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

[Baydreams]

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?

The state doesn’t “fleece” anyone. If anything taxes are far too low.

people only say that about other "richer" tax payer who always need to pay more, it never applies to their own tax bracket

(and on what planet are the tax too low in this country! I spend a bloody fortune on mine on direct tax, let alone the VAT and the rest!)

inliverpool1 incorrect, OP works too.

OP must've written that 100k is peanuts in invisible ink, or script only viewable by people who own Borrower sized musical instruments or something.

Inliverpool - that's not how tax allowances work. The OP is owed 20percent of the tax allowance back. So about 2200. Not 11k...

Xenia I’ll go against the grain and say that ever since I became a higher rate taxpayer I feel I have been undertaxed. Those who earn well in this country have an obligation to contribute to amazing services like the NHS, which have been cut to the bone. (Users of the NHS have an obligation not to get themselves so obese their health burdens the whole country too, but that is another thread). Anyway, I for one am not sucked in by the sob story about £20k each for nursery putting you below the benefits cap in London etc. This is a temporary situation, chosen by yourself, and you are already earning your way out of it (by continuing to develop a well paid career working full time). No tears from me.

As for the OP, many banks now have spend trackers. If you put your coffees, corner shop spends etc on debit card, it’s a quick way to see where it goes. Also, make sure the first thing you put your savings on is a car you own outright. £300/month on a financed car is just money down the drain.

Suck in the belt again a bit and you’ll be able to save heaps. Make sure a good chunk of it goes into pension! Good luck.

Mandala - sorry to say it, but you must be absolutely skint your children must be in private nursery...

Two children in private school would cost you AT LEAST £3k per month without any of the necessary additional costs needed for them to match their peers.

@historydweeb your situation isn't ideal but its nobody's fault, we have all been through hard times but having compassion shouldn't come down to how financially stable a person is. We all have exactly the same 24/7 in the day to make our lives better. We could feel sorry for ourselves, or not let our shitty circumstances define who we become. I don't feel the need to tell you my life's story to justify what I have said, but I too, have had more shit than pampers and try to keep going. Its a mentality.

I am just below 100K, but a single parent. Childcare + mortgage at the moment are ~£4K combined (and the mortgage is well below the rent in the area), my take home is ~£5.2K / month and I even cannot afford any pension contributions at the moment.

@Historydweeb, £600 a month is below the rate at which you should be taxed at all. You should pay no income tax if this is your sole income. Phone HMRC and ask them to give your employers new tax codes for you. They should also give you a rebate for the 20% you have already paid. I've always found them helpful on the phone.

@slappingjoffrey I get it. It’s an emotional subject. I’ve spent more time broke / on an income that didn’t keep our family afloat than I have on the very comfortable one that we have had the past couple of years. And during those years it was hard to hear people talking about having ACTUAL money to spend - more money than I could get my head around. I knew what I’d be getting in for with the comments when I posted, but I still wanted to ask because I find these threads really interesting and honest. But yes, to clarify, again, I certainly don’t think my earnings are peanuts, and I am definitely not asking for pity or pitying myself.

bbcessex interesting. Define skint.

my dh and I earned 60k between us. Mort 1100. household Bill's around 2700 per month including mort. However we did not have childcare costs anymore. Think the take home pay is important and childcare is crippling. We now live on 34k and Bill's of approx 1500 per month.
We cannot afford holidays but stress levels a lot less as I left my high paying job. We live in Manchester.

ps I do not begrudge people who are able to earn more. Good luck to them. I would like to say and has been said before, "the more you earn the more you spend". I did to offset the stress I was experiencing.

I think when your salary goes up a lot you need to put the extra into savings to see the benefit. We've had times when our income has jumped up, e.g. DH got a local job on the same salary so we suddenly had £6k more per year (no more season ticket) that went straight on overpaying the mortgage. When the youngest DC started school we rejigged our hours at work and our childcare bill went from £1100 pcm to £110 pcm, we immediately increased the money that went into savings. If you adjust to the extra money being in your account you just fritter it but if you save it then you can choose how to spend it (we both have long term savings accounts that don't get touched and short term savings for e.g. holidays).

OP I've only read part of this thread, but is your DH completely transparent about what he spends his/your money on??

