Where the money went, 2006

[fivemack]

(SLC is the Student Loans Corporation; I have not suddenly become an inadequately-tithe-paying Mormon)


If you compare with 2004



I'm surprised how consistent my habits have been; housing's more expensive (a whole house in Cambridge costs more to rent than half a house in Cheltenham), I've stopped learning to drive, and, worryingly, I seem to have become about 25% meaner when I look at the 'charity' and 'gift.out' segments; this latter I need to do something about.

I should probably apologise in advance to American readers for the invisible sliver that is medical costs, and to the taxpayers of the future for the absence of 'savings' segments, though income tax and pension contributions come straight out of salary and don't show up in the data I use for these graphs.

Comments

[vicarage.livejournal.com]

Interesting. What are FOREX and LIVE? It alarms me that you aren't able to save at all for a deposit on £300k shoebox Cambridge house. How would you assign, food and entertainment fractions to 'holidays', always my biggest extravagance.
And while you're reanalysing, what about 'stuff' for the accumulation of posessions?

TMI

[fivemack.livejournal.com]

'FOREX' is cash spent while abroad; my spreadsheet doesn't handle foreign currencies at all, so I record the withdrawals of cash and subtract anything I convert back afterwards. I take out money from foreign ATMs as I need it, so at worst have to convert back the difference between the minimum permitted withdrawal and the bus fare to the airport. Sometimes I have notes of how I spent the cash - more later in the year when I took to carrying a little notebook and pen at all times - but they don't fit in the spreadsheet.

I tend to holiday in youth hostels in eastern Europe, so those aren't all that expensive; the biggest single element in the FOOD pie is the £600/year that a pizza a week with friends at Pizza Express adds up to.

'LIVE' is my uninteresting but necessary sundries section; in 2006 it encompassed a small number of clothes, a wardrobe, a new microwave when the old one blew up, two haircuts, and the cost of transporting most of my possessions to Cambridge from Cheltenham.

I'm trying to be sensible about ebaying old gadgets when acquiring new ones, so the tide of Stuff is fairly still; I'm now convinced there's no easy way of converting unwanted books into money anything approximating what I paid for them, but haven't made the obvious decision of taking them all to Oxfam.

I have about two years of my current salary in savings accounts, as a result entirely of careful choice of parents, so adding to that feels like prudence for its own sake; Cambridge shoeboxes start as low as £165,000, which would take all the savings plus a 30-year mortgage with monthly payments equal to my current rent, I just have trouble convincing myself that's the obvious thing to do with all my worldly wealth and a lien on 30% of my labour until I retire.

Re: TMI

[papersky.livejournal.com]

Rent is money down the drain. But that doesn't mean it's always a bad idea.

It would make sense if you knew you always wanted to live there, or if you weren't buying at the top of the market (which I'd suspect you might be) and locking yourself in.

Best financial advice suggests that no more than 30% of your capital assets should be tied up in a house. For that matter, no more than 30% of your future income should.

(Having said that, I personally have the entirety of my capital assets in this apartment, and pretty much the entirety of my plausible future income too, but That's Different.)

Re: TMI

[aardvark179.livejournal.com]

I think the point at which buying becomes a sensible option is when the downsides of renting start to outweigh the financial arguments. The freedom to redecorate and such like, and the freedom from letting agencies' poliicy of doing maintenance that is adequate but nothing more are the two biggest ones for me, and given I'm putting 40% of the my post tax income into the savings account every month, I think I can probably even afford it.

£165K is probably slightly high as a starting price for Cambridge, provided you look around, I know at least one person who got quite a nice rabbit hutch for £155K, though I doubt I could fit my books in there.

Re: TMI

[fivemack.livejournal.com]

My letting agent appears significantly less evil than the average (that is, than Russells), though my interaction so far has been twice to appear in person and say '$MAJOR_APPLIANCE has broken down', a week or so after which a new $MAJOR_APPLIANCE of the cheapest available brand is installed into the house while I'm at work -- the agent lends the installers her key. They've repainted the outside of the house since I've been in it, and the inside of the house before I moved in.

