The British pound

I agree with Dennis, even though I am mad at him for NOT responding to my PMs! 

600.00 a month for electric?  I assume you have air conditioning.  I lived in a 4 bedroom house and my electric bill was never over 30.00 a month.  Of course, I lived in a place where all I needed was a fan.

I watched a lot of TV and used my computer all the time as well.

Of course, I had no children so that makes a difference. 

Hi there DtM. You won't believe how many times I edited that dang post to make my meaning clearer, and still I didn't quite accomplish it.

Anyway, yes, the figures are monthly. The ones on the left side are actually bonafide $USD monthly amounts (or at least, annual amounts divided by 12).

Yep! You hazarded correctly; $6,599.87 is our annual property taxes stateside (2008 assessment just in.) We're going to rent the first 1-3 years (until the US real estate market turns around, at which time we'll put the US house up for sale) in A-C Band, London. Even then, I'm not thrilled about owning a house again and all the attendant upkeep.  

My £450 pw is for a 2-3 bedroom roughly 1/4 the size of our US house (but it's now just me and DH, and frankly, I'll be glad to be shod of 3455 sqft, 4bed, 4bath, study, gameroom, 2 living rooms, dining room, media room.) It will be comparable in neighborhood and as importantly (to us) comparable to the square footage of space that we've actually used the last few years (which is about 1/3 of the house and not the entire upstairs or formal living room at all. Still, I know it may feel pokier at first, but comparable apartments here (2beds, 900sqft) are around $1600, so I'm not blown away.

Next, how 'bout those utility bills, eh! $68 of that is city statutory minimum for water/sewage/trash for a free-standing single-family home (in other words, what the council tax would be for). It's fixed and goes up from there during the year, depending on your water usage and how much you, uh, flush. . The rest? Well, freakin' Enron, freakin' EXXON, freakin state politicians with their hands in the utility companies' pockets. Every time TXU Electric cries that the need to raise their rates, it swoops thru like greased lightning...3 weeks later the papers announce "record" profits for them. Hmmph. 10 years ago when I bought this house, my utilities (not counting water) averaged about $90/month.

I've called, read, written, calculated and pestered London-based bloggers and keep coming up with about £73 total for gas, elec, water for a 2-bed, 1 bath flat for 2 people. It could be more, but if it even approaches £150, I'll eat my Stetson.  .

Moving on: sorry about the confusion with the $1061 mortgage vs. the £1950 rent (they are both monthly amounts. I meant to write £450 pw-per week, but messed up the nomanclature.

Ah, £0 for maintenance. Sure am looking forward to saying "that's not my job, mon" when something breaks around the flat. I imagine there'll be the odd light bulb and such, but DH is handy and I simply refuse to give up my God-given rights as a tenant and pay for repairs as I do while a homeowner. (I say that tongue-in-cheek, but I'm not half kidding.)

Transportation. It's all public, baby!!! Alllll public!!!! Oyster Card(s) and discount passes. The occassional hire car, but that's it. We did it before; we'll do it again. Besides, I have truly come to H-A-T-E driving. And it's nothing to do with traffic or petrol prices. Could never have imagined I'd be saying that back when I was 16. But, now? If I've forgotten milk at the market, DH is having cornflakes and water in the morning. He feels the same. (There is a small possibility DH will have a company car; but the more we think about it, the more we think we'd rather have the car allowance if it comes up.)

Health insurance. Private in US we pay that sad $418. On UK, we're quoted at £90, which includes a life insurance policy for us both. This also includes UK's Healthcash Plus which will reimburse us for co-pays, deductibles, dental, medical and optical sundries (except the really fancy glass frames and such). Hence, out the window went the co-pays and deductibles.

Lastly, I think I edited since you posted, so the savings is GBP Total £2,920 divided by USD $4,543 = 0.64274, which is a 0.35725 savings, rounded to 36%.