SlappingJoffrey

OP must've written that 100k is peanuts in invisible ink, or script only viewable by people who own Borrower sized musical instruments or something.

Whinging about earning nearly 4 times the average UK salary merits a tiny stringed instrument, and she may not have said peanuts but she certainly seems to think it is

If she actually were whingeing then yes, but since she isnt that's irrelevant. If your point was that you think its insensitive or whatever for people to be asking for budgeting advice above a certain point, that would be one thing, but as it is you're just inventing things.

@Baydreams you might be better off if your DH took a lower paid job that didn’t involve any travel expenses. He’d also be around more. Is this something he would consider doing? If not, he needs to be absolutely meticulous about claiming his expenses. Tell him he is taking food and clothing from his DC by not being organised because there is no excuse.

I’ll echo pp and say don’t bother with airmiles and get a cash back credit card and bank account. Do you pay all bills by direct debit? (it’s easier to spread the payments) Have you gone on price comparison sights for insurance and utilities? (it can save thousands)

I don’t have childcare expenses but our household income is a third of yours in an expensive area. I’ve found keeping to a strict budget and being aware of our spending is the way to have healthy finances. You can do this but you need to get DH on board - good luck!

I earn around 90k, we have 1 child and live in zone 4 in a two bed end of terrace, our mortgage is 1600 per month and we drive a 10 year old car.
We do have nice life but we are also not able to easily afford holidays or to save much, we do save what we can but it goes on unexpected costs which crop up all the time. I would have hoped we could save more and not watch our spending quite as much as we have to, do yes, whilst I know we are massively above average, it's not mega wealthy in London by any stretch! And yes I'm sure there are areas in our lives we could cut back, the OP point is you would think we would be more comfortable than we actually are.

It doesn’t matter what you earn. Outgoings are the key. My salary is just over £50k (four days per week). However, I am actually worse off with regards to disposable income then when I got my first job after uni. I pay private school fees of £2600 per month. Once I take off the cost of running my car so I can get to work, I have practically nothing left. I am not complaining. I made this decision. Eventually I will work full time but I still won’t be any better off as the extra will cover the increased school fees as the children move further up the school!

100k always sounds a lot but I suspect the take home might be around 62k after tax and Ni deductions but that is still 5k a month. Is that right? A family of 3 could be very comfortable on that, but a family of 5 I couldn’t say. Your fixed costs are probably in the region of 2.6k and I imagine, after food, clothes and activities your just left with 1k after which family outings or couple nights and hubbies commute to work would take up the surplus so that I can see how holidays are a struggle. I guess it’s changing priorities?

So I’m guessing the take home after taxes of one partner on 100k is equivalent to 2 partners on roughly 44k each, combining to 88k. So after tax both households would bring home 5.2k a month in theory. If so you can see how once one goes on the higher tax rate there is a disparity between one income and 2 so 6 figures is not as amazing as it initially sounds, at least in London as mortgage, bills and transport chew up half that income.

Baydreams, I don’t think you’re coming across as ‘poor me’ I think you’ve put a genuine question to others on AIBU, in a way which is mindful of others (like myself) not in the same earning bracket.

Even though we earn less, we too tend to spend more when dh earns more. We haven’t saved when things like after school club expenses ceased, instead we tend to think we can now afford that tutor for Ds, which is money well spent but not a necessity.

I know where our money gets flittered away, the supermarket!
I don’t do one big shop, I work near to one of the big chains and can walk up in my lunch break. So for three days a week I just buy what we need for that evening, or that’s what I should do but I don’t! There’s always something else I ‘need’! I’ll then go to the more ‘luxurious’ supermarket chains on my days off I’m embarrassed by how much this all must add up to. This is something I definitely need to fix.

Someone said on here the other day that they find it strange that so many people on mn earn £100k when it puts them in the top 1% of earners...
the more I read this type of post the luckier I think we are. We are in the midlands - joint income £86k and we have quite a lot of disposable income. I’m so glad I don’t live in the south - what you have to pay for a house is ridiculous and keeps you trapped in the rat race.

I’ve recommended this book a lot on here lately because I found it almost life changing with regards to money and how you spend it - it’s called ‘the art of frugal hedonism’ and I recommend reading it.