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to have assumed that a 100k salary in London would mean we would be more comfortable than we are?

(248 Posts)
Baydreams Thu 18-Apr-19 12:08:16

I've been prompted to post this after reading the post about high earners and the two schools of thought that 100k either "isn't that much when you live in London" or "It's a lot compared to the average national salary". That post is here: www.mumsnet.com/Talk/am_i_being_unreasonable/3561649-To-ask-those-who-have-high-earning-partners?

So, the backstory is that we started a family unexpectedly in our early twenties and abruptly adjusted to a household income of £26k, living in London. We stuck to a grocery bill of £40 per week for a family of three, and never spent a penny on small luxuries like coffees, clothes, haircuts, etc. Even so, our household income wasn't enough to cover our mortgage (£800 per month and cheaper than renting), and all the usual bills and outgoings. We slowly sunk into debt just to cover a pretty frugal standard of living. After 5 years, this debt was at £25, so essentially we needed to earn at least 30k to even out our costs.

During the last year of this, my partner landed a higher paying job, and our area of London had had a bit of a boom, meaning we could afford to move our family out of our flat to a 3 bed terrace house in the same area, taking some of the equity to zero our debt.

Over the next years, our household income grew to around £100k, give or take. (My partner has a commission based job so we never quite know what the exact figure is going to be, but it's usually just over or just under 100k).

We live in one of the last remaining affordable areas of London. Our house is valued at £450k. Mortgage repayment is approx £1300 per month. No other huge costs apart from running one family car. We have three children. On a household wage of approx £100k, we can now comfortably pay our mortgage, and live a much happier day to day lifestyle in that I don't feel guilty any more about booking in a haircut or buying a coffee.

We are so relieved to be out of the hole we were in financially, and I don't see £100k in our area of London as a struggle at all - there are many people earning less where we live.

But, I will confess to assuming that it would mean we could afford more than we actually can in reality. For instance, we have found that we aren't able to accrue any meaningful savings - maybe £150 a month which tends to get eaten up very quickly as an 'emergency costs' fund. And holidays abroad are beyond us. We tend to be able to save for one once every three years and the other years we do UK camping holidays.

Previously to earning £100k a year, I did assume that holidays and savings wouldn't be a problem. How do other people with similar earnings and outgoings make it work in terms of saving for luxuries like holidays etc? Do you find you can comfortably afford to save AND go on holiday? Do you substitute one for the other? Do you find it easy enough to live on 100k or do you find it a balancing act to cover everything you would like from your lifestyle?

Baydreams Thu 18-Apr-19 12:10:20

Forgot to mention childcare costs for my youngest at around £300 per month.

EmrysAtticus Thu 18-Apr-19 12:10:25

Are your children still at the childcare stage?

EmrysAtticus Thu 18-Apr-19 12:11:15

Ah cross post! I think the fact that you have three children will be costing a lot. We could manage holidays and savings on your income but we only have one child!

NameChangeNugget Thu 18-Apr-19 12:12:58

100k is not huge for London.

YANBU

QforCucumber Thu 18-Apr-19 12:13:21

I guess it depends on what goes out and what you're prepared to forgo.

We earn between us in 2 full time jobs half of your household income - however our mortgage is also half of yours. We still pay for, outright, an abroad holiday every year with our 3 year old as this is a priority for us. This years is in 3 weeks and cost us £1400 for all 3 all inclusive for a week - that's £110 a month into holiday savings - we do also put our own xmas/birthday money towards this too. We don't pay for Sky Tv etc and have small mobile packages of £17 each ish. DH has no commuting costs as uses a work van and I use approx £25 a week in petrol - granted these things really help.

IceRebel Thu 18-Apr-19 12:13:23

So you have no debts, £1300 mortgage per month, and general car / family expenses?

I would sit down and work out your monthly expenditure as not being able to save each month on 100K wage seems unlikely. I suspect there are lots of areas you could cut back on, food, eating out, expensive Tv / phone packages.

QforCucumber Thu 18-Apr-19 12:13:54

but yes - we do this with one child - I don't know if we still could with 3!

Historydweeb Thu 18-Apr-19 12:14:40

I earn literally about 600 quid a month and unable to get working tax credits as I can't find enough hours in my rural area. I'm taxed at 20% on my second job even though it's minimum wage and I'm looking for a third. I'm a graduate with a good degree. I was widowed at 26 leaving me with a young daughter. Please dont mind if I'm not crying a river for you on 100k. Ffs mumsnet blows my mind some days

Baydreams Thu 18-Apr-19 12:14:45

@EmrysAtticus I think amount of children definitely makes a difference there. We always look for self catered houses rather than hotel stays to save on costs, but add on flights for a family of 5 and the average summer holiday for a week in Europe usually ends up somewhere between £3-4k for us.

