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Telegraph: My Family Is Struggling On £20,000 A Year. Should I Downsize My Home And Invest In Buy-To-Let?

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Sam Pugh and Melissa Clarke, both in their 30s, are still adjusting to life as parents of two children. Their son, Freddie, was born earlier this month, a brother for their daughter, Violet, who is 14 months.

Although they can just about afford to live in their current home, with two children it is a struggle to survive on just Sam’s wage. He said: “I’m very meticulous with the bills but we are basically bringing in not much more than is going out.”

As a result, he is considering selling their family home, a three-bedroom house in the suburbs of Rugby in Warwickshire, and buying a more modest family home in the town centre as well as a buy-to-let property to supplement their income.

http://www.telegraph.co.uk/finance/personalfinance/borrowing/11632698/My-family-is-struggling-on-20000-a-year.-Should-I-downsize-my-home-and-invest-in-buy-to-let.html

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FFS, the solution never seems to be "work harder or study to improve your skills/qualifications/value to get a better job and higher salary"!! Lambs to the slaughter (although surely they're due a chunk in tax credits).

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Reading the article he sounds like a lucky stupid #### who deserves to burn. He leveraged into a government backed echo boom and wants to double down on his winnings despite owing in total 4.5 times his earnings. Idiot.

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FFS, the solution never seems to be "work harder or study to improve your skills/qualifications/value to get a better job and higher salary"!! Lambs to the slaughter (although surely they're due a chunk in tax credits).

.

Edited by shindigger

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The solution to any financial problem is to get a BTL. It's the only game in town as the average house earns more than the average worker. And the DM today shows how you can get a 11.9% return on your capital. Buy a BTL now before you miss out. That extra BTL working for you will bring in £24,000 a year so if you get two you can stop working and be like the 1%.

Indeed. Surely with £135k equity, the answer isn't to get one buy to let property, but to get several buy to let properties. Let's say he buys a £100k family home £20k down and £80k (4x salary) mortgage, that leaves £115k to use as deposits on BTL. That should get three £100k BTLs with £33k deposit on each and enough left over to pay the legals etc.

What sort of bandit would advise anything different to a hard working family man like that?

Edited by pipllman

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Lets put the numbers+dates in and take his assumptions.

'Sam is a dab hand at DIY and has put these skills to use renovating property since 2009, when he bought his first house. He said: “I was a single 25-year-old bloke and I bought a three-bedroom terrace for £94,000 which was a bit of a mess.

“However, it was the best and biggest place I could afford at the time. I gutted the entire house and gradually did it up. I sold it for £116,950 in 2011.”

The couple’s current home, which Sam bought for £161,500 in 2014, should fetch £225,000 after renovations are completed. He currently has £80,000 of his Nationwide repayment mortgage outstanding.

If the house does sell for this price, Sam will have about £135,000 of equity.'

Property 1: Bought in 2009 for 94k. Sold in 2011 for 116K.

Taking the figures on trust, thats ~20K mark-up.

Minus doing up materials, minus mortgage fees, minus transaction costs.

Lets be generous and assume he 'made' 10K in 2 years. Im not costing his time.

Transaction costs when you are buying and selling, even a 100k house, will be in the region of ~5k.

Then there's a 3 years gap between selling his first property and buying his current one in 2014.

What did he do? If he's so good at developing why not say - He bought xxx for yyy and sold for zzz???

So current property, bought in 2014 (Jan 2014, or Dec 2014??) for 160K. He has an 80k mortgage.

He reckons he'll sell it for 225k - thats an increase of almost 70k!

Now, on property #1, I can accept he could have 'made' 10k - buy a scruffy house from someone desperate to sell, gut it, clean it, sell it.

Yep 10K is do-able.

A 70k mark-up on a 160k house - thats almost doubling the price - would require some large, structural work - building a new floor perhaps?

He's not going to get that markup by splashing some emulsion on the walls FFS. In less than 2 years???

As the Rugby is 'Not in London' I doubt there has been any increase.

Indeed, most places 'Not in London' barely show any increase - you are lucky to sell houses 'Not in London' never mind sell them for almost 40% than you bought them for.

Edited by spyguy

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Anyone reckon that the 10k on his cards is his refurb fund?

10K @ what, 15% = ~1.5k years interest = ~100/month.

No wonder the daft sap has not fcking money.

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Ahhhhh.....aren't they sweet ! Look at their scrunched up little faces !!

The kids are as ugly as shite though.

Lmfao!

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Anyone reckon that the 10k on his cards is his refurb fund?

10K @ what, 15% = ~1.5k years interest = ~100/month.

No wonder the daft sap has not fcking money.

Yep, he's seemingly stoozing his home improvements. says interest free till 2017 but rollover fees must sting each time

Clearly not an "electrical engineer" either to be only earning £20k. Lying to the tax man electrician more like. Wants the btls to launder his earnings. Not that I'm cynical or anything.

