Look rich but very poor

[greyfoxy]

I live in a lovely house in a nice area, I wear nice clothes and I know people perceive me as being well off. The truth is I have absolutely no money. It's 2 weeks until pay day and I have £15 left. I will end up using credit cards to buy the essentials which is why I'm in this mess - my repayments are huge.

Anyone else relate to this?

That would be my worry for you. Just now you can keep it all going but it only takes one thing to bring the whole house down. It can be illness or redundancy or the economy. It can sneak up on you or just happen overnight

This is is what I was referring to up thread.

Everything is OK until that one thing...

Absolutely no way would I put holidays before the type of financial security that is needed to ride this type of thing out.
That doesn't mean we had a miserable life btw we just didn't rack up 20K debts, we budgeted
Personally I think there is MH /ND/trauma behind this type of head in the sand behaviour and its a type of self harm sadly.

This. If they are high end designer you may be able to sell them through the ‘pre-loved’ section of the designer’s website and get a reasonable amount of money for them.

Op has a limited autonomy here to make a difference if DH refuses to listen/change.
It’s only going to get better one way and if he’s not willing to play ball OP can only make a limited impact on her own. Getting a second job is tempting but facilitating. It’s like a type of financial abuse to cling to the insistence on holidays in this context. Is he controlling in other areas OP?

I think there are two extremes

Spending everything you have and what you don't have on having the best of everything because you work hard and deserve it but it is a house built on sand and if there is the smallest change in earnings or ability to earn then the whole pile comes crashing down- or living like a pauper in rags and dying rich but never really living

Somewhere in the middle is better. Have a nice house but not to the point of where you are stretched. Have a nice car but buy a 1 year old car rather than brand new. Have a nice holiday but 1 rather than 3. Get to a point where you are debt free and have savings- if the sh*t hits the fan you can then weather a storm rather than being instantly in trouble.

That's not the OP. That's a subsequent poster.

I can totally relate. Like you, we earn well and appear to have everything however we are always limping to payday. We also have debts and have about 2.5 years left before these are paid off

I think the mistake that some people make is that because they have high salaries they think they are rich. For wealthy people, salary is only one part of their income. Investments, stocks and shares, trust funds, property, land, etc, make up the rest.

To fund an extravagant lifestyle purely on salary, with no buffer, is precarious and somewhat foolhardy.

Even on a modest salary (and some posters here have more than a modest salary!), then taking the opportunity to invest and so actually boost your income is a more sensible approach, and should ultimately lead to a better and more secure lifestyle.

Agree….being ‘rich’ is usually about wealth…ie money behind you, rather than coming in each month.

Lots of people have good incomes but can’t buy anything upfront (ie car) as they don’t have a chunk of money available. Everything has to come out of monthly income and be monthly payments. It’s why people often get trapped in a cycle of car leasing, when it might be better for them to buy outright. Everything has to come out of monthly income or credit. And then when a big, unexpected expense comes along, it’s difficult to deal with.

Quite often I’ve known people on much more modest salaries, but who have been a bit more savvy or frugal over the years, be much ‘richer’. They have been able to make choices like private schooling for a phase for their kids, or early retirement, or buying a camper van or holiday home, despite their lower incomes.

@thriftyhen your comment really resonates. When I got a promotion and my salary went up to 6 figures I suddenly decided I was rich and able to keep up with friends who spent ££££ on holidays, meals out and ‘experiences’. What I failed to realise was that some of these friends drew their money from sources unrelated to their income. Many of them actually earn considerably less than me.

It took time, finance podcasts and a few painful lessons for me to learn to live ‘below’ my apparent means. I am in the fortunate position of having inherited some money last year and this year (not in the best of circumstances though) but having learned my lessons my lifestyle has not changed. I’m still driving my old but reliable car, have my Pots set up in Monzo as I save for everything monthly and basically live as if I haven’t inherited anything because that money is earmarked for the future. It’s took me a long time to change my mindset and I realise that was the single biggest thing I needed to do in order to stay out of debt.

