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?

To be honest that doesn’t sound too bad to me, you are both on good salaries and the debt is all on interest free credit. We are similar but older - mortgage nearly paid and after a bit of illness I’ve realised that I want to enjoy my life while I can and have nice holidays etc.

What can you sell?

Bloody hell. I love holidays but I wouldn't enjoy them at all if I was in credit card debt and scraping by to afford then.

I'm the opposite though, relatively well off but drive an old, basic car, have scruffy hair and hate wasting anything (money, food, energy etc). I'm sure most people think I have a lot less money than I do and would be astonished to know that I have no mortgage, car finance etc and plan to retire at 60 because I'm stuffing lots into my pension and ISAs.

I agree with PPs saying it's unfair to your children to give them such unrealistic expectations of "normal" life. They will grow up and feel deprived that they can't afford 4 holidays a year and will get into debt to live beyond their means, and the cycle will continue. Yes, they are only young once and I get that lovely memories are made on holiday but you can achieve that on 1-2 holidays a year and just generally having fun together and larking about. Some of my kids favourite memories are of "made up" fun things we did at home in lockdown.

That was me. Totally overreached myself buying a niceish house in a niceish area.

To be able to make the mortgage payments, relied more and more on credit cards which gave me higher and higher limits - until I could not afford the minimum monthly payments.

My only way out was to take voluntary redundancy and pay the credit cards off with the lump sum (which felt Amazing).

But I will have to massively downsize in the next three years as I'm not on track to pay off the mortgage, which I'm at peace with.

So my advice - sell the lovely house and buy somewhere small and affordable. Pay off the debts and crawl out from under their weight. Have some money to enjoy yourself. Save. Make sure your pension is strong.

I'm the same!

Live in a tiny house, don't really go on many holidays as we live right by the beach, drive old cars and don't really have any outside signs of wealth.

But we have passive income, investments, savings in the bank and are putting two kids through private school. My goal is to buy my kids a house each when they hit 21 so they start off mortgage free in life.

But, and here's the laughable part, some friend have assumed we're poor and have asked each other if we're struggling.

@greyfoxy The 'you only live once' mantra is so toxic and destructive, it actually stops you living now because you're having to cut back and worry about money. Its also a poor example to show your kids when they try to replicate it as adults. You're setting them up for failure and stress.

I think most of you sound like you're in a good position. None of you actually are poor. You all have good options and can be debt free quickly if you choose to be. You all have a lot of control over your own situations and can change things if you want. If you were poor, you wouldn't have.

I don’t buy ‘the kids are only young once’. Everyone is only young once. No one needs to fly business class all the time, no one needs several holidays a year and the kids might enjoy a holiday in this country just as much. You’re prioritising holidays because you choose to, at the expense ( literally) of being in debt.

Jobs are less stable than they used to be and living beyond your means gives you no room for manoeuvre if it goes pear shaped.

This gives me anxiety just reading it! 😱

Apart from everything else said on this thread - one of my daughter’s favourite ever holidays was a weekend break in a static caravan in mid Wales. It wasn’t for financial reasons, we just needed to book something in that location and it was literally all that was available.

She has travelled the world, 5* all over, and she absolutely LOVED it. So did we - we are going back this summer.

What a child sees as the ‘best’ or the ‘most fun’ sometimes bears absolutely no resemblance to what adults see!

@iamnotalemon I don't think that's right because if we had a disaster - like boiler needs replacing - we would have to go into debt to pay for it? We need to keep our savings and pay down our debt...I think

In your position I would try just stopping the spending for six months and see how you feel about it afterwards.

Don't book any holidays, don't buy any new clothes (except absolutely necessary basics for growing children); don't change your car; don't buy big treats; do some smaller things closer to home - playground instead of theme park etc; don't buy new crafts or toys - use what you've got etc etc.

My gut feeling is that after six months you'll probably have clear priorities in your own head eg I don't miss the clothes spending but I do really want a holiday. Plus you'll have cleared some of the debt.

I'd also advise anyone who is on a good salary but isn't great with money to overpay on the mortguage or pension contributions. That way once its out of your account you can't get it back, but it is building assets and not just being frittered.

