To have expected more in life from working to reach this salary?

[grethrow]

I’m early forties and earn 75k. I know this isn’t huge money but it’s well above average salaries in the uk. I worked hard to get to this point (I’m not saying people who earn less don’t work hard).

I guess along the way I always thought I would be able to have a really comfortable life on this salary. I have one ds who is 11 but his costs don’t really factor in much as his dad pays for most stuff (ds lives with me so dad pays a decent amount).

I assumed going on holiday would be easy but renting a cottage in Devon in a nice area for a week is around 1,500, then there’s travel costs and food etc when you’re there! Going abroad long haul is extortionate. I guess these things are just about doable for me but it’s not easy.

I am having a privileged whinge. I know that. But I do feel sometimes like maybe at 18 I shouldn’t have bothered. My parents had a similar income (taking into account inflation) and me and my brother both went to independent schools, grew up in a large home and parents had very nice cars. It wouldn’t be possible for me to go and buy a nice car outright. I know people have it much worse but I still feel cheated and like it is a slog for very little, fair of me to feel this? Do others feel this?

I'd make it nearer £2k left over.

OPs on threads like this rarely come back and explain what they do with their generous disposable income.

Either because they don't want to admit the amount they spend on luxuries or because they aren't actually struggling at all and just enjoy to watch people frothing.

Hmm. Not going to start one, as I don't want to add to the hype tbh.

I think the country will get there because there will be a huge influx of foreign cash invested and the pressure on Spain resorts will push price conscious there but the stolen cars (you have to see it to believe the scale of it), the chaos of driving, the mountains of litter everywhere, the levels of poverty, the number of things literally gaffer taped together, electrical appliance disaster zones, the pollution and a willingness for some (not all) to rip off people they see with money are going to be persistent for quite some time...

None of this is appearing in those wonderful insta pic.

I'd also say the price of things wasn't as low as you think - certainly not on anything western branded unless it was knock off. This is particularly true on food in supermarkets. I've been to other parts of the Balkans and found it cheaper there than Albania. Including on petrol. You can't drink the tap water (indeed the recommendation is to make sure you have an up-to-date Hep A and Hep B vaccination which you don't have for almost all other places in Europe because of the quality of water). Which means you have to buy bottled water everywhere. This isn't cheap even in non hot spot places.

ATM it's being pitched as THE new place to go. It's not. Not quite yet. There will be a bunch of people who go on package beach holidays in the next couple of years and will either rave about it due to it being quieter than the busiest places in Spain or will have a whole bunch of horror stories about incomplete resorts, shit beaches and places not being anywhere near as nice as they'd been sold. Because it's being oversold and overmarketted at this point. I'm watching out for the Fail Splashes about Holidays from Hell.

Off the beaten track away from the beaches there's no tourist infrastructure at all. Just litter. And no parking. And maniac driving. Omg the driving.

Don't be tempted by the Albanian Tourist board!

I'm used to more unusual holidays. I've been all over the Balkans. I don't mind somewhere that's not 4*. Albania pushed my limits on many many fronts.

I think these threads reveal three things

• there's a lack of understanding that a single salary of £75k isn't as much as people think after tax/benefits - the gap is small that people realise in practical terms

• there is lifestyle creep and unrealistic expectations
• people are pissing money up the wall without realising it and unaware of how to get better value for money, without necessarily compromising too much on what you get.

This results in people on bigger salaries often being financially worse off than they should be, potentially to the point where they are financially less secure.

All these things can be true at the same time. They aren't mutually exclusive.

You missed the actual point the OP was making - which is that objectively living standards have declined in the UK.

No I haven't.
I've covered that in previous posts.

HTH.

I didn't leave any decades out.

I calculated how much the total cost of a 25 year term mortgage on an average price house - taken out in 1980 - using historic interest rates. It was 8 times 1980 average salary.

i calculated how much the total cost of a 25 year term mortgage on an average price house - taken out in 2010 - using historic interest rates to the current time and assuming rates would stay at 6% for the next decade - which is pessimistic. It was 10 times 2010 average salary.

