[gangzoom]

I think people are been abit over 'sensible'. If Mega has worked out a way to pay off the car and save for a house than its good for him. After all it sounds like his net income is well over £3K/month which is nearly double the 'average' salary in the UK...so if he feels he cannot afford to save for a house and run a reasonable car on that income than what hope has people on lower income have of getting on the housing ladder? and if no new buyers come into the market who are the rest of us going to sell our houses to when we want to move on?

I say go for it, some people waste money on expensive holidays, others on alcohol, if your passion is cars and you can afford it why not??

[Kerr]

Originally Posted by gangzoom

I think people are been abit over 'sensible'. If Mega has worked out a way to pay off the car and save for a house than its good for him. After all it sounds like his net income is well over £3K/month which is nearly double the 'average' salary in the UK...so if he feels he cannot afford to save for a house and run a reasonable car on that income than what hope has people on lower income have of getting on the housing ladder? and if no new buyers come into the market who are the rest of us going to sell our houses to when we want to move on?

I say go for it, some people waste money on expensive holidays, others on alcohol, if your passion is cars and you can afford it why not??

Call itover sensible, i call it a long term realistic plan.

If prices rise by 5% year on year and Mega takes 3 years to buy, he'll either have to buy a smaller house or need to shell out another £37k roughly.

Interest rates shoot up and at a rough guess, you could see a £500 per month swing.

People on average earnings don't buy £250k houses and finance near £30k cars.

The loss of the car now will see significant gains later that are hugely outweighed.

[dxb335d]

Buying houses are like getting married, only do it when your ready.

[Frobius]

I wish I had bought 10 years ago...

[gangzoom]

What people are comfortable spending money on is very different, at work we have one guy driving around in brand new GT3 (bought on finance), and another in a 10 year old Polo (big house), they earn the same wage, and both seem happy.

I'm all for longterm planning, i do it alot but your only young once. As soon as kids arrive priorities shift completely, unless your very well off you can forget about nice cars for a good 20 years.

I'm pretty sure Mega isn't even anywhere near 30, if he think his found a way to keep a nice car and get into a house why not go for it?? If any of us are really 100% financially sensible we'll all be driving around in £500 bangers till we re all mortgage free, but where's the fun in that

At the end of the day it's up to Mega what he feels most comfortable doing.

[HighlandPete]

Originally Posted by gangzoom

I think people are been a bit over 'sensible'.

...I say go for it, some people waste money on expensive holidays, others on alcohol, if your passion is cars and you can afford it why not??

Originally Posted by gangzoom

What people are comfortable spending money on is very different, at work we have one guy driving around in brand new GT3 (bought on finance), and another in a 10 year old Polo (big house), they earn the same wage, and both seem happy.

I'm all for longterm planning, i do it alot but your only young once. As soon as kids arrive priorities shift completely, unless your very well off you can forget about nice cars for a good 20 years.

I'm pretty sure Mega isn't even anywhere near 30, if he think his found a way to keep a nice car and get into a house why not go for it?? If any of us are really 100% financially sensible we'll all be driving around in £500 bangers till we re all mortgage free, but where's the fun in that

At the end of the day it's up to Mega what he feels most comfortable doing.

I come from a generation where 'sensible' was part of living. We couldn't have both as average earners, and the bank manager had to approve loans as well. So no going into high amounts of debt which had no slack for a rainy day.

'Credit Crunch', 'Banking Crisis' is all about over stretching and manipulating too much debt.

I had to go without decent cars for several years to secure a house and keep afloat, without the burden of being over stretched. We also had the high interest rates on mortgages, I saw 14%, which doubled my mortgage. If I had been pushing the limits, would have lost the house and I was well above average wages at the time.

The idea of running a decent car and the mortgage, might be the norm these days. But, in reality we need a bit of flexibility. Remember there are the added bills of running a house, just financing and servicing debt is not necessarily "affording it". Only needs a change in circumstances, like a rise in interest rate on the mortgage and it can be a financial disaster and you can lose the lot.

In my own case I bit the bullet and ran cheaper cars, I was driving 5-series BMWs back in the 1980's, gave up BMW and went for used cars like a Ford Orion, Rover 416, to get the house sorted. When I started getting cash into the bank, started clearing the mortgage rather than get back into a BMW. Once the mortgage was cleared bought the E39 540i for cash and now can enjoy the house and decent cars without debt. Just due to a bit of patience and financial prudence.

Remember that the financial situation is still on a knife edge, any tipping over (which could still happen) will be felt by those with the highest debt burdens. So be careful of just moving debt around, far better to try and reduce or clear it.

HighlandPete

[dakhu1]

Originally Posted by HighlandPete

I come from a generation where 'sensible' was part of living. We couldn't have both as average earners, and the bank manager had to approve loans as well. So no going into high amounts of debt which had no slack for a rainy day.

'Credit Crunch', 'Banking Crisis' is all about over stretching and manipulating too much debt.

