But where does all the money go?

So, how come the middle class are skint? Another sob story in The Mail.

Totting up what they\’re spending I get to some £43 k a year. Yet earnings?

Granted, I have worked only part-time since becoming a mother, determined to spend as many hours as possible with my children, but my gross earnings have exceeded a respectable £30,000 most years

….
I don’t know anyone who works harder. He stays up until 1.30am most nights, leaves before 7am most days, and puts in more than 60 hours’ work every week.

Dillon’s pre-tax earnings are nudging £50,000,

Gross earnings of £80k a year then. Just on the verge of the top 10% of households by income then. You\’d think they\’d be doing alright really, even with three kinds.

Yet in terms of disposable income they\’re skint. How come?

I\’d run with the very vague idea, just a suspicion mind, that perhaps they\’re being taxed too heavily?

52 comments on “But where does all the money go?

  1. Daily Mail trollbait. Let’s draw no conclusions from it at all. It’ll be awash with hits from the outraged of twitter who (not without reason) think that people in the top 10% of earners should quit whining about how hard it is to get by.

    I would add (ignoring my own advice) that a family with three young kids will probably be net beneficiaries of the tax system. Oh, and they’re overpaying on insurance.

  2. I agree re tax, obviously, but I’m afraid I smell a heady mix of entitlement, waste, inability or refusal to face facts, and – perhaps crucially – bullshit figures created to fit a Daily Mail narrative.

    On this last:

    ‘£4,500 on utilities including energy and the phone’

    Yet she doesn’t have the heating on during the day? Has hubby got some hydroponics going somewhere, or a major phone sex habit? I live in a 3,500 sq ft house and we don’t have gas – we have oil central heating, which is more expensive. Our utility and phone bills are half that. For starters.

    ‘having switched universities for greater job security last September, it now costs my husband £100 a week in train fares just to get to and from work on the other side of London’

    Season tickets?

    ‘Despite our status as a professional couple, we simply do not have the cash to pay for decorators or to replace the carpet with a more practical wooden floor.’

    Paint the stairs yourself, then. Most people have done this at some point in their lives, you know. Then take the carpet up and sand down the floorboards.

    ‘I recognise that our problem may be, in part, rooted in our 20s when we should, perhaps, have got on to the property ladder. Instead, we rented flats in Central London…’

    And spent the money you could have put into a house on going out and enjoying London, I guess. Actions have consequences.

  3. Or maybe they are living beyond their means..? If you found it hard with one kid, why have three?

    That’s a bit unfair. They can afford 3 children, but they are also expected to pay for 3 children belonging to other people they don’t know who either will not or cannot pay for their own.

  4. “That’s a bit unfair. They can afford 3 children, but they are also expected to pay for 3 children belonging to other people they don’t know who either will not or cannot pay for their own.”

    But their argument is that, without child benefit, they can’t. They never once acknowledge the anchor of other people’s (often feral) children on the budget in that article.

    As you’d expect, from middle-class professionals in education. Who probably enthusiastically vote Labour and read the ‘Guardian’ while nodding in agreement…

  5. @Tim N

    Nah. They’re only paying for their own kids. It’s me that’s paying for the others.

  6. Paying interest only (£8500 a year) for the last 5 years: so assuming 4% their mortgage is about £215000. Five years ago, BoEBR was 5.5%. It fell all through 2008 and hit 0.5% in March 2009.

    On the face of it, they went onto I/O payments when mortgage rates were around 6%, then didn’t go back to capital reductions when rates fell to around 2.5%. Or possibly they withdrew equity as cash.

    Either way, when rates rise again, there’s an excellent chance they’ll be amongst those raising the cry “we own a house! Bail us out!”

    Sigh. Them, and all those who thought their house was a money machine while the good times rolled. And the rest of us will be expected to pay, while they wait to catch long-term untaxed capital gains on their property.

  7. I do wonder about that £100/wk in train fares. A zones 1-9 travelcard costs £75/wk. And apparently they live in London. Not even an Oxford-London season ticket is £5200/yr.

