl

mitchaa wrote: »

We have no choice but to work, otherwise my child would suffer the consequences. (There would be no 3 wk disneyworld holidays for example)

Isn't that a good thing? The idea of a 3 week disney holiday scares the living daylights out of me, I'd far rather work in a mine for 3 weeks instead.

Captain_Mainwaring_2

mircea wrote: »

We have a joint income of 60k. We buy our groceries from Aldi. We constantly switch energy and communication suppliers to get the cheapest deal possible. When we go on holiday we swap houses so we pay nothing for accommodation. We have nothing going out of our account apart from unavoidables: council tax, insurances etc. We grow vegetables in the garden. We pay for childcare with tax vouchers. We sold one car and I cycle to work. etc etc etc. At the end of the year we will be lucky if we have 5k in our savings.

Mind to share how you made your calculations?

Aldi? house swap? and all you have is 5K in savings a year? I've saved 300K in 6 years and have two houses in the UK and one overseas, all pretty much mortgage free. You may as well just throw in the towel now, because you sure as hell cannot manage your money.

wisbech_lad

HouseBuyer wrote: »

Why would people prefer higher mortgage rates for a smaller loan than a lower rate to a bigger loan? Would you not pay the same at the end of the day (since mortgages are 25 years).

And isn't it still a big ball and chain when you have a mortgage of 10% even though you bought your house at the corrected price?

How many people can realistically afford 25% deposit? If you are lucky and live rent free with the oldies, I can see that happening but even with us (as reasonable wage earners), we will struggle with paying our 250,000 repayment mortgage of about 1900 each month.

And no, we don't live extravagant lifestyles but we do need to have the odd new suit for work and ocassional takeaway.

Because people aren't stupid maybe?
Using a mortgage calculator, a 3,125 pound monthly payment at 5% will let you borrow 535,000 at a cost of 937,500 over 25 years. At 10% you can borrow 344,000 at a cost of 937,500 over 25 years.

But, in the second case "money illusion" will work for you. Mortgage rates are, over time, pretty much the risk free rate plus a bit. Which, thanks to some figures that seem to be innate (length of a generation, normal lifespans etc) usually works out to be inflation plus 2-3%. The 2-3% is the "real" interest rate, inflation plus this the "nominal" interest rate.

And, guess what, incomes tend to go up by inflation. So, say your monthly income is 8000 pounds, the 3125 mortgage in both cases is 39% of income. In five years time, if inflation stays low (5% interest rates) your income is 8,800, and still paying 35% of income.

But if a time of high inflation, your income is now 11,000 quid, and the repayments down to 28%.

Basically, times of high inflation = good time to be a debtor, bad time to be a creditor.

IMHO, much of the asset price increases over the last generation can be explained by the unwinding of the post war great inflation, about 1955-1982, inflation surprised people on the upside, the next generation (1982-2007) inflation surprised on the downside.

If you look at times when inflation did not surprise up or down (about 1820-1914 in the UK, or Germany over the last 30 years) asset prices tend to be much more flat, or tied to fundamentals. Economists and central bankers hate inflation, (and especially gyrations in inflation) not because inflation in and of itself is bad, but because it masks and confuses relative price signals, and leads to inefficient allocation of resources.

prudentsaving42

mircea wrote: »

We have a joint income of 60k. We buy our groceries from Aldi. We constantly switch energy and communication suppliers to get the cheapest deal possible. When we go on holiday we swap houses so we pay nothing for accommodation. We have nothing going out of our account apart from unavoidables: council tax, insurances etc. We grow vegetables in the garden. We pay for childcare with tax vouchers. We sold one car and I cycle to work. etc etc etc. At the end of the year we will be lucky if we have 5k in our savings.

Mind to share how you made your calculations?

Sorry, but I don't believe you. The current situation is bad, but not that bad.

moanymoany

mitchaa wrote: »

That's back to front thinking.

You dont tell a mortgage company your after tax earnings do you? I have never once read someone stating their salary as after tax either.

The average UK wage is heavily publicised as being £25,000 for instance. This isn't £25,000 after tax though.

Accepted, but we are not a mortgage company. When people give their SOAs over on the dfw, they give what is coming in rather than before deductions. That's all.

I also think that if someone decides to save to the max, they can live on very little. Look over on the dfw board to see the lengths people go to to save cash to pay of the debts, this gives an idea of how little it takes to live. The there is also the OS board to see how to do it.

Lotus-eater

I do some work for a guy who says he needs to spend £250 a week on food. Three kids and some relatives visit often.
I said, you don't need to, but you want to! No, apparently he needs to, guessing this is where mitchaa is as well.

PasturesNew

Lotus-eater wrote: »

I do some work for a guy who says he needs to spend £250 a week on food. Three kids and some relatives visit often.
I said, you don't need to, but you want to! No, apparently he needs to, guessing this is where mitchaa is as well.

