Higher middle earners- how do you afford your fancy life?

[Led921900]

This is very much a tongue in cheek post … and yes I might be crying in my Tesco finest Prosecco but….

I live in London and there are smallish but relatively expensive houses around me that sell for about £1.1 million… inhabited by 2 parent 2 children families with nice cars, bugaboos and doodle dogs who go on all inclusive foreign holidays. How???

It’s not that unusual…. whereas we have a household income of about £140k which I thought was pretty good and I don’t feel like we’re doing particularly well at all. No prospect of upsizing our house, no fancy cars, no foreign holidays at an algarve all inclusive. I have had 3 kids but my childcare is cheap (£55 nursery a day full time) and to be honest when the kids are school age the childcare difference between 2 or 3 kids is hardly anything.

So how are you all doing it? It’s no fancy extensions for us, no upsizing to a nice house, no fancy cars (running a cheap Citroen) and our fancy foreign holiday is driving 10 hours to a nice Eurocamp caravan with air conditioning.

Is it…

1. Bank of mum and dad or inheritance has allowed you to afford a nice house with small mortgage?

2. Not having kids?

3. A very well paid job (if so, what and what earnings?).

My background is working class northerner but I can’t see the lifestyle we have now on a very good income is any different than what my parents could afford with us! And I’ve looked at my job elsewhere and the cut in earnings is more than the lower mortgage (although actually houses in nice areas near good schools i. Wirral/manchester are about the same as mine anyway!)

I don’t get it?

Tbh quite happy with our lifestyle and when the cat goes (:() childcare costs come down we’ll be another £500 a month better off and I guess that’s the foreign holiday but the worry is for my kids. Our house was £200k cheaper 10 years ago, what the hell are they going to do?! Sigh. They’ll be priced out of these 3 bed semi’s even on professional jobs and lumbered with much higher student debt than I had (if they go to Uni).

To be honest my favourite job was as the “bubbly barmaid” (quoted from local newspaper :D) when I was a student and could’ve stayed doing something like that had my kids up t’north and feels like almost they’d have had similar sort of options!! Anyway who knows we’ll see!

It’s not about that really it’s

1. what the F do I actually have to earn to keep up with these Jones’s.? I thought being on the money I am I’d be feeling the benefit of it but no not really. Still effectively in an end of terrace with a galley kitchen etc. This was (and was my) working class experience but increasingly seems to be a middle class one because I guess house prices are so high. However I am perfectly happy enough with my arthritic cat, Eurocamp holidays, 3 little ones and my tiny garden!
2. But what on earth are my kids supposed to do given I don’t have a wad to give them my main asset being the roof over my head!? I feel very fortunate and lucky and my earnings are, statistically high. My eldest wants to be a teacher and my main comment back was “it doesn’t pay enough.” But I suppose she can move away and have a better standard of living!

Just move out of London. You're paying crazy money for your housing...

I know what you mean. I think part of the issue is that we are the first generation not able to better the lifestyle of our parents. I'm a City lawyer so I'll use the legal profession as an example. A generation ago, the local high street solicitor would have had one of the nicer houses in the town and a decent car. And that would have been on one salary. Now young city lawyers are struggling to afford small flats in less than salubrious parts of town and will most likely need to combine funds with a partner to buy anywhere.

But some people are managing to keep up with the Jones's somehow.

You can’t be serious?! Living in a cottage in a village is so so so out of reach for so many young people looking to start families, with absolutely no hope of ever being financially secure, let alone ‘wealthy’

@Rollercoaster1920 we rent a house that would be about £900k in Bath- we couldn't buy it as at the point our income radically improved we were too old to get mortgages- we intend to buy when we inherit/ sell our business- I'm 61 now- it used to bother me but my H refused to buy in areas he didn't remotely want to live and to be honest we wouldn't have got the mortgage anyway even at half the price of this due to age. So yes it does happen- I love this house too

Some of it in recent years has been people working in start ups. The company ends up getting bought out or the stock being listed. If you’re there at the right time you can make a ton of money. A friend of mine cashed in only SOME of his shares in a tech firm for £200k. There are some very lucky people out there.

In our case well paid jobs. I’m very modest about my work and probably earn much more than people would guess

Similar income, no kids, live outside London. No inheritance/financial help and only got on the housing ladder in the past 2 years in my late-30s. I earn 4x DH's salary.

I also wonder things l this, and feel like I'll never move up the housing ladder. I would love to earn more, but think I'm close to the top of my range.

I often feel like i have to "pay for everything" without much personal reward. I feel envious of people who seem to be "given everything". Especially when it feels like they're looking down their nose at others.

I should have just married a rich man and not bothered with multiple degrees 🤣

Sorry if my post sounded like I was telling you what to do, I needed to throw in a few silly emojis 🤪! Our perspectives and lifestyles sound quite similar and I wonder what the future will be for my children too (baby and toddler). One thing I am doing is trying to improve my financial literacy, budget better, make investments etc. I have been really spurred on since having baby number 2.

Gosh. You seriously can't see that there has been a massive economic decline and that the people who are the current version of 'you' now can't afford your comfy 'beginner' home in a posh commuter village and they're sad that they will likely never be in a position to have no money worries when they're older, like you?

You really think this is an attitude problem rather than the result of a crumbling economy?

