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Original poster

Can we live on 42k?

98 replies

Canweaffordit · 17/09/2015 16:49

Name changed as embarrassed as speaking about money Blush blame my parents.

So I am on mat leave, due back in December. DH just been promoted. New salary is £42k so take home is about £2400 a month after pension student loan etc. Our month to costs are mortgage £800, council tax £200, utilities £100, tv/mobiles/contact lenses/ insurance etc is probably another £200. No fuel cost as company car provided.

We are discussing me not returning to work and whether or not we can afford it. We in the past have been not very careful with money, just spent what we wanted too. I used to earn £1900 a month but will drop to just £500 as I would be going back part time and nursery costs would come out of my salary. We do operate as "one pot" but easier to explain this way Grin

Do you think it is manageable ? Does anyone else have similar income/expenses? I understand e won't be having twice yearly holidays, slap up meals etc

out

OP posts:
Original poster
Canweaffordit · 17/09/2015 16:51

No idea why I have left "out" at the bottom of my post Blush

OP posts:
AnyoneButAndre · 17/09/2015 16:57

500 a month would be a lot better as a take home income after childcare than some people manage. However £1,100 monthly disposable income for two adults and a baby is of course incredibly manageable in the short term.

The key question is what your plans are for the future. Are you going to have another child? Or two or three? What's your job? Is it the sort of job you'll be able to return to easily after a break of two or three years? Is part time or some WFH feasible? Are you ever planning to work again?

mysticlogistic · 17/09/2015 16:57

Its not really that clear. Is 42k your salary with both of you working or with you not going back? I don't see why you wouldn't manage but then you would probably have to change your lifestyle quite a bit. We are in a similar situation that has resulted in us doing 90% of our shopping at lidl, not eating out and no soft play. Other than that everything else is pretty much the same and it doesn't feel much different.

Iamnotloobrushphobic · 17/09/2015 16:58

How much do you estimate your food, clothes and entertainment costs to be?
Will you be saving on travel to work costs and work clothing?
Do you have any savings to cover household emergencies /repairs?

Bolograph · 17/09/2015 16:59

No fuel cost as company car provided.

Have you factored in the tax you'll be charged on an expensed car? £2 400 is about right as take home for £42 000 in the absence of company car tax, but if you have a fully expensed car that's a huge benefit in kind. A quick glance at the HMRC calculator says that an expensed car with a list price of £18 000 and 140g/km CO2 rating would cost you about £1 800 a year in tax as a standard rate tax payer, about half of it the benefit in kind for the fuel (a five grand benefit!). So if you aren't spending five grand a year on private fuel, it's a dubious benefit...

antimatter · 17/09/2015 16:59

Company car is big saving to you.

Are you sure you aren't going to miss on employment prospects once you take long gap?

Some people do the saving whilst living for few months prior to going on Maternity on a planned lower income. Have you considered that?

How soon are you going to go back to work because during those early months your income would be even lower.

Bolograph · 17/09/2015 17:04

Company car is big saving to you.

There's a reason why a lot of people take the cash alternative if it's available, you know. A company car is a saving if you were going to run a car of that standard anyway, drive a lot of private or commuting miles and would have to finance the cost of the car. If, say, you have the price of a decent second hand car in savings, don't drive much at the weekends, aren't an insurance nightmare and only commute ten miles, it's much more dubious. The company tax charge of cars is very high, particularly if you're a higher-rate tax payer (as the OP's husband isn't, quite, but might well become).

We were both entitled to company cars for most of the last fifteen years, but gave them up: we ran the contracts to the end, bought the cars off the lease companies (they sell them for buttons) and ran them ourselves. Modern cars will last fifteen years. We were several thousand pounds a year better off by doing this.

Mintyy · 17/09/2015 17:08

We pay just a bit over £800.00 on our mortgage and absolutely definitely couldn't manage on a take home salary of £2400.00.

Well, we could survive if we had to I guess, but not for very long.

annielostit · 17/09/2015 17:16

Take home for £44.5k including car tax payment/ pension/healthcover etc is approx £2450/month.

Original poster
Canweaffordit · 17/09/2015 17:19

Thanks.

To answer questions.

There will maybe be one more child. DS is the result of ivf. We have a few frozen embryos and statistically speaking one sibling would be a possibility.

I can return to work. I work in finance and a gap shouldn't be an issue. If DS is our only child I will return to work full time when he is 3. If we have a second child I will return when he or she is 3.

42k is my husbands salary pre tax so will be the amount we have to live on if I don't go back to work.

Very little savings on my work travel and clothes, maybe 500 a year.

We have about £6k savings. I don't really want to use them too live on. We also have about 100k equity in our house but we wouldn't want too/be able to remortgage.

Food clothes entertainment I would estimate at about 600 a month. Does that sounds right? We spend an awful lot at Asda/tesco etc. It's def an area I need to learn how to save in.

Thanks for the pointing out the fuel. Truth is I don't know. He described it as being a company car that everyone can use but it will be ours out of work hours. I will need to check this.

OP posts:
Bolograph · 17/09/2015 17:22

He described it as being a company car that everyone can use but it will be ours out of work hours.

