10 Jul 2012, 10:48pm
economy reflections
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  • The Guardian is telling me I’m living in poverty. Oh and a family needs £36k to get by these days

    Cripes. According to the Grauniad’s new campaign on Breadline Britain, the Ermine is living in abject poverty. Not only that, they appear to be in some confusion between the notions of income and wealth –

    Using key data from the Institute of Fiscal Studies […] you can see exactly how wealthy you really are.

    Really? The reason, dear Guardianistas, that you will never get rich is because you are stuck in a poor person’s mindset. You think only of selling your time for money, and therefore you assess how wealthy readers are by exclusively focusing on their incomes. So just to set you guys right, wealth is accumulated income that hasn’t been spent. Geddit? Although no doubt the Ermine is lacking many of the baubles and gewgaws that the IFS consider to be essential to a life well lived these days, like Sky TV and a smartphone, the reason the Grauniad decides I am subsisting below the poverty line is because my income is low. I am in the lowest 5% by taxable income, though in the upper 5% by net worth. That doesn’t quite set me into Monevator’s millionaire bracket ambitions, it simply shows how little accumulated wealth most Britons have. Presumably because they’re spending it on cars and childcare…

    In another article, the Graun shares with us the fact that a family of four need a combined income of £36k for a decent standard of living - a third more than before the recession.

    A large part of this seems to be due to rising expectations – said family needs to run a car and have broadband which it didn’t in 2008. I’m not sure if those nice chaps at the Joseph Rowntree Foundation are au fait with what the word recession means. It means living standards taking a hit. So those rising expectations had better be packed away in a dark place until the recession ends, if and when that happens. Old Mervyn King, while he’s not occupied giving brash American banksters the order of the boot, isn’t chipper about that happening any time real soon now. So, JRF, just put away those rising expectations for the moment, OK? Then we had this corker

    With the cost of bus travel doubling compared with the cost of owning and running a car, families said that having a car was now essential in urban areas outside London.These rising costs come as government cuts deeply into the subsidies paid to modern middle-class Britain.

    Well, colour me a cynical old so and so, but exactly why was the government subsidising the middle class in Britain? Did somebody discover the money tree in the last decade? Surely it is the very definition of middle class that you can basically pay your own way in the world…

    Now I’m probably going to get some hate for this, but apparently childcare is now these two child families’ biggest weekly outgoing. Which sort of begs the question of why the parents are spending time they’s probably like to spend with their kids in earning money so that … they can pay other people to spend the time with their kids rather than doing the job themselves. Seems a rum old situation, that.

    11 Jul 2012, 4:43am
    by Steve P


    Indeed, and the poor hard-done-by parents are probably claiming child support whilst earning up to £80k between them. As if somehow having accidentally spawned a couple of spoilt little Alfies and Flossies means you deserve some charity so you can buy them croquet lessons.

    Apart from that valid point, this post does unfortunately come across as insufferably smug. *Of course* you’re a low earner, because you’re retired! And you retired bloody early too. Lucky you, you don’t have to “sell your time for money”, or “work” as most people call it.

    *Of course* you’re high net worth – that’s how you managed to retire years early.

    Sorry dude, but you need to accept that you’re fortunate. You don’t have any more of a birthright that these insufferable Guardian people, so get over yourself, and start appreciating your comfortable life without lording it over the rest of us.

    @Steve Can’t argue with your opinion that I’m a smug git since I respect your right to your opinion, but perhaps I do take issue with some of your assumptions ;) I am not unusually high net worth. If you spend less than you earn then obviously net worth reaches a peak at the end of your working life, whenever that is. And it’s going to be higher at that instance than the average value.

    I can retire early because I have *chosen* not to spend my money on what a lot of people do. I haven’t been abroad for the last three years, frinstance, as an elective choice in being one of the things that help me stop selling my time for money as opposed to having six weeks in the sun. It is called work, and I carried on doing a job that came to really piss me off and damage my health short term for several years exactly so I could knock it off early.

    I’ve had some strokes of luck, and some strokes of rotten luck. I’m not drawing a pension, that is why I have a low income; this is deliberate as I’ve paid enough into the tax system now.

