Disposable income

[Childwillnotlisten]

We are planning to buy a house in the next couple years and I’ve been working out finances and just trying to get a vision of what life may look like for us.

Can I ask, if both you and your partner work, what is your disposable income once everything is paid? Childcare, mortgage, other bills, petrol, cars and food shop etc.

You need to work out the proportion of your prospective mortgage payment willl be out of your current take home pay. Can’t remember what the recommended percentage is as interest rates and inflation have changed since I had one.

I think if that included everything such as food etc then not too bad as long as you could save- things like MOTs, the boiler breaking etc can wipe out an entire months disposable income and then some. It depends how you like to spend your time as well, hobbies, interests and days out add up more for some than others. A lot of people are in a similar situation when they buy though, id be more concerned about interest rates going wild again in a few years than the short term.

It depends on what you have included in other bills. Have you taken into account putting money aside for

Car repairs, MoT, servicing, insurance, general maintenance.
Christmas presents
Birthday presents
Clothing and shoes
Haircuts / any other personal care
Optician/ glasses
Dentistry
Savings for holidays
Savings for emergency fund
Additional school / nursery costs like trips and stuff.
Long term savings.

If you have to pay for all of the above out of the £700 - £100 then it may be a bit tight.

How do people survive then?

Part of the reason that people get into debt and financial difficulty is not accounting for everything. If you work out a budget and dont include all of the above then all it takes is a large garage bill for the car or a boiler repair and your entire months disposable income is gone.

I think this is going to be subjective anyway, but OP I would say £700-100K is absolutely fine for completely disposable income. It's honestly ridiculous to think that most average people have that spare anyway. I do however take the point that it only takes a couple of unexpected bills to crop up and you can quickly burn through that. However if all of your other bills, food and outgoings are covered then surely that's fine.

If you put even half of that spare income away each month, you'd soon build up a good reserve pot anyway.

That should say 1k not 100k!!

We have just been hot today with a 1.5k bill for the car, it’s no bother for us.

When we first had a mortgage it was 19% of our income.

You also haven’t out the ages of your children, when is an end to childcare cost in sight. A decade or just 2 more years, make a difference, plus what cushion do you have savings wise if you get a mortgage ?

How do people survive then?

Just curious why you don’t think 700-1k would be enough once all outgoings were paid inc mortgage?

You seem to be ricocheting between thinking £700-1000 is loads and then wondering how people could possibly manage with any additional costs!

What is your disposable income now? That’s a good starting point. If you have more, then try 6 months of only having £700 and see how you go.

FWIW @Childwillnotlisten This is our budget

Me 3100
DP 4100
Child benefit 280
Total 7480

Housing
Mortgage: 1900.
Insurances(life, house): 150
Total Housing: 2050
Utilities
Electricity 150
Waste collection: 30
Broadband & TV: 70
Mobile phones x3: 60
Total Utilities: 310
Food & Groceries
Groceries & household food: 500
Dining out / takeaways: 200
Total Food: 700
Transportation
Fuel: 250
Car insurance & tax: 150
Maintenance & NCT: 100
Public transport / Parking: 20
Total Transport: 520
Education & Kids
School books, uniforms, fees: 50
Activities, sports, clubs: 50
Pocket money/treats: 60
Total Kids & Education: 160
Entertainment & Lifestyle
Family outings, hobbies, gifts: 200
Subscriptions, books, etc.: 60
Miscellaneous expenses (haircuts,nails): 60
Personal spends:200 x 2 = 400
Total Entertainment: 730
Savings & Miscellaneous
Emergency fund / Savings: 2,000
Holidays (monthly allocation): 500
Clothing: 200
Miscellaneous buffer: 300
Total Savings & Misc.: 3,000
TOTAL MONTHLY SPENDING: 7,480

this is our basic budget so it doesn’t include any overtime we work, which we do most months.

Nice healthy budget there @Statsquestion1

But generally, as someone else has said, try and keep your mortgage target to be under 33% of your take home joint wage. thats an important target to hit

This was us when both working, before kids!

Do you not have any childcare costs?

I can’t imagine the average family has 2k to save monthly but you never know!

No, no childcare costs as they are 10 and 12. We both have flexi time so do the drop offs/collections ourselves

Our monthly outgoings are about £1000 including food (no childcare or mortgage any more) and ingoings are about £5.5/6k, but this would obviously have looked very different when the children were smaller,