You need to find out exactly what basis it's on. Will you be able to drive it? Does he have to take it to work each day (ie, if you need it that day, can you drop him to work and then use it?)

And are you sure it's expensed? Fully expensed cars with a fuel card for private use are pretty rare these days, and as I point out very expensive in tax (a benefit in kind of five grand).

Original poster
Canweaffordit · 17/09/2015 17:22

Oh and I do definitely work in finance. But nothing resulted to personal finance which is why I know nothing about the fuel issue etcBlush

OP posts:
TabithaTwitchEye · 17/09/2015 17:23

I think it depends a bit on where you live? I do t think I could manage it in London

Original poster
Canweaffordit · 17/09/2015 17:24

I won't be driving it as i don't drive and walk everywhere so not an issue.

He has to take it to work and he will have a fuel card type credit card thing.

OP posts:
Original poster
Canweaffordit · 17/09/2015 17:28

Not London but we are in an expensive city much further North.

OP posts:
shovetheholly · 17/09/2015 17:38

It's really something only you can answer because individuals vary so wildly in their expectations and their willingness and ability to economise!

This is just a personal opinion, but I think there are a definite set of skills that come with surviving real poverty (I don't mean your cut in income, OP, I mean being absolutely on the breadline). It is amazing how little you can 'survive' on, but it is NOT by any stretch of the imagination 'fun'. However, it does mean that you gain a perspective where your baseline is really, really low, so that anything 'additional' always feels disposable - you know you CAN get by without it if you have to. By those standards, your disposable income after everything is paid would be positively princely. It's easily enough to have quite a pleasant lifestyle, unless you are a really big spender who can't manage without a lot of consumption.

However, if you've always been used to having plenty and never had to struggle, I think paring things back can be much harder. DH is much more like this - always had bank of Mum and Dad, never struggled, and wouldn't have the first idea how to cut back if he ever had to. He's not profligate or spendthrift by any stretch of the imagination - he just doesn't know what it's like to go cold and hungry is all!

addictedtosugar · 17/09/2015 17:38

Well, those sums say that you have 1k for food, treats, birthdays, Christmas etc.
I'd say doable, but tight.

I think £500 post childcare is great. So would consider going back to see what you think after 6 months. Try putting all your salary, after nursery fees, into a savings account. You'll be able to see if you can live on DHs income, and also have a few grand stashed away.

Can either of you get childcare vouchers? They make a big difference if you haven't already factored them in.

annielostit · 17/09/2015 17:39

Re fuel for car, oh puts in fuel, then puts in work mileage monthly, they pay back the difference. Worth finding how it would work. We're usually 2 weeks behind.I'm insured to drive it too.

Investmentspaidout · 17/09/2015 17:42

It depends what standard of living you want, at least you have some sort of choice.

Of course you can manage and people manage on a lot less but do you want to? My friend took herself out of the workplace for many years and I think she regrets it. I would take ML and see how you feel and leave all doors open and all options available.

How old are you?

gingerdad · 17/09/2015 17:45

We lived on 24k when had DD's

Want2bSupermum · 17/09/2015 17:45

How much leave are planning to take for your first?

If you are not sure about being able to have a 2nd DC I would be hesitant to stop working. Once your DC is at school, which happens sooner than you think, you will feel the impact of the reduced income. If I were you I would go back after DC1 and see if you get pregnant with DC2. If you do get pregnant with DC2 take a full year of maternity leave and try out living on the one wage. If you can do it for a year and both of you are happy then go for it.

I don't know about the driving thing. In the UK it makes much more sense to buy your own car and take the cash. Also, once you have a couple of kids quite often being able to drive is very helpful. I wouldn't assume you will always not be driving unless you have a disability that precludes you.

Original poster
Canweaffordit · 17/09/2015 17:51

Thanks everyone. Definitely lots of fair points and things to think about.

We have never had to worry about money before or be on a budget and that worries me.

I think we need to do some more exact sums and factor in the childcare vouchers which I forgot about.

I do worry about taking time out of my career but I would rather regret that than regret missing out on seeing my child in the early years especially of he is our only one. I always thought I would return to work full time after mat leave but we have changed our minds now that dh is earning much more than before.

OP posts:
colley · 17/09/2015 17:51

The average income for a British family with two adults working is £40,000 a year.

Bolograph · 17/09/2015 18:02

He has to take it to work and he will have a fuel card type credit card thing.

Potentially that's a thousand quid a year in tax. You need to find out the details: there are various things you can do to mitigate it.

lorelei9 · 17/09/2015 18:05

"Food clothes entertainment I would estimate at about 600 a month. Does that sounds right? We spend an awful lot at Asda/tesco etc. It's def an area I need to learn how to save in."

woah, yes, lots of saving potential there.

re the rest - you need to make a full list of all your costs for each month - allocating an amount for annual stuff like home insurance, dentist - and cost of fuel/travel critical.

then you will know if you can manage. I'm sure you can but if you aren't doing anything budget-y at the moment you might find you will actually be much better off than you think once you start with all the Aldi type shopping etc.

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