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?

Ashamed
These might help focus the conversation ....
www.mumsnet.com/Talk/legal_money_matters/1715581-Cost-of-credit-cards-and-mortgages-the-spreadsheets
and
docs.google.com/spreadsheet/ccc?key=0AiZqlQ7-gn07dHRoTXA5Qnlld25UWkw1TEhZZk9IYVE&authkey=CMjc4JEB&authkey=CMjc4JEB#gid=0
there are tricks the bank will never tell you but the spreadsheet will make clear

*Talkinpeace" thanks for the link. So 62% of balances are bearing interest. That's more than I thought but then I expect most people who have credit card debt have multiple credit cards. And some people don't have any credit cards or don't use the ones they have...so the percentage of the adult population who pay interest on cards I suspect is well under 50%.
I'm not sure how you get 96% as a figure though? Surely 62,2% paying interest of the 64.8% of accounts in use means that 43% of active accounts pay interest.
Assuming people with debt problems have more credit cards each than those without debt problems then less (and I suspect a lot less) than 43% of those who have active accounts are paying interest on their card(s).
I find it odd how hard it is to find straightforward stats on how many of us don't clear our cards each month though.

TalkinPeace

Thank you very much.

The gist of it is DH has always liked a decent amount of 'pocket money' so we both have the same which is about £400 each per month.

I think this is too much we could save more/pay off card quicker but he always says he works hard (he does v long hours high level). Im prepared to go without for a bit to get things in better shape. He never is.

Im going to tackle this again with ref to some recent overspending and issue related to the house.

It maybe that I end up saving a portion of mine to make a point. But part of me thinks why should I when he is swaning about spending. We always keep everything equal.

Snog
the other page makes clear that 62% of all accounts are earning interest, not 62% of live accounts
so 96% of live credit card accounts are paying interest

and banks do not WANT people to clear their accounts - they make no money out of people like us - hence why Lloyds shut down the accounts of thousands of "good payers" last year.

many of the people without credit cards are using payday loans, Brighthouse and pawnbrokers so paying even higher interest rates (up to 4,000% APR)

many others are using illegal door to door money lenders

only the very richest 5% think that there is not a crisis of unsecured household debt in this country

"Talkinpeace" I don't see anything on the other page that says this?

Certainly I'm not seeking to deny a problem, just looking for good data that is easy to understand.
My thoughts are that unsecured credit certainly is part of the problem but that there are a lot of other factors eg inheritances/ not seeing people who don't spend much money as they are less visible etc

Are full shopping centres a sign that there s money in the country though? I thought the opposite. Before few years people would go to France for shopping.
Maybe people spend weekends in shopping centres because they are warm and dry, fun if you like shops, and most of them have a poundshop too.

My local shopping centre has few shut down shops.

Are full shopping centres a sign that there s money in the country though? I thought the opposite. Before few years people would go to France for shopping.
Maybe people spend weekends in shopping centres because they are warm and dry, fun if you like shops, and most of them have a poundshop too.

My local shopping centre has few shut down shops.

inheritances
Bless
do you know how few people inherit anything more than debts from their parents?
in 2010/11 there were less than 250,000 estates large enough to have to register for probate and only 15,584 of those paid IHT
www.hmrc.gov.uk/statistics/inheritance/commentary.pdf

Half of the households in the UK have an income under £26,000
you do realise how utterly broke most people are - don't you?

We have about 900- 1000 disposable income per mth. Compared to our friends this is a lot even though they earn significantly more on 2 full time incomes. My dh works full time and I do 15hrs per week. The difference being that we have not bought the most expensive house that we can where they have. We only run one car and have holidays in the uk (2-3 per year). I would hate to have no money for leisure or fun just so I can have a bigger house.

A lot of large shopping chains have a lot of debt too. They just keep extending the overdraft on a massive scale.

All it takes is for their bank to say no to this and they're often out of businness. It will be telling after Christmas, or perhaps in late march, as big shop rent is due quarterly and this is often what pushes them over the edge.

We have discussed before on here how no-one can understand how the likes of WH Smith stays in business, and we have seen the end of quite a few big chains over the recent years. I would not be surprised at all if a few more go within the next few months.

I can't imagine how much money a big shop needs to take to pay its staff, rent, rates, utilities, banking facilities etc, and stock, before it makes a profit.

The majority of people in the UK - around 70% - are home owners and thus most of them leave significant amounts to their children when they die. So yes, I think there are a lot of inheritances and often people have a bit of a spend when they have windfall money like this.
Your stats are misleading as most estates are beneath the de minimus for probate which is £325,000. Hardly worth discounting an inheritance because it is less then £325k!

