Author Topic: We earn 190k a year. Do we need to sell our flat to afford private school fees?  (Read 4271 times)

nanliza

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Did anyone see this in the Telegraph yesterday? It immediately made me think of MMM. These people are basically spending 10,000 a MONTH and have no savings, +800worth of credit card debt, but are worrying about how they're going to send their kids to private school. (In a city where there are plenty of great non-private schools)

Even the very un-mustachian financial planners who give them advice in the article sound like they think the people are idiots.

http://www.telegraph.co.uk/finance/personalfinance/pensions/12000288/We-earn-190k-a-year.-Do-we-need-to-sell-our-flat-to-afford-private-school-fees.html

How is it possible to spend that much money, even in London??

Edward

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This article tries to explain how you can feel broke on 190k in London.

http://firevlondon.com/2015/05/30/minimum-salary-required-in-london-500k/

There is still no excuse for this kind of spending.

frugalnacho

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HAHA, I forgot what subsection of the forum I was in and thought this thread was a personal thread about your own situation.  I instantly got riled up and was about to come in and tell you how much of an idiot you are!

vivophoenix

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there were like zero details on where the money was going.
the article states that the family nets 10K  per month, the mortgage is 2.5k and the other mortgage is paid by the rental income. they are stressed about not having money for education, but can't tell us a clue about 7.5k of excess cash each month, and then have the nerve to somehow also be running up credit card debt!?

a family of two adults and two children under three are somehow magic-ing away 7.5 k (pounds no less!!) per month on unmentionables and yet can't find 4k a semester for school?

but why is the advice: they need to sell a rental flat, that is paying for itself!? each year it should be gaining equity, even if it doesn't increase in value at all. they should be able to pay off themortgage.

i am confused, if taxes go up, why wouldn't they increase the price of the rental? in Boston, its written into most leases, that the landlord can make tax based increases in the rent. they are concerned about a future supposed increase in taxes, but not their mounting debt, or the soon to be expired 0% intro APR on their cc ,or the fact that they don't know where their money is going?

i also noticed inconsistencies in what is really going on:

'Megan, who is currently on maternity leave, usually works four days a week but she could increase her salary considerably if she goes back to work full time. "

later the article states:

"There is limited benefit in Megan going back to work full time as she would be doing 25pc more work for not even 15pc more income. Plus she'll have to foot additional potential costs of childcare. "

it seems like a lot of hemming and hahhing and no real problem solving.


i don't care, honestly, if they do private school or not, but whomever did this 'case study' should have point blank told them:  they have the money, they just don't want to give up whatever else, they are spending it.
« Last Edit: November 20, 2015, 10:04:54 AM by vivophoenix »

nobodyspecial

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a family of two adults and two children under three are somehow magic-ing away 7.5 k (pounds no less!!) per month on unmentionables and yet can't find 4k a semester for school?
Have you any idea how expensive it is to keep a pony in London?

nanliza

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Yeah, I was being a bit disingenuous asking how you spend that much money in London; it is really expensive to live here. But given their main mortgage is 2500 a month, where is the other 7500 going??

I am single/no kids, and have managed to get my outgoings down to about 12k a year (renting in Zone 4, admittedly), so clearly not in the same position... But I have some very spendthrift City-worker friends who would definitely still balk at blowing through 10 grand a month.

Also agree the idea of selling the other flat is crazy considering it's paying for itself, when clearly they have a ton of ordinary outgoings they could cut down on. But as usual there's the idea that there's a 'middle-class standard of living' that is taking all this money away from them and to reduce that would somehow be demeaning.

cerat0n1a

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i also noticed inconsistencies in what is really going on:

'Megan, who is currently on maternity leave, usually works four days a week but she could increase her salary considerably if she goes back to work full time. "

later the article states:

"There is limited benefit in Megan going back to work full time as she would be doing 25pc more work for not even 15pc more income. Plus she'll have to foot additional potential costs of childcare. "

Going from 4 days per week up to 5 is indeed 25% more work (and 25% more gross salary) but that incremental income will be taxed at 40% (and there is the bizarre effect whereby earnings between 100k and 120k effectively have a 60% marginal rate). So I think the second comment is probably correct (and comes from the financial adviser type person) whereas the first comment comes from the couple (who seem pretty clueless when it comes to finances).

There is quite strong evidence that much of the difference in the UK between men and women's pay comes from the tendency of women to be working part-time for important parts of their career, particularly in these kinds of very high paying jobs. The part-time work is paid the same as the equivalent full-time role, but it tends to significantly reduce your prospects of getting a top job. So it's not necessarily wrong to say that she has scope to increase her pay significantly by going full time.

The scary part is how exposed they are to interest rate rises or anything happening to house prices in London.

Dicey

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HAHA, I forgot what subsection of the forum I was in and thought this thread was a personal thread about your own situation.  I instantly got riled up and was about to come in and tell you how much of an idiot you are!
^This^

Avidconsumer

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a family of two adults and two children under three are somehow magic-ing away 7.5 k (pounds no less!!) per month on unmentionables and yet can't find 4k a semester for school?
Have you any idea how expensive it is to keep a pony in London?

25 quid? 5 lady godiva's shouldn't give you much trouble. A ton can be a bit barney though.

vivophoenix

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a family of two adults and two children under three are somehow magic-ing away 7.5 k (pounds no less!!) per month on unmentionables and yet can't find 4k a semester for school?
Have you any idea how expensive it is to keep a pony in London?

25 quid? 5 lady godiva's shouldn't give you much trouble. A ton can be a bit barney though.

-.-

cerat0n1a

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This bit of clickbait by the Telegraph was obviously succesful enough that it's drawn a response from the Daily Mash (a UK satirical website.)

http://www.thedailymash.co.uk/news/business/we-earn-190k-a-year-should-we-sell-a-child-so-we-can-buy-another-flat-20151120104033

Squirrel away

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This bit of clickbait by the Telegraph was obviously succesful enough that it's drawn a response from the Daily Mash (a UK satirical website.)

http://www.thedailymash.co.uk/news/business/we-earn-190k-a-year-should-we-sell-a-child-so-we-can-buy-another-flat-20151120104033

Haha, I was just about to post that!:P

zephyr911

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This bit of clickbait by the Telegraph was obviously succesful enough that it's drawn a response from the Daily Mash (a UK satirical website.)

http://www.thedailymash.co.uk/news/business/we-earn-190k-a-year-should-we-sell-a-child-so-we-can-buy-another-flat-20151120104033

Haha, I was just about to post that!:P
That was pretty hilarious.