SardineJam Thu 18-Apr-19 12:15:05

I think that when we think of the 100k salary we forget about the net/take home pay after taxes, NI and pension contributions. The higher rate tax bracket definitely eats into the earnings...

missyB1 Thu 18-Apr-19 12:18:15

It’s true that it’s all relative depending on where you live. We are in a town that is not far off London prices, my dh earns about 100k and we certainly can’t live a lavish lifestyle on that. We drive a 10 year old banger of a car and like you can’t afford holidays abroad every year. Our mortgage is big even though our house is average size, and not even in the best area.
So I know what you mean about the expectations of having that kind of income, I find the reality is quite different.

PettyContractor Thu 18-Apr-19 12:19:03

I'd be curious to see a budget. I'd guess 100K a year works out at about 5.5K after tax, so you have 4K after housing and childcare. Where is that 4K going? You should be able to live on 2K, easily.

OnlyFoolsnMothers Thu 18-Apr-19 12:19:28

Your mortgage payments seem high OP.
My income is just over half yours, again live in one of the "cheaper " parts of london, my toddler childcare costs for just 2.5days a wk are over £700 a month, I wouldnt say Im living in luxury but nor do i struggle with an unexpected bill.

QforCucumber Thu 18-Apr-19 12:19:56

@Historydweeb you need to speak with HMRC to get your tax code split between the 2 jobs then you won't be taxed the 20%. At £600 a month you're well under the PAYE threshold

BarbaraofSevillle Thu 18-Apr-19 12:20:35

What's your take home pay?

How much you end up with out of £100k will vary quite a lot. If you both earn £50k you will have quite a bit more than if most of the money is earnt by one person due to the effect of tax and loss of child benefit.

Like IceRebel suggests* there migh be areas you can cut back, and a few 'hidden luxuries' might have crept in, that you have started to see as normal basic expenditure.
A systematic way of reviewing your finances can be found here.

It can be worth doing, because if there is a lot of slack and free spending, it could be easy to free up a few hundred pounds a month, which would be great for savings and holidays.

Of course, it could also be that expenses like council tax etc have increased, and more of your money is going on essentials.

Baydreams Thu 18-Apr-19 12:21:55

@historydweeb I am really sorry about your circumstances and that you are struggling with work and financially.

I am not complaining about what we earn. We have been in much worse financial circumstances than we are now, so we are really happy to be financially comfortable and don't take it for granted. But these earnings are new territory for us, and I'm genuinely interested to hear what others with similar finances and expenses choose to prioritise. No one talks about money in real life.

DianaPrincessOfThemyscira Thu 18-Apr-19 12:22:21

You’re bringing in around £5500 a month, pay out £1300 mortgage and £300 childcare plus normal household expenses but can only save £150 a month?

Was the £300 a month a typo and that should be £3000? Because otherwise I’m sorry I’m struggling a little bit to see why you can’t just adjust your spending and save more?

I consider myself on a good wage of £38k, and while my mortgage is a lot less I also have £25k of debt I’m trying to pay down. Plus three kids. I’m not saving at the moment but I really don’t understand why you aren’t?

DianaPrincessOfThemyscira Thu 18-Apr-19 12:23:47

(I assumed the £100k was one salary and used www.thesalarycalculator.co.uk/ to work it out)

ACPC Thu 18-Apr-19 12:24:12

I think it is very sad that the world's cities are becoming playgrounds for the rich. They lose all vibrancy and charm.

NoBaggyPants Thu 18-Apr-19 12:25:54

@Historydweeb You might be one of the few people that benefit from the change to Universal Credit. Contact CAB and they can check for you.

daisypond Thu 18-Apr-19 12:26:39

I live in London and our joint salary is about 55K. We have three dc and are past the childcare stage, though we are now forking out for two dc at university. One dc is still at school . I would never have a coffee out and rarely have my hair cut. We have one uk holiday self catering holiday for a week in the year but we did used to go abroad for holidays as we have family in Europe we could stay with. We try to save as much as we can because of a probable redundancy in the future which could mean I won’t be able to work again. We shop at Lidl and we don’t have a car.

MyDcAreMarvel Thu 18-Apr-19 12:27:44

Your op makes no sense your outgoings are £1.6 a month plus bills and running a car a food. Say £2.5k for everything. What are you spending the rest of your money on?

LaurieMarlow Thu 18-Apr-19 12:27:44

How much is your childcare OP? £300 a month doesn't sound like a realistic london price.

desparate4sleep Thu 18-Apr-19 12:28:36

Agree with other people that you must be wasting thousands somewhere.

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