    Oh, and *jumps on groceries bandwagon*

  8. Tim said: “Totting up what they’re spending I get to some £43 k a year. Yet earnings?”

    Did that include his train travel mentioned near the bottom?(I guessed at 4k for that) In total I’m at about £48k.

    Perhaps the £12K on groceries includes alcohol. We are forever being told the middle classes are secret booze hounds.

    A large chunk of the loan repayments will be for their fresh car I guess but they don’t say whether the loan covered the entire cost or if they paid a sizable deposit for a new car and financed the rest.

    Childcare costs of £6k have now finished.

    Using listentotaxman.com if they were both on PAYE (which is not accurate) their combined take home pay would be in the region of £58k. £23k for her and £35k for him. That is comfortably above their spending figure.

  9. London – and actually living there rather than merely suffering the dismal commute every day.

    £80k gross down there is a different living standard to anywhere moderately civilised. Hence the (probably at least slightly hyperbole) £10 for a hot-dog and a hot chocolate.

    Anyway – it’s bollocks.

    She lists about £42k of expenditure (which could be reduced, as above.) Let’s say he’s on £48k PAYE – that’s a bit over £34k net. She’s on, call it £24k freelance – that’s a bit under£19k (assuming she pays her Class 4 NICs). Overall, about £53k net – so £900 per month in disposable income. Which isn’t much less than the gross full-time minimum wage income, for example. And is about 20% of their net income.

  10. The trip to our local ice-rink was a special treat at the end of a largely uneventful half-term holiday. Constrained by a cash shortage and the bitter cold

    They went to an ice rink because it was cold out; face, meet palm!

    and then…

    The problem, you see, is that we didn’t have the £33 it had cost our family of five to get into the ice-rink

    Well go to the Science Museum, then, its free and warm! What’s more you can take a picnic.

    This is what real people without a sense of entitlement do when they have kids, its called economising.

    These people make my blood boil.

  11. The truth is, if you are the sort of person who spends all your income and then complains about not having enough to get by on, it doesn’t really matter what your income is, you will do it.

    And if you are the sort of person who saves a lot, you will get by on less than you earn, save a fair portion of your income, and complain yes. It has everything to do with personality, and little to do with income and expenses.

  12. “puts in more than 60 hours’ work every week”: when I was in my twenties and thirties I usually did more hours than that. In my forties I often did more hours than that. Is he ill?

  13. £12,000 on groceries! Shock! Horror!
    It works out at £6-50 per day per person. Maybe a bit more than I spend on my 4 perpetually hungry brood but not unusual for feeding kids in London.
    Personally I think Child Benefit is daft. First, it doesn’t cover a fraction of the actual cost of raising a child, so is a snare and delusion for the dimwitted. Second, people without children think it does and that they are subsidising parents’ “lifestyles”.

  14. Struggling to see how it’s £100 per week to get across London. An all zone seven day Travelcard is £76. Buying it for the month is £291.90 (~£67 / month). Buying it for longer periods is of course even less expensive. Avoiding central is cheaper iirc?

  15. £12,000 on groceries for five people, three of whom are kids and two of whom get school lunches five times a week, is either a joke or admittance to daily steak consumption.

  16. Them, and all those who thought their house was a money machine while the good times rolled.

    Don’t get me started on these…unless and until there are mass repossessions, I won’t believe justice has been done.

  17. The problem, you see, is that we didn’t have the £33 it had cost our family of five to get into the ice-rink — we simply handed over a debit card and it was added to our ever-expanding overdraft. Spending another £30 in the cafe was out of the question.

    It’s funny what people consider as marking them as poor as church mice.

    Complaining that you can’t afford to eat at the attached concession to a facility isn’t even a 1st world problem, it’s a chronically entitled 1st world problem.

    It’s like bitching that you can’t afford to drink at Les Deux Magots or The Punch and Judy and instead had to go and get a coffee at a cafe a few hundred yards away.

