My own experience at 24.

[sam1994]

I've been reading this forum for a while and there's some great analysis on it. It looks like chaps such as durhamborn are on the mark. 

I'm 24 years old and have been fortunate enough to start my own business. It does pretty well, and I'm lucky enough to max out my ISA and SIPP contributions every year. But being in the South East, there's not much chance of me being able to afford something actually worth its value for some time. Conversely, my friends are either working minimum wage jobs such as bartending or happy to bring in 26k a year (albeit outside of Central) despite us all having attained a good qualification in engineering subjects. 

It's unclear to me how any of this is sustainable, but perhaps it is. I can't see anything else in the long term other than severe -ve equity on purchases because Carney will rise to match Fed far too late and far too quickly and a disaster will ensue.

Perhaps one thing we haven't considered that will contribute to a crash is not just a lack of affordability; but those that can afford simply wanting to wait a lot longer in the hope they get something better. 

[iamnumerate]

It has not seen sustainable to me since 2001 but amazingly it has sustained.  Hopefully you can rent somewhere cheaply until it corrects.

[happyguy]

It is a shame that people with a real degree in engineering rather than sociology or film studies are struggling to find a job.  Fair okay to you for having the drive to start your own business and good luck for the future.  

[happyguy]

FAIR PLAY NOT OK !

[wsn03]

29 minutes ago, iamnumerate said:

It has not seen sustainable to me since 2001 but amazingly it has sustained.  Hopefully you can rent somewhere cheaply until it corrects.

+1

[Lurkerbelow]

1 hour ago, happyguy said:

It is a shame that people with a real degree in engineering rather than sociology or film studies are struggling to find a job.  Fair okay to you for having the drive to start your own business and good luck for the future.  

That's what happens when you hollow out your economy and turn it into a casino based on rentierism.

[Guest]

Two choices, three if you want to do something strange and off beat.

1. Rent extortionately priced properties

2. Buy extortionately  priced properties 

 

I am not sure what true answer to give you anymore, at least rent for the next 18 months , there are a lot of positives to a highly possible crashing property market soon and then re-evaluate, but what do I know.

I would have sworn there was no way this market could keep inflated several years ago, but it did.

[spyguy]

On 30/09/2018 at 03:21, sam1994 said:

I've been reading this forum for a while and there's some great analysis on it. It looks like chaps such as durhamborn are on the mark. 

I'm 24 years old and have been fortunate enough to start my own business. It does pretty well, and I'm lucky enough to max out my ISA and SIPP contributions every year. But being in the South East, there's not much chance of me being able to afford something actually worth its value for some time. Conversely, my friends are either working minimum wage jobs such as bartending or happy to bring in 26k a year (albeit outside of Central) despite us all having attained a good qualification in engineering subjects. 

It's unclear to me how any of this is sustainable, but perhaps it is. I can't see anything else in the long term other than severe -ve equity on purchases because Carney will rise to match Fed far too late and far too quickly and a disaster will ensue.

Perhaps one thing we haven't considered that will contribute to a crash is not just a lack of affordability; but those that can afford simply wanting to wait a lot longer in the hope they get something better. 

It doesnt, work out that is.

Either house prices halve to meet earnings.

Or earnigns double to meet house prices.

Until either outcome occurs, house will just sit their, unsold.

 

[micawber]

Head North. That's what I did when I couldn't afford anything in the SE in the 80's. Buy a nice pad. Enjoy life. Head back after the crash and hoover up.

[Cryptotrader]

On 30/09/2018 at 03:21, sam1994 said:

I'm 24 years old and have been fortunate enough to start my own business. It does pretty well, and I'm lucky enough to max out my ISA and SIPP contributions every year. But being in the South East, there's not much chance of me being able to afford something actually worth its value for some time.

Well, you have an advantage that you have your own business - much more possible to relocate up North, to Scotland or parts of Wales where houses are much cheaper. If your customers are people, not businesses, I would imagine they have more disposal income compared to South East - so you could also make more.