I think it's a little more complicated than just looking at net wealth. I think most of us would take into account future expected earnings and ability to aquire assets. Kind of like look at forward PE ratios when buying stocks. Otherwise you would class someone who is on benefits in a council house as better off than a professional who has just bought a house.

I think that’s a relevant point for some people and at certain points of life.

Some careers will have good upwards trajectories and people might opt to take on very large mortgages with that in mind. This seems to make sense, to a point. However that’s different to funding other lifestyle choices, which are about short to possibly medium term consumption (holidays, probably cars) on the back of credit, because maybe in 5-10 years time salary will hopefully jump significantly.

Especially for people with small children, massively stretching to have consumables in significant excess of what can be afforded, doesn’t sound wise, even on the back on hoped-for (but often not guaranteed) future earnings growth. Likewise, if you have got to 50+ and are still living in excess of your earnings, plus not being in a position of the end of mortgage being in sight, and/or not having funded pension provision adequately, you could say poor choices have been made which will have poor outcomes.

Of course there is a balance and there is also an element of luck in that sometimes bad luck comes into play for individuals or timing of markets or economic cycles, or good luck happens. And also, people have different attitudes to risk and living on the edge. The posts of those like OP on this thread show often couples don’t have quite the same attitude to risk and living on the edge and one is uncomfortable with it whilst the other isn’t. With families, one person unilaterally deciding to live in the edge of affordability and making choices for today which could be negative for the future, don’t just impact them but the whole of the family. That issue of security also comes up a lot on this thread and the issue of risking the security and future comfort of family and children, in order to live beyond means now. Many posters are uncomfortable with the idea of it and people often mention ‘not being able to sleep at night’.

One thing where couples are concerned, is that often the main salary earner seems to have a bigger say over these things. It comes up that women sometimes feel ‘subjected’ to a lifestyle and spending habits they are uncomfortable with, but as the lesser earner, can’t voice their views or feel unheard. Before anyone complains, I know often the woman is the higher earner, but this is a thread where mostly women are posting, and many express concern about being in this position, ir comment they would not like to be in this position.

I remember, some years ago, filling up my car with petrol. The car next to me was a brand new top of the rand Range Rover. The women who was filling it up was middle aged brassy blonde ( I know a bit of an judgy comment but that’s what she was) and finished before me.

I followed her in to pay and there was a bit of a queue forming. The brassy blonde was working her way through a purse crammed with credit cards. Each time she tried one it was declined, several times, until she got to the last one which again was declined. By this time there was a queue of 5/6 people all watching, intrigued how she was going to foot the bill.

She then produced her phone from her pocket and rang her husband, they went through every card ( 8 or 9 ) and argued about how much should be left and why it was maxed out, with a smattering of choice words, it was gradually dawning on her that she couldn’t afford to pay for the full tank of diesel she’d helped herself to.

At this point the staff were getting flustered and the manager stepped in and asked her to step aside so they could serve other customers.

I always wondered how she sorted it out. She
must have phoned a family member or friend to help her out. At one point she had turned around to see that her audience was growing and thoroughly enjoying the show. She scowled and muttered “ what’s your problem” to the nearest customer.

Had it been a teenager or little old lady/man who had found themselves unable to pay for their fuel for their 15yr old car I would have happily stepped in and offered to pay the bill. But the sheer brass neck of this women and her attitude to the staff was uncalled for.

It’s much easier today to keep track of your spending and you can set limits on your spending via online banking, but running 8-9 cards up to there limit is just poor financial management however much you are earning.

After shuffling credit cards in the past and chasing the 0% interest rate deals, once I had cleared my debts I changed all my cards so the balance was paid off in full each month.

Having money in the bank and zero on credit cards is a pretty good feeling.

Why are you gloating over the fact someone couldn't pay for their petrol? Is it because she was driving a Range Rover? Maybe she or her dh had lost their jobs? Maybe she's in a financially abusive relationship? You have no idea of her circumstances.

Ive been in a position where my card was declined and I didn't have a spare one with me and yes I drive a very nice car. I had to ring dh to come and bail me out. Does that mean I deserve to have everyone in the queue enjoying the fact my card has been declined and thinking I deserve it? Oh and I'm blonde - would that annoy you too?