There really isn't an inter-generational opportunity-changing difference in mortgage repayments between those. It comes to 32% of earnings spent on mortgage for a house bought in 1980 versus 40% earnings for a house bought in 2010.

This isn't opinion, it's maths.

No major generational difference.

But there is a huge regional difference.

Average price for a property in London is £647k and median price £500k. Average salary in London is not dissimilar to the wider UK.

So it's more than twice as hard to buy a property in London than it is elsewhere in the UK. That's the problem, not generational difference.

@RedToothBrush
I'd think £4k+ take home per month is pretty good, not many people are on that.
OP has failed to reply to the countless asks of where does her £2 disposable income go that she can't save for a holiday.

Rightmove. Still see similar prices in that area now so i can only imagine you aren't comparing apples with apples. W Dids which is considered quite a good area.

Edit: just seen a flat in the very same block renting at 1450 pcm. Maybe it has slightly better features than the one we had. Still an increase from 600 to 1450 in just under 15 years is mad.

I had 2 sandwiches and 2 drinks in West Dids recently. £35.00
For eggs and bread basically.

In 2010, the interest rate was 0.5%.
Today it is 4.75%

Rent prices will always change with the interest rate because interest rate determines both how much the landlord has to pay for money they have borrowed to buy the property and also how much money they could get by selling the property and investing the money elsewhere.

£600 in 2010 is worth £960 today allowing for inflation. So £1450 is only 1.5x higher allowing for inflation.

Not bad at all when the interest rate is 9 times higher than it was in 2010.

Must be an area where the landlord expects much higher than average property price growth!

The idea is that it replaces benefits, yes. Everyone gets it, no strings. It is a basic income only though — enough to survive on but not enough for any luxuries.

There was a pilot in Canada I think (sorry, i haven’t got a link but you could Google it) which was unfortunately abandoned but still gave loads of really interesting data. It showed that actually, it didn’t encourage people not to work. Most people continued their jobs but just had a better standard of living and less worry/insecurity. Others used it to retrain. People stayed longer in education, and it particularly benefited women.

Parents could choose longer maternity and paternity leave. The data on the reduction in childhood psychological disorders and reduction in medicated anxiety and depression is fascinating.

I think it’s a valid way forward as it also means employers have to raise both their wages and their conditions to keep people in menial jobs. There is more money in the economy etc…

Obama is a big advocate.

Well, my gran lived in a 4 bed detached in west dids. Sold after her death in 1990 for around 90k. Now worth 1.6 mill!

Blimey!

So when a property is expected to appreciate (significantly more than inflation) the landlord can accept a lower rental, because part of their verall return on their investment comes from the asset appreciation.

Generally, the higher the expected house price appreciation is, the lower the rent will be in comparison to the house purchase price.

Your take-home pay is around £4500 per month, plus the “decent amount” which DC father pays (assume £1-2k per month, tax free…?). How on earth are you NOT enjoying the nice lifestyle you seem to want? Have you actually looked at what your outgoings are? Even with eating well, £130 a week on food for two people is excessive!

Only it doesn't really work like that. Landlord will charge to the market rate.

The library in my town isn’t even open anymore. I loved going as a child and wanted to start taking my baby there but the nearest one is a bus ride away and has very limited opening hours plus is tiny! It’s such a shame to see places like that be shut down yet there’s about 50 play centres open- it’s no wonder kids struggle to sit and focus nowadays.

I work at a nursery so wanted to clear up the childcare “benefits” confusion. It does vary by nursery how they divide it (e.g. some cover less hours per week but include school holidays). Where I work all children over 3 get 30 hours per week. Children aged 2 (but soon it will be as low as 9 month old baby’s) you get 15 hours per week. However, you still have to pay a daily fee to cover costs such as food, around £10 a day, out of pocket. The only parents getting additional funded hours on top of the 15/30hrs are on extremely low wages, much lower than 30k. My nursery only has about 2 parents out of every hundred receiving this.

