What is a reasonable disposable income?

[Blondeandbeautifullol]

We are looking to extend our home. We have some money to do it and need to borrow a bit more. Our Monthly outgoings are around 3k with about on average 1000 left if we have no overtime. My husband thinks borrowing an more at an extra £175 a month is unreasonable. Is this the norm? Or is this a debt you think unreasonable? What is the average disposable income in most households?

We have about £1000 disposable every month. I have 2 dc and massive nursery bills so we don't put much in savings at the moment.
I think you'd notice the missing £175 particularly in the last week of the month but money is all about priorities, and if you're sure you can afford that extra each month then go for it!

Disposable?

Before / after food and travel costs ?

What is it currently spent on ? What would you specifically cut or change ?

Also before or after annual and irregular costs like holidays, Christmas, car costs, insurance etc.

OP you say you have £1k pm left per month, but what do you do with it? Do you have savings, which proves that it is genuinely spare, or does it go on 'living' whether essential or non essential?

As for what's average, there is no 'norm' that people will be universally happy with. Some with have nothing, others thousands of pounds.

You just have to decide how the extension and paying for it sits as a priority alongside everything else that you could spend your money on. It sounds like the loan is easily affordable, but unless your savings are growing by at least £175 pm, it's likely you might have to reduce your spending somewhere to balance the books.

Depends on what has to come out of the £1k. And how fixed the interest rates are.

Do you mean you are saving £1000 a month? You can try by putting whatever your increased payment would be in a savings account first

You need your define the scope of disposable for threads like this, after pension and student loans? After bills? After discretionary bills? After food? After savings?

Well obviously as everyone else has said, it depends on what you mean by "disposable". But more importantly, nobody can really answer these questions for you. You need to put together a monthly budget based on what you are currently spending. Or even just think about specifically where you would make the cuts to find an extra £175 a month.

At the risk of repeating - what does "disposable" mean?

Could you not start putting as much as possible into savings every month for X amount of time to pay for it outright and avoid a loan? Or even just to take out a smaller loan?

I'd see "disposable" as money left after all necessary bills and food for the month. Clothing is discretionary spend so part of disposable. We have about 1,750 a month. Family of 4, both at school/ nursery.

You need to do a more detailed budget setting out ALL your outgoings, then see what’s left.

After everything. Usually saved/spent on non essential thing

After everything has come out plus After food, activities etc.

If that’s truly disposable, which it sounds like it is, then borrowing to do the work at that cost is a relatively easy decision. You just save 800 a month instead of 1k!!

I have around 2.5k after all outgoings and my husband the same again and that wouldn’t phase me.

This is such a humble-brag. 😂

‘Non essential’ things need including in the full budget too, i.e. gifts, holidays, eating out, home improvement, household goods replacement. Everything. THEN you know how much, per year, you have spare.

If you stopped squandering a grand a month and started saving it, you'd soon be able to save up and pay for an extension.

Well I panic if I have less than 1.5k a month after all bills and food are paid, but luckily the butler doesn’t mind if I pay him late so it’s usually ok.

If you're currently saving £1K per month (which you will be doing if it's truly disposable), then how long would it take you to save up the extra that you need?

If you're not actually saving £1K per month, then you don't have £1K disposable income, because you're clearly spending it on something.

If you are actually saving £1k per month, then saving £825 a month instead isn't an enormously big deal unless you are aware of impending increased costs or loss of earnings (nursery fees/new baby/cut in hours/redundancy etc).

Is it because you squander £1k a month that you’re too poor now to be able to afford this extension and must take out a loan?

Oh no

This question should be considered on a % of income basis to ignore variance in personal circumstances.
The general rule is 30% of gross income pre tax (to include pension contributions)