Yes, that's digit-for-digit (as was the first argument above). However, we will earn salaries in GBP, not USD. And, even assuming we'll be hit with the forlorn reduction in salary, and earn, let's say 20% less than we do in the US, (fortunately, recruiters are consistently telling us only I will take that hit and my salary is much lower than DH's anyway), we still come out even-steven in London. And with a better quality of life to boot (Culture, arts & entertainment, proximity to continental Europe, coastlines, watersports and wintersports are extremely important to us at this stage in our marriage, careers and lives). It's the bloody taxes, transportation and insurance that eat us alive here.

In round figures, say $100,000 combined US salaries becomes £80,000. That's ok, because my UK expenses paid from my lower UK salary compensates for that. Even better, the last niggling debt that we have to pay off in the US will evaporate faster thanks to the favourable strength of the £. (Weaker today than 2 months ago, but still!)

$100,000 - (4543 X 12) = $45,434
£80,000  -  (2920 X 12) = £44,960

600.00 a month for electric?  I assume you have air conditioning.  I lived in a 4 bedroom house and my electric bill was never over 30.00 a month.  Of course, I lived in a place where all I needed was a fan.

I watched a lot of TV and used my computer all the time as well.

Of course, I had no children so that makes a difference. 

Sucks, doesn't it! The average temp last month was over 100F. We regularly break records. This year was for 107F; that's 40C. The house grows less efficient as time passes. It could really do with new A/C compressors and a fresh blow in the attic insulation. Yet, we keep the blinds and drapes closed in the Summer, turn off lights, and keep the thermostats at 83F in the daytime (summer) and 66F in the winter (again daytime). Last year we even wore thermal underwear indoors, and my fingers were too frozen to type. It's not just us, all our friends and neighbors and indeed the city is grousing about this. We use less kWh than we used to; it's the price/kWh that's gone through the roof! My util are pretty standard here...sadly.

Okay, the biggest point is that you are downsizing significantly from your life in the US.  So of course it's going to be cheaper!  But a few specific points:

- As Dennis surmised, if you tried to get a place the same size as your current place in the US, it would be much, much more expensive than 450 quid/week and so will the council tax

- You are taking out the entire expenditure of two cars.  If you had those in the UK, that number would shoot up.  Plus your transport number still looks low, unless you're not planning on commuting on a regular basis.  It's not cheap to use transit in London just because it's public.

- optical expenses are NOT going to be zero cost - they are not covered by the NHS, by and large.  So if that's something you and your husband spend a lot on now, you will spend as much if not more when you move to the UK

- 73 pounds for utilities in the UK, in particular London - I'll believe it when I see it.  It will definitely be more than that unless you use no heat.  Heat in particular will be extremely expensive as most buildings are cold and drafty in the winter.

Actually you are proving my entire point to mattj.  You are talking about a change in lifestyle - you might feel you have a better quality of life because you are downsizing, but the cost of living in the UK is still HIGHER than if you had the exact same lifestyle that you're having now in the US. 

In round figures, say $100,000 combined US salaries becomes £64,000. That's ok, because my UK expenses paid from my lower UK salary compensates for that. Even better, the last niggling debt that we have to pay off in the US will evaporate faster thanks to the favourable strength of the £. (Weaker today than 2 months ago, but still!)

$100,000 - (4543 X 12) = $45,434
£80,000  -  (2920 X 12) = £44,960

Where did this number come from, the 64k?  I'm not clear how you ended up with that.  I don't think $100k equals 64k in pounds at all.

Where did this number come from, the 64k?  I'm not clear how you ended up with that.  I don't think $100k equals 64k in pounds at all.

Don't get your panties in a wad. It's a simple mistake, which I will correct post haste! I can think faster than I can type, hence the need for clarification and me mistakenly deducting the same 36% from salaries as expenses.

Rather it comes to a 20% reduction. So what I should have typed is that DH's salary will be quite comparable to £70,000, about what he's worth in the US at a private company, while mine will take a hit. (My vocation is not as valued). So total we'll earn £80,000.

Don't get your panties in a wad. It's a simple mistake, which I will correct post haste! I can think faster than I can type, hence the need for clarification and me mistakenly deducting the same 36% from salaries as expenses.