Yes of course. But market rate doesn't come out of thin air.

Demand will feed into it as well of course - but those factors will affect supply. Market rate comes from both.

That's what has made rental prices increase so much over the last few years - much more even than house prices.

It's a reduction in supply caused by:

• higher interest rates making alternative investments more attractive / any borrowing more expensive
• new regulations making it harder to get rid of problem tenants (so landlords have to cost in the higher risk of lost earnings)
• fewer individuals (rather than firms) buying to rent due to higher stamp duty for 2nd homes, higher council tax for 2nd homes, and also a hostile social narrative about landlords

And also an increase in demand as higher COL and stagnating salaries (compared to inflation) has increased demand by increasing barriers to buying.

Perfect storm.

I've never been a landlord, so I'm not being defensive about landlords. It's just basic economics.

I found a trial in Ontario - is that the one?

It was only aimed at low income participants, so effectively they were trialling something very similar to our existing benefits system.

I haven't seen any trials which found improvements in mid- to high- income participants. Would love to see one - I think it's very difficult to theorise on what would actually happen. Humans are complicated!

Any study woud need to be quite long term as well as across different income groups and other demographics. I can imagine that behaviour would take several years to change, and there would additionally be a change when it became the norm across generations.

I can't really imagine how it could work long term, in anything but a very small homogeneous group. My observation is that policy only works if it is based on normal human behaviour, not denying it out of idealism of how things 'should be'. It's very appealing though, so I'd love to be wrong!

I completely get you OP. It’s because stuff is really expensive, house prices have rocketed and wages as a whole haven’t kept pace with inflation for years. Plus I think things have shifted as in many households now both people in the couple work. I think initially this was to their advantage but now it’s become a necessity really for people to manage. So although your salary is good, it isn’t large detached house and private school good any more. You need two good salaries to afford that, certainly in the SE anyway.

Your calculation, although arithmetically correct, is, I think irrelevant. Consider two countries initially identical. In both, average salaries are 10k, average house prices are 30k.

In country A, there is no inflation and interest rates are 1% for the entire life of a 26 year mortgage. The total repayments are approximately 34k. [25 annual payments of 1.3k. In Excel. =pmt(1%, 25, 30000) ] Total payments are 3.3 times average earnings at time of purchase.

In country B, inflation is 5% and interest rates are 1% real , so 6% in money terms. Salaries keep up with general and house price inflation over 25 years. Annual payments required are 2.6k and total payments over 25 years approximately 59k. - hence, total payments are 5.9 times initial salary.

At the end of 25 year, in A, salaries are still 10k and house prices 30k. In country B, salaries are now 34k and house prices 102k. There is no reason to think that those in country B are any worse than those in country A because they have paid a bigger multiple of their initial salary. Also, those in B are not better off just because their now-owned house is worth 10 times their initial salary rather than 3 times (as in A). All prices have increased similarly.

tl;dr
where there are different levels of inflation, it makes no sense at all to compare the ratio of 'total mortgage payments' to 'salary at time of taking out the mortgage'

That is true. I didn't allow for speed of salary increases being different.

It does depend whether salary increases match interest rates. You'd need to use the interest rate - salary inflation rate instead of simply the interest rate for each year to do a proper comparison.

Any idea whether salary inflation kept up with interest rates in the 80s? The fact there were so many repossessions suggests not.

Also worth considering that £75k now is basically equivalent to £55k in 2016, which wasn't considered a massive salary back then (although it was definitely a good salary), and that's before you even take into account the fact that the tax thresholds haven't moved. When you do that, it's closer to the equivalent of £45-50k.

£75k feels like it should be an absolute boatload of cash, but it isn't in real terms. In those terms...I'm on £85k now, but my life now isn't any different to our lifestyle when I was on £56k in 2016. It's mental what the last 8 years have done to the economy.

Note that I'm not complaining at all; just remarking on how weird the difference is between perception and the actual maths of it all.