I don't think I've ever felt the urge to redecorate, though I may be the sort of barbarian who sometimes views having more books than bookcases as a reason to get rid of books rather than to buy bookcases.

Re: TMI

[fivemack.livejournal.com]

I do feel that this is the top of the market, but I've felt that for the last four years, over which time house prices have approximately doubled.

I'll build a more fearsome data-miner and set it loose on www.mypropertyspy.co.uk this evening, they seem to have a dataset of the price paid for every house sold in England since 2000. It's presented for the gratification of estate agents rather than demographers, but fixing that is a Small Matter Of Perl. What I'm seeing in the small chunk (Histon Road and the end of Victoria Road, a region essentially consisting of houses bought by speculators for letting to students so maybe not relevant for my situation) that I've manually copy-and-pasted into gnumeric is:

• No house sold for about nine months after September 2001
  
• When they started selling again after that, prices abruptly roughly doubled from what they had been, possibly not coincidentally with interest rates having dropped from 6% to 4% between Feb 2000 and November 2001.
  
• Nobody sold between December 2005 and June 2006, whilst people had sold in that area every previous spring.
  
• 46 Histon Road sold in April 2000 for 107k, in July 2001 for 145k, and in July 2005 for 190k.
  
• The person who bought 52 Histon Road for 160k in September 2001 and sold it for 89k in March 2005 may deserve sympathy, though I haven't checked whether 52 Histon Road looks as if it burned down in February 2005. Or there might be a '1' missing from the database.
  

Re: TMI

[huggyrei.livejournal.com]

We bought because after a careful look into the type of places we wanted to live, it turned out to be just as expensive per month to rent as it would be to pay the mortgage, so we figured we might as well buy and actually have something to show for it later!

It's also probably a good idea to own somewhere by the time I retire, so I don't lose all my pension to accomodation costs, especially given problems with pension black holes and the ageing population and such.

Re: TMI

[fivemack.livejournal.com]

Here, I'm paying 750/month on a place whose clone down the road went for £230,000, which is a lot better than any conceivable mortgage deal could produce.

If you're making purchases now based on needing to do something before retirement, you're asserting that house prices are going to grow faster than wages for the next forty years; I'd be wary of putting a fiver on that bet, let alone my worldly wealth plus a 30% lien on my income unto death.

Re: TMI

[tau-iota-mu-c.livejournal.com]

I'd bet that such a house price growth would be symptom resulting from overpopulation though, as cities stop wanting to sprawl into their water catchment areas and viable residential land becomes harder to find. If we are approaching that world population peak supposedly around 10 billion (but not there yet), then that probably means we are going to be in this regime for a little while longer before population densities and land prices start plateuing.

Now that I'm finally making money, I reckon if prices don't start improving in 5 years, I might have to start considering buying then.

Re: TMI

[scat0324.livejournal.com]

I'd bet that such a house price growth would be symptom resulting from overpopulation though

It's not as simple as that. The cost of houses is a supply-and-demand thing, but the demand isn't just an increase in population - it's a change in aspirations meaning people don't want to share properties in the way they used to (mostly as families). With a downturn in the economy, I suspect people would go back to deciding to share in one way or the other, and demand for property would fall without a matching reduction in the overall population.

Re: TMI

[huggyrei.livejournal.com]

If house prices decrease and I want a better house, I'll sell this one and buy one really cheaply. If house prices increase, I'll get more money for this one when I sell. If I don't want to move, I'll be happy enough to stay here.

All I'm really betting on is that rent prices won't become significantly cheaper than mortgages so as to outweigh the benefits of completely owning a house and owing nothing after 25 years and the rights I have over my own place for owning rather than renting.

[liv]

I think the reason why someone in your position would buy rather than rent is so that when they do retire and their income drops, they don't have to worry about a roof over their head. But that's a pretty huge gamble against an unknowable future, and if you're happy renting then why not go on with it?