Honestly, I am just a little younger than you I think, l and I'm absolutely cringing for you. It annoys me when millennials excoriate boomers but this is quite something, in terms of wilfully blind entitlement.

How is £2k a month crazy on a £300k mortgage debt? This is a £425k house in north west with 3 beds. A young family might easily find themselves with £300k mortgage, £125k equity and paying £2k a month and this house is pretty standard?

no idea how the ones buying the more expensive £800k houses can do it even in Manchester!
Cheaper family home
https://www.rightmove.co.uk/properties/147896120#/?channel=RES_BUY

pricey one
www.rightmove.co.uk/properties/149240867#/?channel=RES_BUY

Another thing to consider is pensions. So many people don't fund one. I know couples who live the high life and say their 'home is their pension'. When I ask how that will work in practice when they'd need to sell their home to get the money out yet still need to live somewhere they'll 'worry about it later'.
We hammer our pensions (40% of my salary) and if we didn't we'd have a lot of spare cash each month. There is an argument that you should enjoy life while you're young and I do wonder if we lean too far away from that but I'd prefer to live frugally and save.

We are both high earners (HH income about £300k), but have kids in private school which is what is our big drainer, and means we don't feel wealthy.

Got step on property ladder because my parents inherited money which they directly passed on to us. Then we lived fairly frugally for years (the only thing we really spent on was holidays - not 5 star hotels, but backpacking trips to Asia and the likes - this was pre kids obviously!), so we were able to overpay the mortgage every month and get it down.

As concerns the holidays - no-one I know goes all inclusive, and definitely no families use hotels - you need to self cater as otherwise the costs go through the roof (even eating out or getting takeaway will be cheaper). Everyone rents a villa or appartment, or in our case, we go Airbnb. Can get somewhere really nice in France for about £1700/wk even in peak summer, and when it's in France we tend to drive down (saves on flights but especially car rental).
As a result, we also go skiing every year, but again, we drive down (as do many of our friends).
So it's possible to have nice holidays, but without paying extortionate costs for it.

This. We have the lifestyle you describe on just over £100k 'up north'
It's not just about mortgage payments but cost of living generally being cheaper outside London

I'm really interested in this - can you expand on what you think is cheaper? I've always been puzzled by the fact that energy costs and (presumably) the cost of a supermarket shop or a car is the same all over the country. What is it that's cheaper? Childcare maybe?

We live that life (not the bugaboos, kids are teenagers, and no longer AI holidays, but have in the past) - combination of:

buying a flat 25 years ago, which set us up well on the housing ladder, £500k equity in most recent sale

large gift of £££ (several hundred £k) to avoid future inheritance tax meaning current house mortgage free

high income - £200k+

not sending kids to private school

Life is pretty comfortable. People looking in would know none of the above. Large monetary gifts have definitely been key. Could have done it without, but not as comfortably

I also worry for my kids.
My ambition is for my husband and I to have no need for my parents money, and when they pass away one day, to be able to pass on any inheritance directly to my children, as a house deposit (or whatever they want it to be).
But that means I will have to keep working like a dog for the next 20 years in stressful roles which I don't enjoy (this is exactly what i am doing today to pay for the school fees). And there is always that fear that after about age 50 I won't be so employable, so that won't be an option (I work in advertising). So I don't know if that will be possible, in practice.

Tell me how? Our mortgage wasn’t particularly cheaper given the drop in warning, and our childcare is £55 a day with a childminder. Nursery in north west was the same.
The council tax where we looked was more expensive! As was local transport and then other bills, food, etc all the same.
My kids in London will get the bus to school for free until they’re 16 but my parents spent a small fortune on bus fares for me and my siblings. Car and fuel all the same too. Honestly I’ve looked and it’s not cheaper up north outside of house prices which were negated by salary drop.

We worked abroad for a few years so we were able to buy a house outright when we came back but then property was cheaper 18 years ago. Apart from that we have both pursued our respective careers and taken promotion when ever possible. It’s all about energy, self confidence and commitment. Sounds glib but worked for us.

I mentioned this previously but some people have done extraordinarily well simply because of property timing eg being on the ladder pre crash. One of my friends in the year above me was the only friend to not go to uni, she worked in retail for a year and with a 10% deposit from parents bought a flat on a 90% interest only mortgage in 2000 ish. She sold it for more than double she had paid & bought another flat on 5 times her (office job) salary. Again sold for more than double & bought a house with her now husband. They again borrowed the max but got lucky with yrs of low interest rates (had one of those lifetime trackers or something). It’s very difficult to take those risks in todays economic climate and you can’t even get interest only unless you’re a high earner now.

Hmmm well I bought a one bed flat in a shitty part of london in 2006 on a 100% mortgage, I bought in an “up and coming” part of london and 8 years later sold it when my dad was diagnosed with stage 4 cancer and bought a two bedroom house a mile away in a different postcode. Increased the mortgage to extend.

Again, suspect you are massively underplaying the critical role that being able to buy a house outright has played in your ascent. Today's economy doesn't care how confident or committed young people are, really.

Lots of general everyday things are more expensive down south, which all add up. Cinema tickets, petrol, drinks in the pub, car parks (it's £2 in my midlands time town, for the same amount of time in Surrey it was £9 last time I went). All of these things and more, is where I imagine your money is going...

I also have older colleagues & family who bought property in the late 90s for 100k ish in places like Herne Hill, Hackney, Brixton & they would be worth 1m now.