    The whole point of this is that at this particular time in Britain living standards are historically high. You don’t *need* to spend anywhere near as much as people do on average in the UK to live well. Live intentionally, and choose what you spend your money on rather than accepting received wisdom. The JRF would have been horrified at the standard of living in the 1960s London I grew up in, but looking at the hand-wringing it was a happier place than 2010s Britain, even though we have stupendously more stuff and life is physically much easier now.

    11 Jul 2012, 9:20am
    by hotairmail


    Like you I was somewhat shocked to see that amount of money was required. It looked rubbish, so beyoned it including a family of four I don’t know anything about it – gross I presume, does it include child benefit etc? an assessment of mortgage and other outgoings (surely that has fallen a ton).

    But it doesn’t surprise me at all for them to decide we’re all poor because our expectaions have risen. My first reaction to that is ‘get real’ just as yours was. My second reaction is to see how incisive that assessment is:

    “A man is rich, he who few wants”.

    My own personal motto.

    11 Jul 2012, 6:12pm
    by possumcat


    @Steve P I think Ermine is fortunate in that he saw the light and also had the willpower to rein himself in (spending wise) so that he could have a more joyful tomorrow – which is he is now experiencing as he has retired. We do live in a consumer society and so we all get sucked in to feeling that we ‘must’ have/do certain things to be considered normal. He has a relatively high net worth because he has been sensible, possibly had some luck along the way and is in his 50s. You have the chance to do the same. I’ve just been looking at holidays for the two week break I have in September and I have come to the conclusion that I really should follow the sound advice here and holiday at home. My job, although enjoyable in many ways, has begun to really p*** me off and I don’t want to feel this sort of stress for another 10 years simply so I can go on foreign holidays, buy better clothes, eat out in restaurants etc etc.

    It is my choice.

    The figure sounds reasonable to me, simply because the median income from all sources for a family of four is £33k and the JRF figure reflects some aspiration above that.

    However, a “typical family” does not have the frugal-wealthy mindset of the PF blogosphere. Although this appeals to you, me and many others, I am not a little grateful that some of the population do want to waste their money and allow me to accumulate capital at their expense.

    I’ve spent the last few years living off £5k a year so its sums of moneys I struggle to believe possible to earn. However, by the time you have the car, holidays, the house, you end up with assets that require money to be pumped into them on a continual basis.

    >why the parents are spending time they’s probably like to spend with their kids in earning money so that

    A good point. We avoided childcare, took the income hit and are glad we did so, but I can see why people don’t. I think for two kids the breakeven point is going to be around the £25k mark. However, for a parent to take several years out of the workplace is inevitably going to be career detrimental in a number fields.

    […] The Guardian tells me I’m in poverty – Simple Living in Suffolk […]

    14 Jul 2012, 12:38pm
    by carl studt


    Whenever these assessments of net worth are made they always focus on real assets such as houses and cash but whoever stops to consider the capital value of a steady flow of income from a rock solid job in the civil service or JRF?
    There is talk of a wealth tax in Europe to clear up the mess that the politicians have made by borrowing mega from less than cautious bankers. I doubt that the capital value of a future income will be included, so that the poor sods who haven’t spent all their income but rather put some by will again be penalised.
    It’s bad enough that interest rates at f*** all an annuity rates are hurting older savers more than any other group.
    Now I’m over 60 I can’t ‘sell my time’. No one is buying!

    Now. It could just be me, but isn’t this all sort of meaningless? People like Ermine (and me) who have paid-for houses, have investment assets and no kids at home any more do not need much at all to live on.

    Whereas younger people with kids need more, because they are having to pay mortgages and cover other expenses. So I’m not sure this takes us anywhere, really.

    My late first husband and I opted for one moderate income and no childcare costs during the ‘baby’ years, but that was in the 1980s and I was able to fall back on the services of my widowed mother after that. The quid pro quo is that I now subsidise her in her old age – fair is fair.

    ‘Poverty’ is, of course,a moveable target, depending on where you are shooting from. But I do question some of the so-called ‘essentials’ for middle class family life now. Encouragingly, so does my daughter (30 this year) and many of her circle, who are in the live-within-your-means brigade and earn generally modest salaries (with no final salary pension schemes, natch!).

    Jane

     

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