    I never take my kids to such places. You get in the car, search for McDonalds on the phone and pay half the price. Or time your visit to eat at home. Or take a picnic.

  18. “Personally I think Child Benefit is daft. First, it doesn’t cover a fraction of the actual cost of raising a child, so is a snare and delusion for the dimwitted. Second, people without children think it does and that they are subsidising parents’ “lifestyles”.”
    I am not sure when the baby was born we didn’t spend more than child benefit on him – we do now though!

  19. ‘What is prudence in the conduct of every private family… etc’
    ‘Cut your coat according to your cloth…etc’
    ‘Annual income twenty pounds, annual expenditure nineteen pounds nineteen…etc’
    Go to Aldi.
    Agreed, tax is too high, and regulations too costly.

  20. Even accepting her claim to £12K on groceries, her total outgoings add up to something in the region of 35K. Including mortgage. utilities, groceries, etc, etc.
    They are making about £80K before tax. So there’s something amiss here because they should be clearing all of their expenses, and managing to put away some savings, even without child benefits.
    There must be other significant outgoings she hasn’t mentioned, because the numbers don’t add up.

  21. @Monty: ‘Even accepting her claim to £12K on groceries, her total outgoings add up to something in the region of 35K. Including mortgage. utilities, groceries, etc, etc.
    They are making about £80K before tax. So there’s something amiss here’

    It could be, of course, that she is actually making substantially less than she claims she is – 30k a year as a part-time freelance writer of dodgy health and lifestyle pieces in the Mail, Mirror and Guardian (the latter two of which pay absolutee peanuts, I understand) seems a shade high to me.

    It wouldn’t be the first time someone exaggerated their earnings to be seen to be keeping up with the Joneses.

    Tim adds: Mail pays well. But crunching through the numbers on a reasonable freelance rate (25 p a word say, what I get at The Register) then she’d be needing 2,500 words a week. Say, one feature and two short features? If those papers pay better than El Reg then her word count falls.

    For someone whose well plugged into the commissioning editors and been doing it some years that’s not a heavy workload at all. Hell, I’ll do that this month and that’s not including Forbes, ASI etc.

    The key is whether she’s getting the commissions or not.

    A Google News search (which is by no means complete at all) shows an Indy and this Mail piece for the past week. So maybe she ain’t.

    The Mail piece will make her £1,200 though, so that’s half this month’s done……

    Looking at her Mail list she seems to be getting two pieces a month there. That would actually get her close to her reported income on its own actually. Certainly over 50% of it.

  22. Yes, does sound like they are not shopping around for bargains, cheapest deals, even perhaps overspending on transport.
    Part time workers, what can you say?

    Spending too much, its not that hard to cut down. Cut out unnecessary insurances, ramp up excess on insurance you are unlikly to claim on, shop around for best deal. Cut out subscription packages – reduce treats and days out a lot.
    My sister is raising 3 kids on a fraction of what this family are spending. And still able to have occasional nights out on the town.

  23. For a proud working class girl she appears overly keen to parade her Dickensian lifestyle before the public.

  24. It’s a clever editorial trick by the Mail. The story just sucks in readers and comments. The Mail pulls it off every four months with a middle class family sob story (usually written by a woman or is that my perceptual bias?) that sets up the author for a deserved slagging or a gush of sympathy, depending on the reader’s inclination.

    Whatever, though, these tales always contain a cluster fuck of reality detachment. They never inform us about the reality of poverty and scarcely provide data, even at an anecdotal level, that can be used in serious debate about wage, benefit and tax reform.

  25. In which I find myself agreeing (at least slightly) more with the blogger than the commentators. She and hubby combined are earning shed loads by national standards. May not be the most price conscious shoppers around. If shedload earners have to scrimp and save and shop at Aldi, the rest of us are stuffed (remember that one person’s savings are another’s earnings).

