In not having much sympathy with a couple on £45k plus per year having some benefits cut?

[ssd]

There is loads of this on the news just now about how "middle income" families will be having some child tax credits cut and might be paying more tax. They news are showing what to me looks like comfortable off families having to do with a bit less. Is this really so bad? I know an income of £45-£50k per year might not be much in central London but will keep you in style in parts of the north, but how bad will it be? So people might have to change jobs/give up the second car/holiday at home instead of Spain every year? SO WHAT? There are plenty of us living on less than £25k a year who have had to cut back since having kids and take this as a fact of life.

I know MN is made up of mostly middle earners and I'll get pelters for this, but I don't really care. Anyone I know on a middle income can afford to give up some things _ its called life.

facinated here at the levels of sacrifce and puts people here are willing to endure.
On condition that its someone else taking the hit.
Youse are all blooming experts at spending other peoples money

Since the inflation figures today are starting to tell the true story, my advice is to start saving that child benefit/tax credits immediately that way if you loose them you won't notice and if interest rates go through the roof you'll have a cushion.
It was fairly obvious once QE started that the only way out of this mess is to inflate it away.

mamatomany, you are advocating that people save during a period of high inflation ?
Economics is not your strong suit is it ?
and it's lose, not loose

I'm advocating that people forget about their CB and CTC pretend it isn't there, then you won't miss it and if interest rates mean that your mortgage goes up by £500 a month you'll have that £500, well at least for one month eh ?

Oldmac - off to pedants corner for you

If we are in for a period of high inflation, my advice would be to spend now. If you have any spare cash, use it now whilst its worth more. Pay off debts, holiday, car etc. Its not a good time to save.
Also bear in mind that inflation is a patchy thing that affects different families in different ways, some will suffer more than others. So the savvy ones will look hard at their own personal inflation and do something about it.
for example, over the last few years we found our meat bill was rocketing, compared to other items. So we bought a chest freezer and once a year we fill it with 1/4 of a cow, 1/2 a pig and a couple of lambs. Our costs have halved

And where will you keep your half a pig/cow/sheep if you've been repossessed due to your mortgage doubling whilst wages stay static, that's all I'm saying.
Now would be a good time to make sure you have a cushion.
You don't have to put money into the local high street bank/under the mattress there are other ways of ensuring your savings stay competitive.

what part of 'pay off debts' are you having trouble with

While I agree that a family with an income of 45K should be able to take a hit of a tenner a week, I am at some of these comments.

If you borrow 4x your joint/total salary, and you have a deposit of 10%, then you have 200K to spend on a house. A house of 200K in the SE is not going to be a status symbol, neither is it going to have a dressing room or a ensuite. It is going to be a very basic house and probably not in a great area too.

Moving is also a great idea if you are young and in a job that is in demand in cheaper areas. DH and I have moved around a lot to follow the work. But we moved to an expensive area, because that's where the jobs are now. No point in moving to a cheap area to be unemployed!

Ah I see so instead of saving extra months mortgage payments you think writing a cheque for the entire mortgage is much more doable for 99.9% of people ?

Of course how silly of me.

Depends on your mortgage arrangements , obviously. It may now be possible for you , in your circs
but generally speaking, high inflation = spend now = dont save

Some real good points being raised on this subject.
My DH and I work fulltime and fall into the £45k bracket and we have 3 DC.
To say in a generalised sweeping statement that
'some might have to change jobs/give up the second car/holiday at home instead of Spain every year? SO WHAT? '
is not taking into account personal cicrumstances, any debt, etc.
To assume that £45k earners have 2nd cars, holidays etc is unfair.
The bigger picture of everyone having to budget, however much they earn should apply to help this country get out of this mess. I just hope somethings put in place to help those who are really struggling and genuinely need help if TC/CB are cut.
Not sure I've put my point across but we shouldn't make sweeping generalisations about peoples situations

Just to make everyone feel better about these cuts - if this is the first you're feeling things, be thankful. We are a higher earner family, just above the cut off for tax credits and we've already had a 10% cut in our income due to the recession and I'm nervous that we we'll see more of this in the next year. And yet we're managing to be thankful that my DH is still employed - not everyone is as lucky as us.

'Families with a £45k income' seems to be a massive sweeping catch-all. At the risk of stating the obvious, there's a huge difference between:

• families where one member earns £45k and the other earns something similar (so joint income of £80-90k for example)
• families where one members earns £45k and the other is a stay at home parent
• families where both members earn £20-25k, and probably have heavy childcare costs to boot.

If you're the latter, then no one single job is enough to support you both/a;;, you can't avoid the tax rises, you may lose out on increased National Insurance, you will lose tax credits and possibly child benefit... You're basically buggered.

To be in this bracket you don't have to be doing a 'wealthy' person's job - a nurse, trainee teacher, fireman etc would probably all fall into that bracket. Should we really be making people who do those kind of jobs struggle more?

There seems to be a wider issue hidden in this thread.

The UK has a very centralised economy compared to other countries (USA, Germany, Australia, Brazil, Canada, Spain, Italy, India, China, to name a few). By that I mean that too much of our economy (and population) functions out of ONE city, which dwarfs all others.

The impact of this has been a polarisation in wealth and cost of living between the SE and the rest of the UK. £45k does not have the same spending power across the UK.

Is the solution not to move some sectors of the economy out of the SE (eg arts/media/fashion/finance/politics/sport/transport)to even out income/wealth so that cuts/benefits have an equal effect on the standard of living of those on equal pay?