[Finman]

10 minutes ago, Cryptotrader said:

Well, you have an advantage that you have your own business - much more possible to relocate up North, to Scotland or parts of Wales where houses are much cheaper. If your customers are people, not businesses, I would imagine they have more disposal income compared to South East - so you could also make more.

24, own business, has SIPP, maxing out ISA and SIPP contributions.  The boy/girl's done well.  Sincere congratulations.  I did what you suggested.  Had a UK wide project based job with locations depending on clients.  Bought cheapily where I wanted to live and rented where I (actually more my wife) had to work.  Planning for both of us to go contracting and hopefully charge any rental costs as an allowable business expense.

[bushblairandbrown]

1 hour ago, micawber said:

Head North. That's what I did when I couldn't afford anything in the SE in the 80's. Buy a nice pad. Enjoy life. Head back after the crash and hoover up.

This is the best answer. Staying in the south east unless you think you are going to own a multi million pound business within 5 years is a complete waste of your life.

I've seen so many friend couples living in the South East completely deluded about their situation. Yes, they have a big disposable income with multiple nice holidays abroad every year. Yes some even own their own place (albeit small and in shabby areas) but it's just starting to dawn on some of them that this is only sustainable while they have two full time incomes. Managing on one income after having a baby even for 6 months is completely unfeasible without moving out of the south east. Plus I think they are starting to see those of us living outside of the south east have an improving quality of life with much less debt overhead whilst they continue to endure 90 minutes on the tube every day.

Honestly I would not consider moving back to the south east for a 30k pay rise. It's well worth the cut. Escape while you are still young. 

When I first left university I thought the benefit of a decent degree in the workplace would be earning a lot of money. Now I see it differently. Having a good degree enables you to get a 'proper' work outside the south east. If you've got your own thing going, all the better still! 

[iamnumerate]

2 hours ago, micawber said:

Head North. That's what I did when I couldn't afford anything in the SE in the 80's. Buy a nice pad. Enjoy life. Head back after the crash and hoover up.

It seems weird that people like you  who work, leave the South, but not those who don''t.  It should be the other way round!

[jimmy2x3]

maxing out isas and sipps at 24 tells me your earning 60k plus at 24. and that while building a new buisness?  you are the 1% the other 99% are truly fu56ed

[sam1994]

Good to get some replies. Thank you

I do wonder if some aren't aware of how bad the situation is. My parents are surprised at my position and keep asking why I choose to pay in to my SIPP and ISA when I could've got a deposit on a house. I can see at best house prices stagnating. Any gains must surely be muted at this point; at least in comparison to an index fund. 

5 hours ago, Cryptotrader said:

Well, you have an advantage that you have your own business - much more possible to relocate up North, to Scotland or parts of Wales where houses are much cheaper. If your customers are people, not businesses, I would imagine they have more disposal income compared to South East - so you could also make more.

About 90% of my revenue comes from outside the UK now. I just need a laptop to do most of my work; so I'm not tied to any fixed location which is very helpful. I've noticed a decline in our UK sales and increasing uptake internationally. I don't think we're failing in the UK, but disposable income seems to be tightening. 

5 hours ago, Finman said:

24, own business, has SIPP, maxing out ISA and SIPP contributions.  The boy/girl's done well.  Sincere congratulations.  I did what you suggested.  Had a UK wide project based job with locations depending on clients.  Bought cheapily where I wanted to live and rented where I (actually more my wife) had to work.  Planning for both of us to go contracting and hopefully charge any rental costs as an allowable business expense.

I don't know if you'll be able to do that with rental costs; but you may get some relief with use of home and subsistence. Contracting route is the way to go as long as you don't fall in the scope of IR35.

4 hours ago, bushblairandbrown said:

This is the best answer. Staying in the south east unless you think you are going to own a multi million pound business within 5 years is a complete waste of your life.

I've seen so many friend couples living in the South East completely deluded about their situation. Yes, they have a big disposable income with multiple nice holidays abroad every year. Yes some even own their own place (albeit small and in shabby areas) but it's just starting to dawn on some of them that this is only sustainable while they have two full time incomes. Managing on one income after having a baby even for 6 months is completely unfeasible without moving out of the south east. Plus I think they are starting to see those of us living outside of the south east have an improving quality of life with much less debt overhead whilst they continue to endure 90 minutes on the tube every day.

