Where do people get the money?

[MrsLouisTheroux]

I understand that there are people (I thought the minority) who earn a zillion pounds and are very high earners but I just don't understand how so many people afford to eat out, shop, go to the cinema/theatre so often. The huge shopping centre near me is always literally packed with people doing just that. Not just at this time of year either.
The shops seem to be doing brilliantly but I don't know where the money comes from.
DH and I earn a good amount between us and we do nice stuff but can't afford to eat out, shop or go to the cinema more than a couple of times a month and we don't buy a lot when we do go shopping - certainly not for designer stuff.
I thought there was a recession?!
AIBU to wonder how people afford it?

It's all priorities and circumstances though isn't it?

DP and I earn quite a bit, but depending on where you met us, you might know it or you might not. We have lovely holidays and when we eat out, we tend to push the boat out (except for the odd Nandos before the pictures!), but we don't do it very often and don't run up credit.

We have a Cineworld card and a gym membership. We have no DC so all of these things compliment each other - we can go out regularly, to the same area (very near where we both work) for not a lot of money. £15 a month each for Cineworld, but if we sit in on a Friday night and have a G&T, then some wine, we could knock back more than that of an evening.

For us, these things make sense and allow us to do positive things of an evening rather than veg / wine / chocolate and boredom (which I can easily fall into). It's also a great way of ensuring we schedule time together, because at least once a week we do gym + healthyish dinner + cinema together (we do them separately as well). To offset this, I tend to take packed lunches, try to minimise commuting costs and almost never buy posh coffee.

Having said all that, we are technically high earners (though I feel comfortable, but by no means rich).

I'm kind of in the same situation as meeeemo: no kids, lots of disposable income (though husband earns three times as much as me) but we try to live off my salary and save his for our house deposit as we are trying to borrow as little as possible. So I'm not the person clogging up the shops, I shop online and only in the sales. We live way below our means so we can save for our future. But lots and lots of people with our means don't: they spend all they have. And then borrow more money they don't have. The chickens will come home to roost one day.

I don't really notice much because I really hate going shopping and shop online as much as possible. Shopping centres are the work of the devil, hate the bloody places. Westfield gives me the creeps.

If you have a mortgage though and a good credit record you can have access to loads of credit on cards as they just keep putting it up. Our household income is 40 - 50K so reasonable, but on my credit cards alone I can spend up to about 40K. I don't though and pay them off each month unless we occasionally use for a holiday of about 1K.

Reading this thread has made my heart lurch re our financial situation.

I know I need to tackle DH about our spending habits and lack of saving. I know what he has said in the past but I think I need to take a stronger line on it.

We are in an upper income bracker but do not have a grip on finances at all. We are stuck in a house which we are outgrowing quickly - can afford a bigger mortgage but not deposit.

This scares me as I am currently an SAHP and not paying into a pension. I think we need to face up to a lot of stuff.

Most folk aren't living on credit as mist credit cards are paid off in full every month. Inheritances and help from family play a big part imo

I used to work for a bank and would deal with the day to day transactions - most credit cards definitely aren't paid off each month!

snog
Most folk aren't living on credit as mist credit cards are paid off in full every month
I'd love to know where you get that idea.
Less than 10% of credit cards are paid off in full.
Millions of people are paying the minimum every month and not reading my spreadsheets (linked upthread)

Credit cards are dangerous IMO.
I never take out cash, I use my debit card for all my purchases which means that if the money is not in the account at that moment, I cannot make the purchase. I have a wonderful spreadsheet that logs all my spending so I know how much goes on fun, supermarket, school stuff, etc.
I use the credit card only for real emergencies or sometimes to pay for holidays, but I always pay the entire balance at end of month. I think I have used the credit card a maximum of three times in 2013.

Gosh threads like this make me anxious.

We live to our means - I save very little ... but I figure, I'm mid-twenties and DS is only 2.10 ... and there's time. I also have an excellent pension with work and have done since I was 21, so feel good about that.