It'd be an insight into another world to see a copy of his food receipts .... and probably his bin. He must chuck OUT more than most people buy in!!

gabyjane

Anyway, childcare should be absoloutly free IMO. It's criminal some parents get it for nothing, but others have to pay for it.[/quote]

Glad that is not the case as i would be out of a job!!(childminder) Who would you like to look after your children for free out of interest..

MrDT

gabyjane wrote: »

Anyway, childcare should be absoloutly free IMO. It's criminal some parents get it for nothing, but others have to pay for it.

Glad that is not the case as i would be out of a job!!(childminder) Who would you like to look after your children for free out of interest..

I don't think they were suggesting you look after their kids as a charitable enterprise, the suggestion was, I think, for the government to pay your fees. So basically they want me and all the other childless people out there to pay someone to look after their sprogs. It wouldn't be 'free', but it'd be a free ride for the parents.

SingleSue

mitchaa wrote: »

Purely to get stay at home parents back to work who you pay for. The only reason they do not work is because they choose not to, due to childcare costs and more often than not, it not being worth it, especially when you factor in fuel/parking charges etc also.

By getting 1 person back into work, it has a double whammy effect on the budget.

Instead of claiming say £500pm in benefits, they are now contributing £500pm in taxation meaning 1 person going back to work earns the government £1000pm, the £500 they save in benefits + the £500 the worker is being taxed.

This in itself could/should be able to pay the bill for making childcare ''free''

People would not be paying for yours, effectively you and your partner through your own taxation contributions would be paying for it yourself.

The double whammy effect above is very real, and should be an incentive to the government.

Your argument is just like stating, why should my taxes fund your children to go to school?

Not quite the only reason....

Yes paying for child care is something which comes into the equation but it is not always the only reason why a parent will stay at home.

I currently do not work, this is not through choice and child care does play a huge part of the reason why I do not work. Not the price though but the availability of child care placements who will take on disabled children.

You can currently get help towards child care costs (if your salary is at the right level) through WTC and is something I would love to do, if only I could get someone to take the blooming kids on in the first place!

Further edit on reading the entire thread : When I was married we were both working, hubby during the day and me in the evening. Mine was fairly well paid (as has always been the case, in 1992 I was earning 3 times his salary) while his was pretty poorly paid (again as has always been the case). Our joint income was around the £28k mark but on this we still managed a fairly comfortable lifestyle with 2 holidays to Disneyland (Paris I know but way better than the USA version) plus an annual two week holiday.

This was with 3 children so had to pay extra when staying in any hotels (Disneyland) to accomodate us. Our annual holiday however would be a cheapy, 2 weeks in a caravan in this country, not in school holidays.

Some of the figures for annual salaries on this thread just blow my mind...completely!

As I have said, I am now a single parent on benefits but the budget lifestyle I have led for the last 14 years has served me well. I do not rely on credit, have no large loans (or even small ones!) and everything that is wanted, is saved for. Yes it is harder now doing the above within the confines of benefits but it is still possible by making sacrifices elsewhere, I don't socialise (at all!), I don't drink, I don't buy clothes for myself, all clothes for the children are purchased via Ebay or in closing down sales (maximum I will pay for trousers for example is £3) and all pennies and 5p's are saved in a rainy day jar. If things get really tight (for example on weeks where there are a fair few direct debits coming out), then I will even go as far as not eating as much (whilst always ensuring the children have enough) just so we do not go into the red.

I also felt an increasing amount of annoyance at the generalisations of the single stop at home parent on benefits, although this was tempered slightly by the realisation that unless you have actually experienced it, then people do tend to take a slightly dim view of it. In an ideal world, a parent would return to work by the time their child was 5 at the latest but this is not always possible. Indeed I returned to work when my eldest was 6 weeks old, much against medical advice which then meant me having to stop work when he was 6 months old and thus losing our home. I did however return to work, not through wanting more money (in fact I had to give up a carers allowance to do so which meant that in real terms, we were worse off with me returning to work) but for my own sanity! Unfortunately this all came to an end when me and hubby split up (after 20 years together) which meant that there was no-one left at home to give care to 2 disabled children at unsociable hours. Daytime hours (which I had just been offered by my bosses) was a complete no no, at that point, I only ever had the maximum of an hour between school/tutor groups and medical appointments... I was doing over 200 miles a week for them! By this time the children were 12,9 and 8 so way over the proposed age 5 mark.

Oh how I long for those heady days when my salary was way above the average and money was no object and I could work work work to my hearts content....instead I am stuck at home becoming ever more braindead wishing for the time when I can become a respected person in the community once more rather than a blood sucking leach to society.