Yes, we are very London centric. We are in South Manchester but DH can only really work here or London so there's no point saying we could move to Norfolk because it's cheaper. There is a reason some areas of the country are so much more expensive than others.

Also, we couldn't sell at the moment as nothing is selling for anywhere near what we payed for ours in 2007. Oh and it's in a mess, and there's damp and the decor is awful. 600k for a house that's falling round my ears!

Yes, we have a big mortgage and that was our choice but we don't have a huge house or acreage of garden. Frankly, I don't see why we should work hard, spend years paying off seriously high student debt then settle for cramming my 3kids in a 2bed terrace just so I don't spend more than 350k on a house.

Do you not think if we could have spent 300k on a reasonable sized modest house with a garden within a good school catchment in an area where DH could commute to work we would?

30andmerkin - you've made the point I wanted to say but worded it much better than I could have.

We fall into the latter category, i.e. we both work (me part-time since dd and just started ML for dc due any day), we have a huge mortgage (for our 3-bed semi in the North!) which takes up my whole teaching salary and my dh's salary pays everything else.

We have to run two vehicles otherwise neither of us could get to work, we have minimal childcare costs thankfully due to family, shop at Asda, buy very few clothes for ourselves and have had no holidays abroad for the last 5 years (pre-dc). We could make small cut-backs but to say that we should just put up and shut up is unfair. We both work many hours and have trained hard for our jobs, but we are in no way extravagant or even comfortable. Each month is a struggle and by the looks of things going to get harder.

OK I've only read the OP (I know, I know!!), but argh!! at the suggestion of second cars and holidays

DH earns £42k, and we have one clapped out car (cheapest way for DH to get to work), and have just had our yearly holiday in Wales costing £150 (gift money I've been saving from my birthday and Christmas). We spend £900 a month on a small two-bedroom flat (for five of us). I scrimp and save on shopping. My and DH's clothes are ancient and we wear them until they literally disintegrate. The DCs mostly wear hand-me-downs or gift clothes from relatives.

I would LOVE to go back to work, but with three pre-school-age DCs would be spending more on childcare than I could earn.

We just about break even at the end of the month, but not always. If we lose child benefit or CTC we will spiral into debt.

30andmerkin - very well said.

We earn 50k. If I earned that alone and DH stayed home we would still earn 50k. However we both work for that meaning our childcare costs £15,000 a year leaving us 35k before tax. Cuts will affect us.

However when the DC's are in school we will be back to having an income of 50k again and would not suggest for one second that we needed any support on that income (we don't live in London).

I am really confused as to why the government want to remove childcare tax credits, 3 year old free places and childcare vouchers. They are such a relatively short term cost per family but keep people in work and therefore paying tax. Surely overall it wouldnt save them that much, especially as working parents also create jobs through childcare needs.

I know a lot of people are really and truly struggling but honestly, 'Tax the rich, they can afford it" really pisses me off. Why should we pay 50% of our earning on tax? It really is not fair that people who have worked hard to earn a good salary should have to just keep putting more in. I am not suggesting for a moment that people who earn less have not worked equally hard but I just don't see why we should put in a greater proportion.
My FIL paid millions in tax - how many people do that in their lifetime?

Littledawley again, I agree. I don't earn a huge wage but more than average at 35k.

However that wage has taken me 10 years of university which equates to 25k of student loan, 20k of tuition fees and a reduced wage whilst I studied. I also work in a job with lots of stress and very long hours for that money. In the long term it will be worth it but right now at the start of my career and paying off those debts why is it fair we are taxed more?

However I know the debt needs to be paid from somewhere, will impact on us less etc. It is just annoying when people start suggesting we are well off on this level of pay and somehow deserve to be taxed more because we have it easy.

OldMac makes a very good point re high inflation = spend more = save less.There is no point in saving money at the moment as the interest rates are so low that you will get very little return on any savings. If you can (and we were advised to do this)any money that we would have put into savings we have been paying extra a month on top of our mortgage payments - so payments due £550 per mnth we have been paying £700 per month and this has made a huge difference to the time left on our repayments.To pay of your mortgage faster (if you can)makes sense as sooner or later those interest rates are going to rise.

Cobbstar Unless you are paying huge chunks off your mortgage it'll actually make very little difference to the monthly payments, if we overpay by £500 a month our payments are reduced by £4 per month.
However if DH finds himself without a job again £2,000 in the bank will keep us afloat for 2 months, that is why there is every point in saving no matter what the interest rates and if you're smart you can find accounts paying the same interest as the increase in your mortgage.
Now ideally you'd chip away at the mortgage and have a rainy day fund of course.

Depends on the type of mortgage and building society of course, but we were advised by a friend (also a financial adv)to pay off our mortgage rather than save. any overpayment you make chips away at the original loan and reduces the time left to pay.This was after DP was made redundant 3 years ago after the firm he had worked for for 15 yrs went bust and we had no money coming in as the liquidators had to pay off the creditors (banks) first and there was no money for the employees.We explaned the situ to the building society who reduced our payments to £50 mnth so we didn't default on the mortgage. DP was out of work for 3 mnths, got another- better - job in London and we now pay the extra on mortgage as wldn't want to be in position of nearly losing house again.In last 3 years have reduced time left on outstanding loan significantly.

But when they reduced the mortgage to £50 they added the difference to the total balance so all you did was tread water for three months and you were at the mercy of the building society and banks kindness, not something I would want to be relying personally.