    Apart from the egregiously wealthy mr Newman ( well earned), it does make me wonder if readers of this blog are rational self interested peeps. If you’re all so poor, why not vote labour? (Says man currently earning not much)

  26. @ Luke
    Because New Labour are the only government in my lifetime to have made the poor poorer while making the rich richer.
    I can’t feel much sympathy for someone who doesn’t make ends meet on £80k pre-tax (and find her claim that she knows no-one who works harder utterly implausible: when I was in my 30s I worked in an environment when 60+ hours was normal, 70 or 80 in a busy week, to the point where the office had rules against taking confidential work home and the caretaker threw junior, but not very senior, staff out of the office around 9pm).
    The details sound almost Grauniad.
    If she’s 40-ish, why didn’t her parents leave school at 15? Can’t make ends meet and ballet? £1800 for petrol when she writes at home and he commutes by public transport? My wife is required to use the car for work almost every day and we still spend less than that. £4,500 for utilities? Our, nominally 4-bedroom house – actually 3 bedrooms and my study, doesn’t incur anything like that amount even including broadband – our annual heating bill is less than £1,000*. She thinks public sector workers, but not private sector employees, are struggling to survive despite widespread evidence that public sector is higher than in the private sector. Clothing – well I did wear two pairs of socks when I was in Siberia in winter, but even then I didn’t wear a fleecy dressing-gown on top of my shirt and pullover when working indoors: in the UK I always have the central heating switched off if I’m alone in the house during the day.

    *OK, that includes nil cost for the firewood I saw up for the wood-burning stove but that’s just for the living room

  27. Its in the nature of money that there’s never enough of it, its such wonderful stuff, you can buy stuff with it.

    Even the prosperous don’t have enough money, its in the nature of it.

    Some people have much more of not enough of it than other people, they are called “the poor”.

    12.5K for food is reasonable, blokes blogging here must be eating real shit.

  28. I have three hungry teenagers who are eating adult sized meals, with only one “fast food” evening a week, shopping averages £150-180, the only excesses would be the occasional half-dozen wine bottles on special offer (because you get a discount) and perhaps the choccy bars for school lunch, the rest is mainly supermarket brand and we probably save at least £20/week on offers.

    £240/week is either stupid shopping sense or definitely living it up.

  29. They make 80,000 pounds a year and still they need welfare? I can suddenly see why Romney lost.

    Luke – “Apart from the egregiously wealthy mr Newman ( well earned), it does make me wonder if readers of this blog are rational self interested peeps. If you’re all so poor, why not vote labour? (Says man currently earning not much)”

    Rational self interest is an interesting concept. If African Americans were rational and self interested they would not vote for Democrats, and especially not Black Democrats. Look at Detroit. Angry Black Nationalists destroyed the city in a generation. In fact anywhere where there are enough Black voters tend to be smoking waste lands. The main sufferers of this are African Americans and those Whites too slow to sell and move out.

    But that presupposes that your values are their values. Because self interest does revolve around values. Blacks, presumably, vote for the Democrats because they think the state will take money from White people and give it to them. Which it will. That is where, apparently, they see their self interest. Even though by my standards it has been a disaster for African Americans and their communities. In the same way, the poor do often see welfare as a non-solution to their problems. It depends on what their values are.

  30. jonnybonk: “12.5K for food is reasonable, blokes blogging here must be eating real shit.”

    Or perhaps, know how to cook real food, not microwave ready meals?

  31. Working a 60 hour week would be nice. Can’t see it happening very often mind, but would be nice.
    90 is more common. When one business shifts into high gear we reduce the hours on the other, when it slows down again (as it will by the end of January when we run out of stock of certain items) then we ramp up the hours on the other. And lots of fun.

  32. 12.5K for food is reasonable …

    Not if you are claiming poverty. It is slightly excessive even for the mid-affluent – £35 per day (excluding two of the kids’ lunches)? My two shopping trips this week were some £150 in total (3 adults + a teenager) – about 2/3rds of what she is claiming. And my spend included wine and some moderately expensive sundries.

