'Middle class earners' - struggling to cope financially and can no longer afford comfortable living standards despite having household incomes of between £60,000 and £120,000- Guardian

[fluffykittens208]

https://www.theguardian.com/business/2024/mar/04/middle-class-workers-mortgages-bills-tax

Excerpts:

'Scott was just one of scores of middle-class earners who shared with the Guardian how they are struggling to cope financially and can no longer afford comfortable living standards despite having household incomes of between £60,000 and £120,000.
A report last month from the abrdn Financial Fairness Trust highlighted how Britain’s insecure jobs market and high housing costs are leading to the growth of a precarious middle class. These households are struggling to maintain a decent living standard on joint incomes as high as £60,000 a year. That compares with the median gross annual earnings for full-time employees of £34,963 last April.'

“It does seem that the only way to be on a middle income and doing OK at the moment is to be a Dink and living in the north.”

'Although respondents with children reported more precarious finances than those without, millennial childless couples say they barely have any disposable income either.'

Personally we am coping ok with a household income of £120k and still eat out/have a lot of city breaks, but I wonder if that is only because of our specific circumstances

1. small 2 bed flat in zone 3 London so we don't have a car and where it is possible for DH to cycle to work. Would probably always stay in a flat even if income doubles so it makes more sense to stay in zone 3 if living in a flat.
2. were able to live at DH's mum for 3 years while working in London and bought in 2019. We were able to overpay a mortgage on 2% interest during the pandemic and plough our pandemic savings into it which means the new mortgage rate isn't as painful.
3. fertility problems so we are still DINKY and unlikely to have more than 1 child (am already 32 this year).

As a disclaimer i don't think the chancellor should cut taxes despite us all feeling the cost of living crisis as 40% of tax revenue comes from NI and income taxes so if they cut taxes, they would have to cut services and I have no desire to pay for healthcare privately in my old age.

But it feels very strange to read about people struggling in the news on our household income, probably means that the income threshold to be 'comfortable' (without very specific circumstances that lower your cost of livin) is much higher! Would hazard around £150k to £250k now. Basically we are going to be a hugely unequal society where only the top 5% can expect all the middle class fixtures and the rest of us have to pick and choose or live a life of penury and no luxuries i.e. car or property in expensive location; 2 children and no savings or 1 child and savings. Far luckier than those in the bottom 50% obviously but i am not sure how you can say you are middle class when the only reason you can afford to eat out and have nice holidays is cos you purposefully cut back on things people used to expect if you were doing semi well i.e. 2 kids in a suburban semi and a car on the driveway.

They are struggling because they lack financial education and have no idea how to manage money. They live above their means by buying houses they can't afford and financing cars they can't afford and eating out too much.

I have older colleagues who bought houses on interest only high LTV when earning 25k (similar to 47k today) & borrowing as much as possible. They did really well with their lack of financial education & lending was tightened up after 08.

Yes, the cost of living has gone up. Salaries havent caught up. There must be a point where people arent spending the money they no longer have so jobs lossess start to happen.

@RiderofRohan its changed but I was referring to people already on the ladder.

The post in question was about not being able to afford to visit her uncle in Cornwall, not about her daily commute.

Exactly my point.

People are complaining about struggling while the majority of the country have to live on so much less. It's ridiculous.

Our costs as a household have gone up dramatically too- obviously we aren't living in a bubble. But we've cut out the luxuries, made a strict budget and we're fine. Part of it is we drive a 4 year old non-fancy car we bought outright and said no to the big mortgage. We're super fortunate as higher earners to be able to do this.

What about the people who were already living on the breadline?

We earn 120k between us. We live in a nice 4 bed detached house. No issues about affordability for that whatsoever. We save a decent amount every month.
We have 2 children, one of whom was in full time childcare in London until very recently and we were paying wrap around care for our oldest on top of that. We now pay wrap around care for both of them.
2 foreign holidays a year plus a couple of UK trips.
I think for most people struggling on 120k, surely it must be due to choices they have made because we find it more than enough for anything we could want to do.

Mine would fit that criteria if an hour on the train to central London suits you.

The biggest issue is housing has lost all links to average earnings.
People seem to think - yes move north houses are cheaper - yes but so are the salaries.

Anyone want to guess what a house that sold for say around 4k in 1970 costs now , and what it would cost if house prices had risen in line with inflation ?

Minimum wage is still minimum wage and is exactly the same whether you live in St Ives or Doncaster.

why can't we have discussions about both? but that the previously comfortable life they had, they no longer do and to them, its still a big adjustment. Why is the response always, well other people have it harder so be quiet? Everyone has a right to respond to the cost of living crisis and its impact on them.

People also seem to think they can get a 3bed semi with a driveway close to decent schools for 100k. Which you absoloutley cannot.

To be in a 3 bed terraced with on street parking in a reasonably safe location with reasonable public transport /access to motorways, and mediocre primaries and a failing secondary school is still close to 300k. In the North.

But we are on the ladder. We have a flat in London that's too small for us and our mortgage is £200 more than the rent our tenant pays thanks to the interest hikes. Yes it sucks, but we just have to budget around that loss because it's a bad time to sell.

It's currently cheaper for our tenant to rent from us than buy the same flat. It's also cheaper for us to rent from our landlord than buy the house we live in, so I guess it works out for us in some ways.

if thats a joint income, then you will be getting more than a family on one income of 120,000 so thats something to consider too.

which part of the north is this?

My friend keeps telling me that his ex londoner friend bought some 100k house in Urmston. this was in 2019 when i was buying my london flat for 400k. i am guessing that house prices have gone up but if its 100k then how much more can it be? £150k?

I think the Fed will cut well before the nov election. They have the dual mandate re inflation & employment so keeping rates high until the US jobs market cracks is not really an option. Not sure what the relevance of BoJ is?

People are complaining about struggling while the majority of the country have to live on so much less.

@RiderofRohan why do you think the majority of the country have less disposal income?

Depends on the sector you work in. I would earn the same anywhere else in the country (aside from inner London) - and my DH works for an international company from home, so his salary isn't lower for living up north either.

when exactly did you buy your home? I bought in 2019. Am on £120k combined.

I am not struggling but i cannot afford a 4 bed detached house anywhere in London or even in the SE! probably up north then but would both need to quit both jobs and as like a PP says, a 3 bed semi near decent schools in the north costs 300k.

@wherethecityis when did you get on the housing ladder?

In the north - I had a 2 bed terraced in 2019 bought for 135k sold for 175k in 2022.

I was recently made a single parent and on working out household expenses require 4k a month to maintain our basic life. Mortgage and bills and nursery and leaves just enough money for food and fuel. No holidays. I don’t have this income and have no idea how to survive. Our house is not fancy. A basic 3 bed semi in the south east. This is where our life, support and friends are. I am scared for the future.

Go on Rightmove or watch Homes under the Hammer. It might be a shitehole, or a 2 bed terrace with no parking in a terrible area. Not all 'the north' is the same. I've just bought a house in the central belt (Scotland) for round about what you spend on your flat. 4 bed detached, but bog standard normal house.

@RiderofRohan but you can’t have had your flat years although I know London flats in have suffered since Brexit. Certainly my house would rent for more than my mortgage now because I didn’t buy today.

We're a family of 5 bringing in 100k and we're struggling 🤷‍♀️ we don't qualify for anything except the tax exemptions on childcare which we don't actually need anymore. A mortgage, 2 cars and bills wipes us out and we're in the Midlands.