Rather it comes to a 20% reduction. So what I should have typed is that DH's salary will be quite comparable to £70,000, about what he's worth in the US at a private company, while mine will take a hit. (My vocation is not as valued). So total we'll earn £80,000.

Um, I wasn't that worried about it.  It was a simple question because I couldn't figure out your logic.  But if someone's earning 100k in US dollars, I would be surprised to hear the same person will earn 80k in pounds.  I would say the average person who is making 70k in dollars would probably make 40k in pounds.  Something like that, anyway.  And the average 100k earner in the US would probably earn about 50-55k in the UK.

Modified because I had that the wrong way round.

Don't get your panties in a wad. It's a simple mistake, which I will correct post haste! I can think faster than I can type, hence the need for clarification and me mistakenly deducting the same 36% from salaries as expenses.

Rather it comes to a 20% reduction. So what I should have typed is that DH's salary will be quite comparable to £70,000, about what he's worth in the US at a private company, while mine will take a hit. (My vocation is not as valued). So total we'll earn £80,000.

Does he have a job offer?  My husband's friend who has about the same qualifications is earning over 100,000 in the U.S., but here my husband was offered 45,000 for a job in London.

Does he have a job offer?  My husband's friend who has about the same qualifications is earning over 100,000 in the U.S., but here my husband was offered 45,000 for a job in London.

Exactly.  It's just not as easy as taking the dollars salary, adjusting for the exchange rate, and bringing it down a bit.  Salaries are lower here compared to the US, and the cost of living is higher. 

Rather it comes to a 20% reduction. So what I should have typed is that DH's salary will be quite comparable to £70,000, about what he's worth in the US at a private company, while mine will take a hit. (My vocation is not as valued). So total we'll earn £80,000.

Wow - I wish I could earn that much... I don't think I'll ever have the chance to earn a salary like that! 

Thing is though, at £80,000 you'll be earning more than double what most British people have to live on, yet everyone has to dish out similar living expenses for rent/food/bills/taxes... so while you might be able to live a comparable life in the UK, the majority of the country (UK) could live much better (in terms of cost of living) in the US.

In the US this year I was earning about $12,000 a year as a grad student - with that I could afford to rent a 350 sq. ft. apartment (utilities included) for $475 a month and still have enough to buy clothes, any food I wanted to, go out for dinner, pay for internet and digital TV and make several trips across the country. In the UK I currently earn £13,000 and I can't even afford to move out of my parents' house because rent, bills and running a car will eat up my entire income (I calculated that I would have about £50 per month left over to pay for my cell phone and all social activities - and I'm trying to save up for either my own car and/or a deposit on a flat or house... although I'm worried that I will never be able to afford to own my own property with the high cost of housing here).

The average household income in the UK in 2007 was 33,492.

However, I don't think the average is really a good indicator. 

Median income would be better, but I can't find it. 

It is considered a more accurate number, but I can only find it for some counties, not the whole country.

http://en.wikipedia.org/wiki/Median_household_income

Okay, the biggest point is that you are downsizing significantly from your life in the US.  So of course it's going to be cheaper!  But a few specific points:

- As Dennis surmised, if you tried to get a place the same size as your current place in the US, it would be much, much more expensive than 450 quid/week and so will the council tax

- You are taking out the entire expenditure of two cars.  If you had those in the UK, that number would shoot up.  Plus your transport number still looks low, unless you're not planning on commuting on a regular basis.  It's not cheap to use transit in London just because it's public.

- optical expenses are NOT going to be zero cost - they are not covered by the NHS, by and large.  So if that's something you and your husband spend a lot on now, you will spend as much if not more when you move to the UK

- 73 pounds for utilities in the UK, in particular London - I'll believe it when I see it.  It will definitely be more than that unless you use no heat.  Heat in particular will be extremely expensive as most buildings are cold and drafty in the winter.

Actually you are proving my entire point to mattj.  You are talking about a change in lifestyle - you might feel you have a better quality of life because you are downsizing, but the cost of living in the UK is still HIGHER than if you had the exact same lifestyle that you're having now in the US. 