  33. SMFS @41
    “Blacks, presumably, vote for the Democrats because they think the state will take money from White people and give it to them. Which it will. That is where, apparently, they see their self interest.”

    You talking about the US. Why do Asians and Jews in the US vote Democrat, despite being richer than the average American, white or otherwise, and less likely to be on welfare?

    (Destroys my own point of course, but you’re falling for the Republican bollocks about makers and takers. It’s the Republican states that depend on Federal handouts.)

  34. I can’t see the relevance of SMFS#41’s racially charged rant to a discussion about the household budget of a Daily Mail journalist. And I don’t feel I belong on a forum where I’m the only one who thinks it worthy of censure. So I shall withdraw for the time being.

    If you want to contact me, I welcome polite emails.

  35. Luke – “You talking about the US. Why do Asians and Jews in the US vote Democrat, despite being richer than the average American, white or otherwise, and less likely to be on welfare?”

    For much the same reasons. Race has not gone away in American politics. Nor have values. Jewish Americans vote consistently against their own economic self interest but no one thinks this is odd. As one of the wealthiest communities in America they ought to vote Republican. They have in Obama someone who is not even particularly pro-Israel – while the Republicans are solidly pro-Zionist. The Zionist vote in the Jewish community is not trivial. But they don’t.

    The explanation must be the same – past history cannot be overcome. Presumably when American Jews look at White Southerners in particular, they think of past in justice, of pogroms and Cossacks. Irrespective of what White Southerners actually think or do.

    “(Destroys my own point of course, but you’re falling for the Republican bollocks about makers and takers. It’s the Republican states that depend on Federal handouts.)”

    To some extent it is true that the Republicans are for welfare for the rich. Sugar producers for instance. The idiocy that is biofuels. But there is actually a difference.

  36. @ SMFS
    You have a short memory: the racist white southerners (plus the unions and the owners of really big businesses) were the Democrat party until the late-60s when Lyndon Johnson so alienated his own power base that it first split and then accepted Nixon’s opportunist approach. The Jews supported the Democrats when they were the party of the rich and big business while the Republicans were the party of small business, but particularly because the Republicans were isolationists in the 30s and the Democrats were in charge when Hitler declared on the USA.
    If you look at which states voted for Obama and which for Romney, can you really claim that the Republicans are the party of the rich?

  37. john77 – “You have a short memory: the racist white southerners (plus the unions and the owners of really big businesses) were the Democrat party until the late-60s when Lyndon Johnson so alienated his own power base that it first split and then accepted Nixon’s opportunist approach.”

    No I don’t. I remember that perfecftly well. I just think the dislike of northern Whites was greater back then. The fact that Roosevelt won over both the KKK and the Black and Jewish votes proves the last two groups do not vote because Whites are racist.

    “The Jews supported the Democrats when they were the party of the rich and big business while the Republicans were the party of small business, but particularly because the Republicans were isolationists in the 30s and the Democrats were in charge when Hitler declared on the USA.”

    The Jewish vote was for the Democrats a long time before Roosevelt took America into the War. He stood on an equally isolationist platform as everyone else. I also think it is odd to describe the Democrats as the party of big business.

    “If you look at which states voted for Obama and which for Romney, can you really claim that the Republicans are the party of the rich?”

    No I wouldn’t these days. But they are the party theoretically in favour of lower taxes on the rich. The richest parts of America voted for Obama. But I don’t think that poor Whites voting for the Republicans are any less rational than African Americans or Jewish Americans voting for the party of Robert Byrd. It is a commonplace that race plays a part in the way Republicans vote – which is not likely these days – but PaulB has a fainting fit if someone suggests that racism may play a role in the way Blacks vote. Weird.

  38. PaulB – “And I don’t feel I belong on a forum where I’m the only one who thinks it worthy of censure. So I shall withdraw for the time being.”

    I doubt you are the only one. But if you think it is wrong dispute it.

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