Honestly I would not consider moving back to the south east for a 30k pay rise. It's well worth the cut. Escape while you are still young. 

When I first left university I thought the benefit of a decent degree in the workplace would be earning a lot of money. Now I see it differently. Having a good degree enables you to get a 'proper' work outside the south east. If you've got your own thing going, all the better still! 

I'm not keenly positioned on leveraging myself heavily with a potentially depreciating asset. I'm also not sure the South East is where I'll want to be in the future; and buying a place would restrict my ability to move on. Prices up North look more in line with expectations; my concern here is that everyone may get the same idea and I may need to make a decision a few years earlier than I would have ideally liked. 

3 hours ago, jimmy2x3 said:

maxing out isas and sipps at 24 tells me your earning 60k plus at 24. and that while building a new buisness?  you are the 1% the other 99% are truly fu56ed

Bemused as to how it can all work. I live very frugally. I don't buy anything I can't afford and if I do use a credit card, it's to build credit history and for consumer protection (i.e. flight cancellations). 

On the other hand, I see people my age driving cars that I know they can't afford. I suppose it's a combination of cheap credit and perhaps a disillusioned opt-out from the hope of being able to afford a house..

Cheers

[Pablo]

Sam, you are probably similar to me in many respects.

I started small time goods trading before I was 15, built this into a successful SME (but still emphasis on the small). Moved away from this when Ebay and direct shipping became the norm and I am now a young senior leader in the private sector.

Long story short, I started looking at a first property a few years back in the south west as I could afford it but thought it was overpriced. The reality is, if I bit then I would have had a home for a few years and made some money on it and not the loss I anticipated. C'est la vie

Since then I have rented/live in London and remain continually frustrated that on paper it looks like I am in the top 1% e.t.c but it rarely feels like that when you can only sensibly afford a large 2 bed flat in Zone 1/2. Or a average semi 3/4 bed house on the outskirts but one that is rather standard and not representative of what people who have played the game, made it to the top should be looking at. It does feel that you have to have been in the game before 2008 or frankly laundering money to feel like you have any success.

The fact that a senior leader is looking at property that those on much lesser salaries could afford just 10+ years ago shows the market is dysfunctional (i.e property that was 350k up for £1.2 million now), and I think leads many young folk into a world of 'whats the point'. So I feel for you.

In terms of nice cars e.t.c, I have only ever bought for cash but there was a stat that something like 96% of new Mercedes sold in the UK are financed/leased. That probably tells you everything, a world where everything is priced 'by the month' in a drive to try and show off to neighbours.

In terms of hope though, the south east continues to get hit and a prime example of this was back in 2016 when I was looking to buy in London, something that was £650k then, is closer to £500-520k now. The fat is being taken out of the market and the real drops are starting to come through. It is a tricky game though, who knows when/where they will land.

[Finman]

On option.  Buy a bit of a ruin somewhere probably out of the South East, outbid a local developer who needs to make a profit, pay low stamp duty, treble your estimated renovation cost, double the renovation quote, and take your time while renting near work.  Maybe hire a project manager.  Build a home, the one you want, where you want it.  Add value, just like you're probably doing in your business.  It's what I did.  Opened up a whole new world to me.  Yep, It's rubbish at times but so sometimes seems the alternative when I read forums like this one. 

[durhamborn]

Move north Sam.Here around Durham you can buy some cracking places for £200k and some very nice 3 bed semis for around £120k.East coast mainline has you in London in 2 hrs 10 minutes from Darlington.Newcastle airport is very laid back and plenty of flights now,even the ferry to Europe from North Shields.The south will be terrible in the next cycle as its those very jobs that will see the most pain.

[Houdini]

1 hour ago, durhamborn said:

Move north Sam.Here around Durham you can buy some cracking places for £200k and some very nice 3 bed semis for around £120k.East coast mainline has you in London in 2 hrs 10 minutes from Darlington.Newcastle airport is very laid back and plenty of flights now,even the ferry to Europe from North Shields.The south will be terrible in the next cycle as its those very jobs that will see the most pain.