@oakleaffy I'm not saying that being bereaved as a child or young person leads to profligacy I'm just saying that it may have for us as we always think - well life can be short so let's live and do all the things we want to do.

Well done to you for being so good with money despite losing your mum, I'm seriously admiring.

It all boils down to the Micawber principle. Income £20, expenditure £19.19s and 11p - happiness. Income £20, expenditure £20, 1s - misery.

Surely a better balance would give you a more pleasant life. You won't be taking your savings to the grave!

That was me when I was young and stupid. After I graduated, it took me 12 years to repay my halls!!!! They were lovely and we reached a voluntary agreement. They even offered to write it off, using the halls 'hardship fund', but I was mortified and we agreed a payment plan. You will grow up and leave this nonsense behind, trust me.

And the next bonus will pay for the holidays that year.

Some people really don’t know when they’ve got it good.

I do think it's sensible to have some savings for emergencies and I understand it's peace of mind to have some savings but it depends on the APR on the debt. Are the credit cards on 0%? If not, could you move them to 0%?

Same!! I just couldn’t live like this! I’m probably the opposite to be fair. I have ample savings to fall back on but live frugally enough as a single parent. I was asked to go on a last minute work trip last week,the trip is the end of this month. We have to pay ourselves and claim back the expenses as that’s how our workplace do it. They very much assumed (and rightly so I suppose for a lot of people) that i wouldn’t be able to go due to costs but I was fine as i said I’ll use savings and replace. 2 others pulled out due to finances, they earn more than me and have partners. It just goes to show we really have no idea of other’s finances.

I make okay money and should be comfortable (even as a single parent) but I’m not due to credit + family members. I finish each month eating into my overdraft.

This thread is stressing me out!!
I have one income and DC with no financial support. It’s been pretty good income and over past 10 years I had built up savings and my pension but have never been overly flash - don’t have lots for me but definitely comfortable. House equity has risen.
HOwever literally this past year my job has become much less secure and my income is under half what it was as I am a small business owner; bills have gone up drastically as we all know; am still paying support to other family; mortgage has INCREASED by £1200 per month on average. I have had to draw down on most of my savings as this is my “rainy day” and am now using an interest free CC facility for the first time.
i am cursing myself for not being even more careful.
I am now selling up, releasing my equity and moving from where I have lived for 30 years to restructure and set myself up for next 20 years.
i realise I have options and am not truly poor but doesn’t stop me feeling rubbish.

Why are you having so many holidays when you're in debt?

Exactly, poor is when you have to decide between heating or food and you can't even get a credit card to help you over the month

Isn't that a very stressful way to live?

Flying business class, additional holidays with friends, skiing and 3 weeks in USA are hugely expensive. I'd think there are easy ways to trim your spending without hardship

Most of the seriously wealthy people I know don’t spend money they haven’t got. When I say wealthy I mean asset rich rather than ability to use credit. Rich people are those that have no problem spending money with no end asset. They can afford the lease payments on a £100k Range Rover but would never be able to pay for one outright.

My one wealthy friend, you would not be able to pick her out of a lineup. Drives a pretty run of the mill second hand car and her biggest personal expenditure is having her hair cut every 8wks. They research every item they buy to get the best value for money. Children were privately educated. Holidays are organised by themselves encouraging the DC to plan routes and organise flights and cheap accommodation.
They are asset wealthy but ready cash fluctuates. On paper multi millionaires but everyday they have to budget.

I think that op needs to work out what they would have left if they lost everything. I owned my own business and was a high earner but was often cash poor as a result of the business needs in a monthly basis left me with not much. Over the year this evens out, but I learned to take a minimum income every month and to give myself a bonus once the accounts allowed me to. Also, self assessment means you have to put so much aside for the tax man. But what I was always aware of is that if anything happened to me my DH and DS would be left with a house with no mortgage and a guaranteed pension with well over £500k in savings ( from the sale of the business and other properties) to fall back on. So when I did have to use a credit card to help it would not leave them in debt.

So if you imagine the worst case scenario how would it leave you OP. Would you loose the house or have you got life insurance. Are your cars on HP or leased? Do you have income protection insurance?
If anything happened to both you and your DH would your DC be left well provided for? If not you need to have a serious discussion about your spending and priorities.