Re median household income I am aware of this - but again the stats aren't that easy to get behind seeing as 30% of UK households consist of just one person. And £26k for one person is a whole lot different to £26k for a family of 6.

Snog
de minimus for probate which is £325,000
WRONG
The limit for IHT is that number.
The limit for Probate is £5,000
www.hmrc.gov.uk/inheritancetax/intro/probate-process.htm#2

Median individual income is under £19,000
and yes, lots of people have houses with their name on the deeds, but hundreds of thousands of them are in negative equity or do not understand how dangerous IO mortgages are.
Not many people under 50 are sitting on pots of equity

you really, really need to understand a lot more about how most of the country lives

Thing is, while there is a recession on, for a lot of people, it's not effected them, DH and I are both in the same jobs we were in before 2008, and while our wages haven't risen much, living costs haven't gone up dramatically, although ours have changed because in that time we've had 2 DCs. We've had moments when redundancies were announced, but we've always survived them, and are now in a position where we aren't facing redundancies again for a few years.

On the other hand, our mortgage rate is cheap, restaurants and shops are offering a lot of deals and it's perfectly possible for people in our situation who haven't done crazy silly things like produce a couple of DCs to have exactly the same spending power as they did during the boom.

There are whole areas of the country that haven't been effected. These things aren't universal.

There are whole areas of the country that haven't been effected
ooh, do name one
-that has not had above inflation energy price rises
-that has not had above inflation transport cost rises
-that has not had below inflation pay rises
-that has not had above inflation food price rises

those who are genuinely feeling no pain are very, very, very lucky and should not extrapolate from their experience until they have checked where they sit on this chart
www.ifs.org.uk/wheredoyoufitin/

It says in that HMRC document that 47% of deaths in 2010/11 did have probate though.

so 53% of people left less than £5,000 to their descendants - that does not go very far

So that's a lot of inheritance going on and probably does explain some of the purchasing OP mentions

TalkinPeace I don't know why you are implying I don't know that many people are struggling? I think the UK has massive problems with the gap between rich and poor and a whole lot besides.
I'm trying to establish some robust facts to answer the OPs question is all, not looking for a soap box session. The answer is complex and multifaceted and not simply that everyone is maxing out credit cards.

snog
So that's a lot of inheritance going on and probably does explain some of the purchasing OP mentions
what do you mean?
Only 15,000 estates were large enough to incur IHT
look at this page
www.hmrc.gov.uk/statistics/inheritance/table12-3.pdf
most of the estates that go to probate as SMALL
most people are POOR
the number of people leaving mortgage free houses to their children is miniscule

Inheritance does not explain the number of people out shopping as per OPs original post.

I think that for the last few years the disparity between wage rises and utility/food costs has been offset for a fair slice of people by the fact that mortgages are the cheapest they've ever been. The slug of the population which bought and budgeted for 5%+ interest rates has been sitting pretty, and is only just starting to feel any pain.

I wonder that too, I have £100 a week. £20 towards credit card, the rest is food, fuel and clothes for the family. People with bags and bags of stuff!

Not in itself no, but of course it plays a part and is disingenuous to say otherwise.
There are multiple reasons and you seem to discount the ones that don't suit your own agenda.
Your "small inheritance" definition is in fact between £5k and £325k - enough to go out shopping with.

TalkinPeace - obviously those things have effected us, but the low mortgage has made a massive difference - I guess if you have a large family to feed and/or housing costs are a smaller part of your budget, then the balance might tip a different way. Our total bills (not including childcare which we didn't have then!) are only about £200 a month more than in 2009, because the mortgage is so low.

We are by no means rich, what I'm trying to say is that there are lots of normal, middle class, middle income people who haven't seen a dramatic reduction in their disposable income in the last 5-6 years. The people on low wages with families to support weren't the ones filling up these shopping centres before.

(of course, having no family childcare, we have bugger all spare money now, but our reduction in lifestyle and spending power have nothing to do with the economy but our family choices)

what I'm trying to say is that there are lots of normal, middle class, middle income people who haven't seen a dramatic reduction in their disposable income in the last 5-6 years

Where are these 'lots of normal, middle class, middle income people? Most of my peers are like DH and I - middle class on good, professional wages well in excess of the median UK wage. The vast majority of us have seen our incomes remain static or only slightly increased over the last few years, whilst childcare, petrol, utilities, food and so on have all shot up exponentially. I don't know anyone of middle class/income who hasn't noticed a reduction in their disposable income.