I think it's becoming more and more the norm for people to put off buying their own place until they get married, or until they have kids or until the kids are old enough for it to matter. Which is as much out of necessity, given that housing prices are growing so much out of proportion to the rest of the economy, as it is a deliberate choice.

[fivemack.livejournal.com]

There's certainly part of me that says that an owned house is a place for a married couple to bring up children in, and accordingly an unpardonable extravagence for a bachelor; couples have two incomes (yes, that's a modern-day axiom) (yes, I know that they have one income for at absolute least six months per child), which makes the mortgage seem somehow more affordable.

I rattle around on my own in the rented house, but the people I know in Cambridge seem well-housed at present, and I'd rather rattle than have a housemate of unknown quality - I've had six years of that, starting at grad school, and thought that enough.

If housing prices are growing out of proportion to the rest of the economy and will do so forever, the right answer must be to mortgage oneself to the hilt and buy now. But economics tends not to do 'will do so forever', and I'm currently in a position where I can be patient.

[tau-iota-mu-c.livejournal.com]

Marriage seems to be a good point to plonk down for a house. You've implicitly said you're going to commit to a person. Committing makes it harder for you to both up and move for a new job (astronomers have to do this every 3 years; not completely unrelated to why I gave up research, not that I have had an SO to worry about for about 5 years now), which means you are more likely to stay put. Which means you can plonk down and don't need to worry about the hassle of selling and buying again in 2 years time when circumstances change.

And if you buy before marriage, what's to say your future SO doesn't also have a house? Then at least one of you have to go through the hassle of selling (and possibly losing a lot of money if you time it wrong relative to this inevitable future crash).

Re: TMI

[vicarage.livejournal.com]

If you've got a savings buffer that's fine. You've got the flexibility to stop work of be long-term sick without financial worry, or go off on a RTW trip like Frances.

Taking stuff to Oxfam counts as charity of course.

I wouldn't buy a house now, but what do I know, I thought the market had peaked in 2003 when I sold mine to go RTW.

Re: TMI

[fivemack.livejournal.com]

I'm not sure I know Frances. In October 2005 I packed in my previous job and went off on a ten-week RTW (India, Thailand, overland to Singapore, Bali, Taiwan, two days in Tokyo, Canada with papersky), returning to Cambridge where I had parents to stay with until I found a job, and where I knew the job market to have a reasonable number of fivemack-shaped holes, one of which I'd fallen into by March; I think prudence would require me not to do that again for a while, though it was good fun.

The next extravagance will be Japan this summer, a couple of weeks wandering around and then the Worldcon; the job I'm in is interesting, enjoyable, lucrative, does not demand sixty-hour weeks, but isn't very generous with holiday. I don't think I've the drive to do the sort of consulting job from which I could decide every couple of years that I wanted to spend the winter in South America this time, though when it is cold outside and someone's posting photos from Machu Picchu there's quite a temptation there.

Re: TMI

[vicarage.livejournal.com]

I managed 8 months on my RTW, 18 months in 2 jobs I didn't like. I'll be 2 years in Colorado, but I'm planning my 6 months in South America already.I enjoy travelling a lot more than working!

BTW if I broke down my salary like you I'd find I was saving about 60% of my income. Ah the delights of tax-free academic visas and being cured of the urge to buy stuff!

Six months holiday a year would be ideal, but I've like to go back to the same company each time, as spinning up in such a complicated field as supercomputing is very hard..

Re: TMI

[nassus.livejournal.com]

yeah - forex has two meanings that immediately sprang to mind. Firstly I wondered what you'd been doing to spend such a large amount of money on condoms (I belive they're a brand in Japan) then I revised that to mispelled beer *grin*.

[vyvyan.livejournal.com]

Thanks for posting this; you've reminded me that I completely forgot to pay the rent this month!

[cartesiandaemon.livejournal.com]

This makes me feel really stupid. I have a standing order, and I'm sure if I didn't I'd forget *every* month! :)