Only in so much as size of house I own in the US. Actually, put another way and no less true, I'm swapping things around in my lifestyle. I'm trading bigger house that's owned for smaller flat that's rent so I can increase the abundance of other things that matter to me more. Like getting rid of cars, their expenses and driving; living close into the city so I can have access to corner shops and pubs and theatre and museums.

If and when we buy a UK house, it will of course not be in the city center. And will likely be smaller. Still, there probably won't be the necessity for owning a car and a a mortgage is almost inherently cheaper than rent of a comparable home.

So if I substitute my $600/month US util cost for util in a comparable sized UK house, best I can calculate, I still won't be paying £600. Any on the forum who lives in or knows someone who does, chime in anytime.  

It's noting that at the beginning of our decision to immigrate (which, funnily enough had nothing to do with lowering our costs) we presumed we'd exactly duplicate our house size, cars, etc. Then it dawned on us that we didn't need to. But up until that time, we did match up the comparative costs with those we pay in the US. Among other things, we found (for some reason) car purchase seemed cheaper; insurance--any kind of insurance--was far, far cheaper (DH came bouncing downstairs to show me those calculations; anyone would think he's a accountant or something. He's not.)

Petrol was more, but the need to own a car, let alone 2 cars, was nearly non-existent, provided we didn't live someplace rural. I could probably accomplish the same by moving to Manhattan, except I couldn't afford the rent in the city center as I can in London, not to mention the state income tax would quickly wipe out the advantage of going carless.

Satelite, cheaper. Broadband, cheaper. We have no TV license fee, but I pay $78 for the basic satelite package (no HBO) and our broadband service are exactly 2, as is regulated by the contract they have with the local municipality.

I guess what I and a couple others here are trying to say is that my lifestyle is changing because I can move to London now, not the other way around. I didn't set out to decrease my expenses. I was sooooo ready to pay more to live in London. When I started working on this months ago, I just wanted to be aware of how much damage London was going to do to our income. Turns out...not a lot £500 or so annually? In exchange for...? Well, all that and a bag of crisps, too?

It's just that what I need to accomplish it is different...and happily, in my case about the same as I pay here. Hence, what you see as me downsizing. For example, I don't have to spend £400 a month on clothes, etc. (That's mostly me, btw, DH is well-behaved). I just want to because now I can! Now, if my figures had shown a hu-freakin-mongous disparity in the cost to live in London, I'd be buying one pair of charity shop bloomers 3 times a year instead. (Kidding! But you get my point.)

Finally, I'm a little distressed and confused that if ever anyone says London is cheaper for them than living in the US, a few seem to get really, acidly bent out of shape and start looking for reasons why those of us who say it are wrong-headed, feeble-minded, stupid, spendthrift oxygen thieves.

I don't think anyone is calling you or economists liars. (Oh, said that already, nevermind.) But since no economists have called me up to compare me personally, specifically and uniquely with my exact counterpart in the UK, I'll take their statistics as I believe they were intended...factual, accurate, broad-picture guidelines whereupon my mileage (and yours) may vary.

Do you know what council London you will be in?  One thing I found is Westminster council has Very low council tax rates.  Band D property is only £687.62/year!  http://www.westminster.gov.uk/councilgovernmentanddemocracy/councils/counciltaxandfinance/bands.cfm

Where I live in Bucks my band D house is almost the same as a band H in Westminster!

Annual Zone 1-2 travelcard is £968.00 which is £80.67/month.  I suppose if you lived and worked in central London and the vast majority of your journeys were there that isn't so bad but it does go up rather dramatically if you go further out (or outside London).

I take your point on like-for-like costs Geeta.  But I suppose living in central London means you do not need a car and probably would have a much smaller place.  Yes, if you tried to have 2 cars and a 4 bedroom house in Central London, well, you probably don't have to worry about finances at all.

Exactly.  It's just not as easy as taking the dollars salary, adjusting for the exchange rate, and bringing it down a bit.  Salaries are lower here compared to the US, and the cost of living is higher. 

Several job offers at that salary.  I realize it's not often that way, unless a US company is transferring you to the UK, but DH's degrees, know-how and experience is particularly in demand. While, I as I said am of your ordinary garden-variety vocation.