36 year old couple… How bad are our finances?

[UpQuick]

DH and I both work. We have £25K saved in a Lifetime ISA as a starting point for a house deposit. We have a combined income of 4,000 per month, after tax. That’s to cover all of life’s expenses. We do have £2,000 on a 0% credit card.

we have recently moved from a rented house into accommodation provided by a family member. They are giving us a discount on this, so it’s helping us to save. We also have two DC age 12 and 9. The thing is, we would really like another, but I’m worried that would be totally irresponsible.

very grateful for opinions…

They are educated enough to know that, thank you.
But this is beside the point really. OP already has 2 children. It's about finances.

Its not about education - it's about lifestyle choices. Plenty of my friends are poor, have kids and are very happy. People on this thread would call them "irresponsible" etc.

My questions would be around long term housing.

How long is the relative willing to offer a discounted rent? If they are doing this to help you save, they might feel used if you actually use the discount to afford another baby… which will make your housing needs (whether rented or bought) even more expensive in the future.

What if something happened to the relative?

I would say this is a baby or house decision.

Have a baby and your finances will take a massive hit, while your future housing needs become more expensive and unreachable.
v
Stick with your 2 kids and keep your income and earning potential, use the advantage to buy a home.

How do you balance the quality of life for your 2 kids v your desire for a 3rd baby?

£4k a month after tax with only 2k of credit card debt? Without a mortgage I wouldn't have another child just yet but you should be able to afford some kind of property.

I think this only applies if the landlord was claiming back expenses. Otherwise, there’s no issue.

https://www.myersclark.co.uk/business-expense-when-charging-reduced-rent/

Surely it depends where the OP lives, if they want a house to buy in London, they are in a terrible position, if it's in one of the cheapest areas of the UK, they might be fine.

They are irresponsible if they rely on the state to provide for them or their children go short of basics.

Is the discounted rent from the family member specifically so you can save a deposit to buy a house? Has there been any discussion of how long this is for? If I was expecting to subsidise you for 3 years and you had another child so I was out of pocket for 10 years/indefinitely I might be pisssed off.

25k tiny savings!? How out of touch are you 😂😂

39% of people have 1k or less.

another daily reminder of how delulu some mumsnetters are..

I was reacting purely to the poster that said if your children don’t do extra-curriculars, you have ‘low standards’. If only well off people were encouraged to have kids, because you’re neglectful if you can’t afford banjo lessons, what then?

Are you ready to buy now? f you get a 25 year morgage now you'll have it paid off by 61. Personally I wouldn't want to be paying a mortgage beyond 65. Everyone is different though.

You are not in a terrible place financially, but not great either. Your joint income isn’t huge, you are renting, and it is unlikely you will be able to continue saving if you have another child. You are also vulnerable while you are renting in case circumstances change and you have to move out or your rent increase. Your kids are also entering teenage years which are expensive! I would focus on what you’ve got rather than having another child.

I wouldn’t personally. Yes you could grab a second-hand cot on Facebook Marketplace, but I’d want to ensure mine got braces, uni help, swimming lessons etc. I’m not talking skiing and fencing lessons … even basic scouts is £50 a term these days.

Personally, I wouldn't but everyone has different ideas on what a child needs (£ wise)
Cars, holidays etc plus you would need to get a bigger house when you do buy !

A great point about a family member subbing you reasonable rent , but to then choose to have another child is taking advantage a bit.

My opinion only of course!

Absolutely no from me. Big age gap when your older 2 are about to lead very different lives as they become teenagers. They will need all your support going into exams and they uni is very expensive.
Owning your own home has to be a priority. Renting is so insecure particularly as landlords are selling up in droves.
I'm sure a 3rd would be very loved but...that isn't enough.

I think that's a bit of an extreme comment in the context of OP's situation.

They already have two children and are clearly not in a good situation at all financially - I wouldn't deliberately be bringing another into this world with so few resources to go around.

I don't think that is anything like suggesting that only wealthy people should have children.

My DS has just finished his 3rd year at uni. It's not been expensive for me in the slightest. He's had his loan and a job all the way through Where's the expense?

Teenagers can be very expensive from school trips and hobbies through to university, I would think extremely carefully about another child. Can either of you increase your income, do any further qualifications and/or seek promotion? And use any increase to save and invest for future. Do you have pensions too?

@UpQuick as family member is giving you a discount, they could presumably rent out the property for more so effectively they are giving you the difference. How much longer do you think it will take you to save if you have another child vs if you don’t and do you think the property owner will be happy to subsidise you for a longer period? You should probably check in with them. They may view you saving the ‘discount money’ favourably, but spending on another child less so 🤷🏻‍♀️

Yes, a brilliant idea, go on UC because as a tax payer I really want to help finance your 3rd baby. I'll do as much overtime as possible to pay towards it.🙄
It's selfish to even consider something like this.
You are relying on good will of your relative for the renting to start with. If that went toes up and you are on UC you might need help in the future with housing benefit et al.
Such entitlement of some people.

I wouldn’t do it. When you’ve got two close in age, I’m not sure what a third with a big gap would add. If you only had one and wanted a second I’d probably understand a bit more.

Focus on the kids you’ve got. Get on the hosing ladder so you’re more secure and able to leave them something, because it’s going to be even harder for them to own a home. I can’t imagine your earning potential is likely to increase loads at this point and that will be further limited if you have another child given how intense the parenting is for younger ones.

I think if you need to work/your income is needed, you need to think about how much childcare would be (funding didn't cover all my needs) and wether you can afford your current circumstances/commitments with the additional childcare bill or loss of income.

If you can, then as a second thought, I'd be looking at can I do the above and achieve financial security and continue to save and be prepared for emergencies.

I couldn't meet the second if I had another child. So I didn't and couldn't risk the loss of security and independence if life threw me a curve ball. Coincidentally, it did throw me one (health) and that financial security has made navigating that situation so much easier. Others do make different choices though. But given you have other children to provide for.... financial security is important.

Do you have a pension? Most people are very under pensioned and this is something that also requires a lot of thought. The state pension may look very different come your retirement age.

But the savings are for buying a house. If they had a house bought and also had 25k cash..then I would say they are in a good position. But buying a house is expensive so that 25k will be gone (and then some) so in theory they have 2k of debt. They already have 2dc…they don’t need and cannot afford a third.

Do you have aspirations of retiring or owning your own home? Say you want to retire at 70 work backwards from then as presumably you need to be mortgage free then. So a standard 25 year mortgage would mean buying at 45 so you have 7 years to build up a 20% deposit… what’s a standard house go for in your area…. Can you get to that amount?

or are you happy to retire in a rental?

4k a month is a pretty good incomings. 25k savings is not so great in my opinion.

£4k a month is a decent income, and should be more than enough for a family of 4.
£25k saved is a nice amount, but doesn't seem like a huge about for a double income family pushing 40, who don't own a home.

I suspect it should probably come down to house or baby.