'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.

Just to add that one round the corner from me went for offers over 110k.

It was in move-in condition - new windows, doors, bathroom, kitchen, carpets - but had no access to the road - middle of a terrace that runs at right angles to the road. Front and back garden, with both being accessed from a common path.

https://forums.digitalspy.com/discussion/2315883/grange-hill-filming-locations

Wow! That wouldn't even pay for the windows, doors, kitchen, bathroom and carpet down here! Let alone a house to put them in!

?
there were 5no. 4beds that I posted. Not one. One for July I think and others were for September. One 4 bed flat went for less than £200,000!

If I looked further out there would be more, just noting the general gist though.

Its worth noting the market is very slow. People, inc my relative, are putting props up for too much and then invariably reducing the price. Last year most props ( exception new build) that sold had been reduced in price at least once. Such is the market at the moment.

I think the point some people are making, that is being missed, is that the reason the higher earners are struggling due to mortgage increases is that they bought to their means, without considering that interest rates and fuel, could rise rapidly. If they hadn't done that, their lifestyle would be a lot more comfortable.

Most people who claim they live comfortably with multiple children on an income of 20k aren't accounting for the many benefits they receive. Often the rental support, childcare support, child tax elements, child benefit, all received tax free bring the household income to a much higher level.

DH and i are comfortable/well off. We have 250k a year or so income & 2 kids and are past the worst childcare bills.

We pay a lot in tax, and get in 12k a month after tax, ni, pension etc. £6,500 immediately goes out for mortgage, bills, kids activities, childcare. Around £500 of that is things we could cut easily - family gym membership & a weekly cleaner.
Of the other £5,500 - around £1,000 each goes on travel to work, coffees and lunches, meals out, buying gifts, cosmetics eg makeup, clothes and shoes including uniforms for children, charity giving. We drive old cars bought outright, mine is about 7 yrs old, DHs is a 56 plate, neither are high end brands.

£1,000 each is saved - our mortgage is only 3% atm and we need to save to reduce the balance before rates rise. Some of the money goes in accounts for the children.

The other £1,500 is what makes us feel comfortable/well off. It pays for holidays (not skiing etc -our summer holiday is a week in a self catered plus a week camping, all in uk, plus we have a week in spring or autumn in france or spain self catered) a new bathroom, when the carpets needed replacing, plants for the garden christmas, unexpected car repair bills or vet bills, house repairs eg we needed a drain unblocked recently & it was over £1k. sometimes its not spent and goes in savings.

If we chose to pay for private school, we would not feel comfortable. It would cost around £2,500 a month for 2 kids, so "comfortable" money would be gone, so would half the saving money. That would then have the knock on effect that the most of the other half of the savings money would go on higher mortgage rates when the fix ends.

We live in a 190sqm 1980s house with a modest garden in the south east, its a nice 4 bed but its not a mansion.

We are incredibly lucky but not rich beyond belief in terms of how we live.

I think it ran for 20 years but don't know. I think you're missing the point, it is not where it was filmed, the point I'm making is that it is based upon a school in North West London, the school was pretty rough and was a reflection of life in a London comprehensive. London does have people that were born and grew up there but on these types of threads that's irrelevant, local housing can only be something considered for the Cornish or those people that have been priced out by Londoners. Londoners they were born there and grew up there are just told that they can move away from their roots and families like it is insignificant.

My nephew moved up to Scotland because of work. He's now happily married to a local girl and they have three children.

There's no way he'll ever be able to move back down to the south of England, because of the disparity in house prices.

That"s right, many chose to ignore (or just did not know?) that the historical average base rate is about 5 - 7%.

Interesting.
Friends of ours are moving out of London to Watford next week due to col. and needing a larger property. They’ve got a 3bed for £360,000 ( they negotiated down )
Estate agents now call it Watford, London!

We left London for Kent for the same reason.

I'm not sure this is true. The banks stress test mortgage applications for affordability, even they didn't build 14 rate rises in quick succession into their calculations. And also factor in an energy crisis and crippling inflation for 2.5 years, so its not just people choosing to go big or go home when buying a house. Plus, most people quite rightfully think if they can minimise future house moves with the bonkers costs they might as well get into a property that will last them for the foreseeable.

This house isn't the same area, but it's very similar:

https://www.onthemarket.com/details/13619294/

ETA It needs a bit more work than the one that I mentioned.

Very easy to illustrate:
Mortgage 5k (3 bed terrace in need of refurbishment, naice middle class SW London zone 2) = 60k a year.
2 kids at independent secondary = another 60k
-> that is already 120k a year before food, bills, holidays, car/transport, days out…

Ofc it is a choice to live in this area but that is the point of the article: the middle class lifestyle is becoming out of reach for households earning 60-120k

Looks like it ran for 30 years! Obviously it was irrelevant long before that, and IMO should have had the plug pulled in the late 80`s, can"t really see 90"s or early 2000"s kids relating to it? I take your point about Londoner"s they are probably worst affected by what cheap debt did to their city.

When I said less than 20k I was including the universal credit top up actually if I just counted my earnings it would only be about 9k a year lol

I can't feel sorry for posters saying they earn 60k - 120k and are broke, I appreciate they pay more taxes but y'all are still far from broke.

A lot of you are living beyond your means and can't accept that

Yes, exactly this but also where is this choice of ''thinking big' as opposed to 'thinking small' coming from, in our case it was buy the 2 bed small house so that you can convert the garage and accommodate your boy and girl DC or stay in a flat and perhaps put a bed on the balcony with some extra blankets in the winter! Talking nonsense!

Completely off point @WearyAuldWumman but as you’re a Scottish teacher have you seen this in the news today.

😀for those of us who would love to move to an island !

We earn 126k together evenly split. Whilst I am sure it sounds like a lot, our mortgage is 2,000 per month on a flat in London and our nursery fees are 2,000 per month. Our current take home is 7k - so out of that total 4,000 goes out without us even thinking about it. We are currently left with 3,000 for everything else. Yes, our childcare costs will be lower once they are in school, but this takes a while particularly if we have another one. As people have said, it is housing costs, childcare but also because everything in London costs so much. We should probably move out but our family and friends are all here.

Since when has private school been part of middle class lifestyle?
Despite the hundreds of Mumsnet threads Only 7% of children are at private school, it's an upper class thing not a middle class thing.
Stop living beyond your means

Agree with this above and it would be interesting to see how better off people with no help are vs people on UC, taking into account the above.

Off the top of my head I’ve lately paid for an eye test, a child first aid course, new boiler, all of which would have been free or heavily subsidised if on UC.

Yes private education is a luxury. It is not reasonable to class it as a standard middle class expense.

I mean private school is not really used by many but it certainly isn't just an upper class thing, who are you talking about? We aren't living in the Edwardian era.

There’s a thread on MN about the 20% tax on private schools and I think a lot of MNs commenting on there would disagree with that, from their own personal experiences.

Ps
‘Im’ not saying it’s any way a standard middle class lifestyle thing.

If you’re on £120k combined with no children but can only afford ‘city breaks in Ibis’ hotels flying with cheap airlines, what are you spending your money on? Not being goady, I’m genuinely confused as to how you could be in that position to only afford cheap holidays. Unless you’re actually going on 10 of those holidays a year.
My childless DD and her DH have a combined income of 50k, they run a shared car and go on about 6 city breaks a year staying in decent hotels. They have gym memberships and eat out. Granted I assume their housing costs are much less than yours but their combined income is also less than half of yours!

You cant really complain if you haven't tried moving to the North yet. Forget about family and friends, these are a luxury that you can't afford to have.