+1. Durham Tees will also get you anywhere in Europe by lunchtime provided you go via Amsterdam...

[No One]

On 30/09/2018 at 03:21, sam1994 said:

I've been reading this forum for a while and there's some great analysis on it. It looks like chaps such as durhamborn are on the mark. 

I'm 24 years old and have been fortunate enough to start my own business. It does pretty well, and I'm lucky enough to max out my ISA and SIPP contributions every year. But being in the South East, there's not much chance of me being able to afford something actually worth its value for some time. Conversely, my friends are either working minimum wage jobs such as bartending or happy to bring in 26k a year (albeit outside of Central) despite us all having attained a good qualification in engineering subjects. 

It's unclear to me how any of this is sustainable, but perhaps it is. I can't see anything else in the long term other than severe -ve equity on purchases because Carney will rise to match Fed far too late and far too quickly and a disaster will ensue.

Perhaps one thing we haven't considered that will contribute to a crash is not just a lack of affordability; but those that can afford simply wanting to wait a lot longer in the hope they get something better. 

Any advice?

 

How do I set up a SIPP?

[The Spaniard]

On 01/10/2018 at 21:51, jimmy2x3 said:

maxing out isas and sipps at 24 tells me your earning 60k plus at 24. and that while building a new buisness?  you are the 1% the other 99% are truly fu56ed

Sam is presumably putting £40,000 p.a. into a SIPP and £20,000 p.a. into an ISA (optimally £4,000 out of that into a LISA?), the latter from income taxed at 20%.

Assuming that his/her annual living expenses amount to at least the personal income tax allowance of £11,850, gross income must be at least £76,850 p.a. plus any NI contributions.

Impressive.

Edited October 3, 2018 by The Spaniard

[Aidan Ap Word]

On 01/10/2018 at 20:51, jimmy2x3 said:

maxing out isas and sipps at 24 tells me your earning 60k plus at 24. and that while building a new buisness?  you are the 1% the other 99% are truly fu56ed

Or 75k at the age of 24 ... which places this person way beyond the 1%. Given that the 1% eacr 75k on average (which is more likely to be closer to half way through their careers... not at 24).

[rockerboy]

Consider that you're only really affluent if when you are in your fifties, you are healthy, content, have a contented partner, a fully paid up house (in good condition with fully paid up contents), a large pool of savings, a well stocked pension, a regular high income which you enjoy and your "expensive" kids have all left and been set up in life.

If you're lucky, you might have this in early fifties, but I think its pretty rare for anyone to achieve this really, because life is so damn VEEEERY expensive.

There are lots of reasons why, but If I was you - If I had that sort of money, I'd be making sure I enjoyed my 20s before I got on the treadmill of it all.

 

 

 

[winkie]

The truth is small business has a harder time today to succeed, they are up against all sorts of challenges, extra costs and burecracy..... competition from the big boys that can demand better rates, better conditions, better rents, better entitlements.......soon if things carry on, all there will be left to buy from in some places are those with the equity, the power the influence and the size to price small firms out completely......?

[sam1994]

4 hours ago, The Spaniard said:

Sam is presumably putting £40,000 p.a. into a SIPP and £20,000 p.a. into an ISA (optimally £4,000 out of that into a LISA?), the latter from income taxed at 20%.

Assuming that his/her annual living expenses amount to at least the personal income tax allowance of £11,850, gross income must be at least £76,850 p.a. plus any NI contributions.

Impressive.

Yes: putting £40k in to SIPP via Ltd and £16k in to regular ISA and £4k in to LISA. 

2 hours ago, winkie said:

The truth is small business has a harder time today to succeed, they are up against all sorts of challenges, extra costs and burecracy..... competition from the big boys that can demand better rates, better conditions, better rents, better entitlements.......soon if things carry on, all there will be left to buy from in some places are those with the equity, the power the influence and the size to price small firms out completely......?

Regulations are tricky. Things like GDPR haven't helped.