Can I afford to live alone on £18k?

caeler · 11 December 2011 at 9:21PM

Cloudane wrote: »

@caeler - great tip on the voa lookup, thanks! The 65k example I saw is band A

My employer has nothing pension-wise (and never will, they're very tight that way)

Well help is on the way, in the form of NEST! Recent pension reforms mean that from next year employers must have a pension scheme in place. http://www.thisismoney.co.uk/money/pensions/article-1691071/Employers-guide-to-2012-pension-reform.html So depending on how big your employer is will depend on when this will impact you as it's being introduced in phases. So basically you'll get a pension at some stage!

Cloudane · 11 December 2011 at 9:32PM

It's a whole different kettle of fish for another thread I suppose, but what worries me is that this extra money for pensions has to come from somewhere.

Either reduced pay (so the same as doing it normally anyway)
Or the company forks out and ends up having to lay some people off
Or we pay at least that if not more through increased taxes
Or the government pension goes down the pan.

Certainly worth knowing though even though it won't be until 2014-2016 for our place.

HappyMJ · 11 December 2011 at 9:40PM

Cloudane wrote: »

It's a whole different kettle of fish for another thread I suppose, but what worries me is that this extra money for pensions has to come from somewhere.

Either reduced pay (so the same as doing it normally anyway)
Or the company forks out and ends up having to lay some people off
Or we pay at least that if not more through increased taxes
Or the government pension goes down the pan.

Certainly worth knowing though even though it won't be until 2014-2016 for our place.

I wouldn't worry too much there will always be some state pension and as long as you own your own house by then you don't have to worry about housing benefit only paying enough to live in the smallest 1 bed flat. I'd rather have savings on the side in ISA's or standard savings accounts rather than private pensions but that's my personal opinion.

imogen-p · 11 December 2011 at 10:46PM

I'd shop around for the buildings and contents - I got mine (2 bed semi in a not to great area of Bradford for £15 for the two) and for gas/leccy. Currently pay £66 per month. Water also seems high - are you metered or not? I'm not and pay £19 per month.

For the council tax if you live there alone you are entitled to the single occupancy discount which is 25% off.

You could probably get the food bill down a bit too. I aim for £55 per week for everything including toiletries and laundry for my family (me husband and toddler.) Sometimes I'm a little over sometimes a little less but it all evens out. I'd probably aim for about 25-30 per week including laundry and toiletries.

If you get similar prices on the utilities, council tax discount and lower food bill you'd have at least another £100 per month spare for savings etc.

Cloudane · 12 December 2011 at 2:43AM

I guess with the water I'd get a meter in if there isn't one already.

Thanks for the tip on the council tax as well.

I feel that there may actually be some hope! Some things still concern me like that mention of interest rates rising drastically and putting my repayments up drastically (as is evident I'm pretty clueless, I'd have assumed you just get an interest rate and that's that, but obviously it follows the current market or whatever) and the expressions of surprise that you can get a house that cheap (surprised me too, what's the catch..) but maybe I do have a chance.

redlady_1 · 12 December 2011 at 3:17AM

Stop worrying about what may happen with the economy, you have no control over this. As long as you factor in a rise and initially fix for a few years, you should be ok. Or you could even fix for 10 years. You need to talk to a mortgage broker - and not one linked to an estate agent!

It is perfectly natural to worry about the future regarding affordability. You are taking on the biggest commitment of your life. Just make sure you keep some savings behind you.

misskool · 12 December 2011 at 8:56AM

HappyMJ wrote: »

I wouldn't worry too much there will always be some state pension and as long as you own your own house by then you don't have to worry about housing benefit only paying enough to live in the smallest 1 bed flat. I'd rather have savings on the side in ISA's or standard savings accounts rather than private pensions but that's my personal opinion.

The rest of the advice/opinion is vastly superior to mine so I won't add to that but I'm surprised people have such a blase attitude about pensions.

Personally, I would contribute to a pension as soon as I can as the younger you start, the less you have to put away as a percentage of your salary. Starting a pension at 35 means you have to pay more percentage wise than if you had started at 18.