My income goes on: rent, nursery, bills, food, DS' clothes/books ... and after that, it's expendable. So, we're lucky in that we can go out to restaurants, nights out, etc. But - I shop mainly in Primark, and holidays are always shoestring budget, plus phone through work. And we don't have internet, or drive. No credit card, and an overdraft that is dipped into rarely.

We should save though ... bugger bugger.

Prozacbear, yes you should! I think people seriously underestimate how much it takes to fund a comfortable retirement. It's really really tempting to go on lots of expensive (£10k plus) holidays and buy crap loads of designer handbags every month which I could do if we didn't have any savings goals. But this won't get us a house, bags won't pay the heating bill or feed us when we are old.

Think about what kind of retirement you want, then set your financial goals to achieve it. I found seeing a financial adviser scary, but enlightening!

We always use credit cards to buy everything and pay off each month - and get cashback.. money for nothing....

but I would NEVER use a debit card - after my dads got cloned and left him penniless, bounced his mortgage payment and put him under threat of being taken to court for non payment of soooooo many bills...

If the card is linked to your current account you can be left with NOTHING for WEEKS....

We put everything on our tesco credit card (except for holidays as they tend to have a 2.5% credit card fee) and always pay it of each month. Each quarter we get enough club card points for £400 of restaurant vouchers, which is about 5 meals.

I use a credit card and always pay it off. I find it easier to track spending on it in some ways.

I use cash as well but don't tend to use my debit card a great deal. Once I paid in M&S for something and my DC got charged even though it was in my purse.

We overpay on the mortgage each month even though interest rate makes it a very small amount but we are not sure if the endowments are going to be up to much.

Talkinpeace you say "Less than 10% of credit cards are paid off in full."

What makes you think this? Is there evidence for it? I think well over 50% of people pay their cards in full each month, and of the rest some of them are on interest free credit cards anyway which is not the same thing at all imo.

In any case people using credit cards are only living beyond their means if they are unable to pay it back, and this is a minority of people, surely?

Bankruptcy and insolvency affects less than 0.2% of us each year as far as I know.

themoneycharity.org.uk/debt-statistics/

www.creditaction.org.uk/assets/PDF/statistics/2013/may-2013-summary.pdf

www.bba.org.uk/statistics/article/october-2013-credit-card-market/credit-card-market/
over £319 million was drawn out in cash on Credit cards in the UK in October 2013 ...
that is not a sign of sustainable spending

nor is the £1,072,000,000 of balance transfers in the same month

snog
find me the stats that show most people have their credit cards under control ....

I used to wonder the very same thing about a friend of mine who earned less than me but had lots of foreign holidays, endless meals out, etc.
She is now signed up to the government debt repayment scheme and has zero credit rating.

We put purchases over £100 on the credit card as it gives us extra insurance protection. Very useful, I've had to claim for flights when an airline went bust, and various lost/damaged items before.

I don't spend what I don't have, there is usually more than enough in the current account to cover the credit card spending and a DD goes out to pay it off in full before any interest is charged.

I think some of those stats don't really tell the whole story, I suppose my credit card spending would be counted as a 'debt' and I know quite a few people who have been spending on 0% offers or making balance transfers on 0% deals, but know they can pay it off before interest charges kick in. They also mention purchases using plastic cards (including debit cards) which doesn't indicate a debt problem to me, but just that people prefer paying by debit card instead of using cash. DH hardly ever uses cash unless he has to, he hates loose change.

As per the Statistics spreadsheet on the BBA link ....

Purchases in October 2013 amounted to £11,820,000,000
but outstanding balances amounted to £57,011,000,000
64.8% of credit card accounts were in use
and 62.2% were bearing interest for the issuers
ie 96% of people with credit card accounts in use are paying interest

so I was wrong,
its way UNDER 10% that are paid off in full every month.
the average outstanding is nearly five months of expenditure

those of us who pay our cards off in full are a very small minority

credit card I also get reward vouchers 4 x a year so it works out well. we have always paid it off. if we can't afford it we don't have it

I constantly bounce balances around...I will pay one card off in full with DH bonus. I juggle it arounf to balance transfers.

We are due a big talk about this and overspending generally.