If the person in the queue behind me was "thoroughly enjoying the show" I'd probably tell them to get lost too.

Horrible.

There's a lot of made up projection on this thread. Just because everyone doesn't choose to live their lives buying value baked beans and scrimping to pay off their mortgage when they're in their 50's doesn't mean they are wrong and your way is right. Dh and I have been in huge debt at different times in our lives in order to have the life we have now - speculate to accumulate. We've taken huge risks and yes we've had holidays when we also had debts. So what? It would've been pretty miserable otherwise with dh working 12 hour days.

People who do well in life financially, entrepreneurs etc almost always start off with debts and take risks. Id be miserable living a boring, scrimping life personally - not having holidays and looking for yellow stickers in order to save a few pence. Each to their own!

There is a mid point/ happy medium between decent income- baked beans/ yellow stickers and having a decent income but drowning in debt / no savings.
Always the swing from one extreme to another on these threads as a defense mechanism
Oh you having savings = you must have a dreadful, awful life then !
Actually it's the opposite

Oh and mortgage was paid off in my 40s 😉

Hi op,

go and see a financial advisor asap. 👌🏼

Absolutely !

This is my exact life!

We are on a tiny income but ok financially because we stopped at one child and don’t feel under pressure to do the big yearly holidays. We have no mortgage but are in what some people would call a ‘starter home’ which is in itself a new concept and quite a Southern thing. Many in the past bought one house and then stayed in it, warts and all. I honestly think many have convinced themselves they have to have the perfect house, perfect holidays, Insta memories and all that and they’re depriving themselves and their kids without but it’s really not the case. Kids are happy as long as they can find someone to hang out with in my experience and they can travel abroad when they’re adults! In my experience you just can’t always have everything you want and it’s probably a good lesson for children to learn that too.

@Lentilweaver you’re right, I misread

scandista · Yesterday 11:45

I'm a less extreme version of PPs.
We earn ok, £120k in London, get a bonus £15-20k every year. We own 80% of our £1m house. We have 3-4 holidays each year. We dress well, we eat extremely well. We have about £10-15k savings.
But we have about £12k of cc debt and live in our overdrafts.
We both suffered significant bereavements at a young age and I wonder if that's why we have this mad attitude to money. I wish we weren't like this but can't seem to stop.

This really resonates with me ; earn enough, plenty of money, yet never have any money. I had a very controlling mum, lost Dad at a young age, and since then have always had a “mad attitude to money”…..comfort spending?…I don’t think so because it never comforts. I’ve been to lots of therapists, only one ever came near helping, and she went to work via BUPA, and even though I’ve got BUPA, they won’t put me back in touch with her - why ?. Right now I’m trying to “go cold turkey”, see if that works, but I think I’m destined never to work out where I’m going wrong…..

Blimey. Some of these are insane. We live well, buy what we want, go on holiday and don't have any debt other than small mortgage that's about to finish. Some of these posters I can't grasp why you would choose to live this way.

Contact Step-Change - Free debt plan charity. They get in touch with your debtors, your monthly payment goes to Step-Change, and they pay your debtors and contact them. Don't live in hardship if you don't need to.

I would find that so stressful. I am the opposite. We actually live below our means and make sure that we have enough savings to survive if we were ever in a position that we had no income for a year. We know that job losses can happen and people don't always walk straight into something else. We have been there.

There were years where we had very low cost trips, not flying overseas when the children were young to allow us to build up some security for the future. We have always invested in living in a nice house in a good area and the children went to very good schools as they were our essentials, but expensive holidays, business class flights and expensive designer clothes were way down on the list. We are now financially very secure but we worked at it and I actually didn't feel as if it was too much of a sacrifice. Some of our favorite holidays looking back were going on road trips and staying in cute cottages, walking along the beach, playing games, going on forest walks.

I think you can do it all with less expense and a little creativity.

Op, refuse to go on the holidays but tell your husband he’s very welcome to go alone and that will be the way of things till the family financial situation is on an even keel. Show him you mean business and that you’re no longer going to be involved in his window dressing.