HappyMJ · 12 December 2011 at 9:29AM

misskool wrote: »

The rest of the advice/opinion is vastly superior to mine so I won't add to that but I'm surprised people have such a blase attitude about pensions.

Personally, I would contribute to a pension as soon as I can as the younger you start, the less you have to put away as a percentage of your salary. Starting a pension at 35 means you have to pay more percentage wise than if you had started at 18.

It depends on how you look at it. Single person's pension credit is currently £600 a month. The OP won't be paying down a mortgage or council tax when he retires so will only be spending £447 to maintain the lifestyle that he currently has. He will still have disposable income even by not saving for a pension.

The more he pays off the mortgage now the sooner he will be mortgage free and the sooner he can start saving towards something else such as a bigger house or whatever.

I'm just trying to point out that pensions are rather pointless for low income earners when you can have pension credit.

If he saves the recommended 10% of salary he's only going to have £20 leftover. It's not affordable. If he waits until he's 35 he needs to save 20%...it's still not affordable on that level of salary. That's only going to give him a pension equal to 50% of his current salary. i.e £9,000 per year or £750 per month...only £150 more per month than pension credit and he'll have to pay for council tax.

rachbc · 12 December 2011 at 10:06AM

Cloudane wrote: »

Don't know where to put this so I'll try here

I'm 29 and thinking I'd kind of like to be independent and get my own place instead of living with my parents forever. Don't get me wrong, it's great - I have loads of disposable income and luxuries and they really don't mind (in fact when I mentioned this they were just concerned they'd done something wrong!). But I just feel that if I don't get a move on soon I will be well, frankly, a manchild - for the rest of my life.

I'm on a salary of £18250 (monthly £1237 net), in a fairly expensive area (but would really like to stay here) and single. I'm in IT work but the jobs around here don't really pay much more than this.

But can't see how I can afford to if I calculate it realistically. Here are my calculations per month (some things are annual so divided those by 12). This is without any saving for the future (i.e. no pension or equivalent savings) and before the costs of going out or 'luxuries' like beer.

Mortgage £400 (on a £65-80k little terraced house)
Council tax £125 (average band 'D' in my area) would a 65k terrace be band D - our 2 bed terrace was band b
Insurance £35
Gas+Electric £120 I pay this in a 5 bed house for 4 people so you cna do it for much less
Water £35 Get a metre - again for 4 we pay £24
Food £150 Should be bale to manage less than this
Internet £15
Laundry/toiletries £10
Car insurance £30
Petrol £55
Car tax £10
Car MOT+maintenance £10
TV license £12
Phone line / calls £15
Mobile £10
Clothing £10
Gifts/xmas £15
Misc bits/repairs/etc £10
That comes out at £1067, with a disposable income of £170.

If I was to save for my eventual retirement (should've started ages ago right?) I'd have to be saving like £150/month to be anywhere near the recommended "age/2%" leaving me with £20. If anything costs a bit more than I expected, that's that gone!

From searching around £200/month seems to be a more accepted figure for food costs. The figure of £120 for gas+electricity is probably a bit optimistic.

I could rent for £300 if I dig around, but for the sake of saving 100 it doesn't seem very sensible when it could be going towards owning something.

Should I just stay put until a miracle happens and I get a well paid job or something?

Its more than possible - but depends on you rpriorities - living a financially relaxed kifestyle with your parents or more thrifty times but having your own home

quintwins · 12 December 2011 at 10:24AM

i lived on my own for alot less, but i alwyas wished i had some savings as we have oil heating here and i could never afford to get any, in theory i had the money spare each month but i had to have heaters on instead which would eat my electric so then i couldn't afford it, i was awful with money back then

your food budget is alot for one person, make sure you have a freezer this will help loads you can patch cook and freezer and buy reduced foods, also i wouldn't have a seperate toiletry/laundry budget and £120 a year seems excessive for these to be, there are 5 of us and i don't spend this in a year including nappies and wipes we buy on offer smellies and we bulk buy laundry liquid so it costs us £20 a year, i spend £200 for everything all in for all of us a month and i clearly over buy as my house is fit to burst with food

your insurance seems abit high but i guess that depends on where you live and what kind of insurance you want

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Can I afford to live alone on £18k?

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