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Just put their current circumstances into the benefits calculator at entitled to.

They should be able to get £136 pw - i.e. somewhere in the region of 6-7k annually above the awesome 20k this genius is taking home.

Probably better than a buy to let, thanks to the largesse of the state and their corporate subsidies.

They should therefore be able to net around 1900 p/m in their current situation.

If they are finding life hard in warwickshire on that, then my first suggest they go down waitrose at closing time like the rest of us vultures. Fabulous bargains to be had.

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Mind you, I thought I'd look at a 'minimum income' calculator to see what society thinks they need.

http://www.minimumincome.org.uk

So, for them (4 person family)

For a basic standard of living,
you need to earn:

£35,932 per year, giving a net income of £559.36 per week

Weekly outgoings(?) £559.36 - total
Food
96.68
Alcohol
7.11
Clothing
46.14
Water rates
9.62
Council Tax
22.71
Household Insurances
2.30
Gas, electricity, etc
25.65
Other housing costs
9.58
Household goods
29.06
Household services
8.82
Childcare
0.00
Personal goods and services
52.41
Travel costs and motoring
71.81
Social and cultural activities
86.14
Rent
91.33
Mortgage
0.00

The outgoings breakdown is from the site. Somehow these idiots think that

* families spend less on rent than on food (rent for a family home is less than £400p/m according to site!)

* A family of four spends £200 per month on clothes

*people need 86.14 per week on 'social and cultural activities' - I bought a PS3 for 80 quid last year with enough games to last four years. I suppose others may prefer more high brow pursuits. Dark Souls will keep me quite busy.

Edited by Frugal Git

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Lets put the numbers+dates in and take his assumptions.

Without knowing what works he's doing, such numbers are meaningless.

I've seen a house I'm slightly tempted to offer £150k on. If I do, I'll want to spend another £50k on it before moving in. And I'm not even in the business of tarting up run-down houses, I just don't particularly want to pay extra for something being all nicely decorated to someone else's taste or (common and perhaps worse) someone's idea of what'll sell.

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FFS, the solution never seems to be "work harder or study to improve your skills/qualifications/value to get a better job and higher salary"!!

I did the above thinking it was the right thing.

Oh well. At least the party for working people is now in power (can't do rolling eyes smiley on phone but it should be here).

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The outgoings breakdown is from the site. Somehow these idiots think that

Sounds a bit like some of the nonsense emanating from the Joseph Rowntree foundation. I recollect finding their numbers strikingly unrealistic, not least 'cos you'd have to go back to sometime in the 1970s (when a middling salary was about £3k) for their rental to look remotely realistic.

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FFS, the solution never seems to be "work harder or study to improve your skills/qualifications/value to get a better job and higher salary"!! Lambs to the slaughter (although surely they're due a chunk in tax credits).

this mindset annoys me.

Sitting a couple of courses does not a better and moreprofitable worker make...unless the system you are working in is as efficient as any tickbox operation... you get the qualies, they pay you more.

idiotic, slavery induced stupour.

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Mind you, I thought I'd look at a 'minimum income' calculator to see what society thinks they need.

http://www.minimumincome.org.uk

So, for them (4 person family)

For a basic standard of living,

you need to earn:

£35,932 per year, giving a net income of £559.36 per week

Weekly outgoings(?) £559.36 - total
Food
96.68
Alcohol
7.11
Clothing
46.14
Water rates
9.62
Council Tax
22.71
Household Insurances
2.30
Gas, electricity, etc
25.65
Other housing costs
9.58
Household goods
29.06
Household services
8.82
Childcare
0.00
Personal goods and services
52.41
Travel costs and motoring
71.81
Social and cultural activities
86.14
Rent
91.33
Mortgage
0.00

The outgoings breakdown is from the site. Somehow these idiots think that

* families spend less on rent than on food (rent for a family home is less than £400p/m according to site!)

* A family of four spends £200 per month on clothes

*people need 86.14 per week on 'social and cultural activities' - I bought a PS3 for 80 quid last year with enough games to last four years. I suppose others may prefer more high brow pursuits. Dark Souls will keep me quite busy.

yeah, but the journalist has improved hislife by working hard, getting the Journalism degree and is worth £40K income, even though he has had a lobotomy from the reality part of his brain.

Still, reader enraged with asinine information, mission accomplished.

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The solution to any financial problem is to get a BTL. It's the only game in town as the average house earns more than the average worker. And the DM today shows how you can get a 11.9% return on your capital. Buy a BTL now before you miss out. That extra BTL working for you will bring in £24,000 a year so if you get two you can stop working and be like the 1%.

Acually this solution is very much in line with government and central bank policy, this is exactly the solution they between them have been pumping. Learning new skills, setting up a real business, taking additional educational courses has been more expensive, more risky and a less predictable outcome compared to the former thanks to their efforts, so much is their meddling in the whole economy.

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