I had to go without decent cars for several years to secure a house and keep afloat, without the burden of being over stretched. We also had the high interest rates on mortgages, I saw 14%, which doubled my mortgage. If I had been pushing the limits, would have lost the house and I was well above average wages at the time.

The idea of running a decent car and the mortgage, might be the norm these days. But, in reality we need a bit of flexibility. Remember there are the added bills of running a house, just financing and servicing debt is not necessarily "affording it". Only needs a change in circumstances, like a rise in interest rate on the mortgage and it can be a financial disaster and you can lose the lot.

In my own case I bit the bullet and ran cheaper cars, I was driving 5-series BMWs back in the 1980's, gave up BMW and went for used cars like a Ford Orion, Rover 416, to get the house sorted. When I started getting cash into the bank, started clearing the mortgage rather than get back into a BMW. Once the mortgage was cleared bought the E39 540i for cash and now can enjoy the house and decent cars without debt. Just due to a bit of patience and financial prudence.

Remember that the financial situation is still on a knife edge, any tipping over (which could still happen) will be felt by those with the highest debt burdens. So be careful of just moving debt around, far better to try and reduce or clear it.

HighlandPete

Completely agree with that - especially that last paragraph about the financial knife edge!

We are on the brink of upsizing with a considerable jump in mortgage and any shift in interest rates will strain the finances so it is very advisable to leave enough of a buffer to cover any adverse financial hits. Being a qualified accountant some may say I am over prudent but careful planning will help ride things out

My best advice to anyone assessing their finances is to get a spreadsheet going which budgets your monthly income/expenditure and plug what you are actually spending each month - you will quickly see what your "true" financial situation is and what your affordability is. Plus, it will highlight where you can make savings i.e. utility bills, mobiles etc

[gIzzE]

Unless you run the business you have no idea how much of a knife edge the UK is on at the moment.
Banks are still reducing risk rather than lending and everyone I speak to say it is getting tighter and tighter, and many are talking about reducing their turnover to work with the limited cash flow. Which seems crazy, but it is what's happening.

So be very careful if you are employed. As an employer everything is rosy today, no further at the moment. Just yesterday someone I know very well, who has 12 sales guys who each earn around £60-120k a year has said that he is struggling to get the increase in funding to keep up with growth, he has gone from 4.5m turnover to 7m in the last 3 years which means his outlay at any one time has gone from 3m to 5m to buy materials etc. however the bank will not increase his facility, so he said he has no choice but to wind back production and work within his means. This also means going back to 8 sales guys, so 4 are about to loose their jobs, even though they are making him money.

It is a very strange world out there at the moment, where 'no ones future is certain' is the only guarantee.

[gIzzE]

Having said all that, Dave you're on West London aren't you?

House prices there are still climbing, 12% average increase over the last 12 months, with that sort of rate you are better to get on rather than saving.

[gIzzE]

Thought I better find some figures for the 12% increase....

http://www.rightmove.co.uk/news/arti...ex-infographic

[MEGA]

Fair point G, and yes house prices are booming. Hence why we want to get in on it.

I've got a lot to think about..

[MEGA]

One thing I need to raise up is that the other half doesn't want me to sell the car either. She expects to be driven in something decent. So to those who think tearing around in a £500 box-o-crap, sorry We're both too much of a snob for that.

So given I don't have the cash to get straight into a "decent" car, ie about 8k for a good E46 M3: Then for now, I see only two options, refinance or don't.

[leetennis]

Just skim read this thread but by the gist of it this is why I buy new.

Buying new can give best apr rates and most support.

Most importantly for me is that you can get back on or off the ride.
After three years of ownership you hit 50% of your finance and you can vt it. Year four you can choose to pay the gfv, keep or chuck it back, possibly haggle some equity.

Low deposit (if you choose) and taylor a car to your repayments limit.

I guess it's similar to leasing a vehicle. I prefer to keep my money in the bank and not in the car.

Maybe you could try and trade it in with a dealer if you say you aren't in neg equity then a new car might see you lower your monthly payments especially cheaper for first year ownership?

[gangzoom]

I'm all for saving and hate any form of finance, hence I've never owned a brand new car, and virtually all my gadgets/car mods are always bought second hand. And I'm all for long term planning, I know in the next 5 years we'll need to move house which will result in a massive jump in the mortgage, so we're making the most of the low interest rates and getting on with overpaying the existing mortgage so that we can have as much equity in the house as possible come resale time.

But it does seem like these days people are 'happy' living with large amounts of debt, as Mega has indicated for many a drop in lifestyle these days are not even considered as a option....in which case it becomes trying to make the figures work as much as you can. I fear to think whats going to happen when interest rates do go back up to 5-6-7% which use to be the norm, I think alot of people are going to be shocked by how much their repayments rocket up.

[HighlandPete]

Originally Posted by gangzoom

But it does seem like these days people are 'happy' living with large amounts of debt, as Mega has indicated for many a drop in lifestyle these days are not even considered as a option....

My observation as well. Even the current financial crisis has not been a big enough wake up call either, that we can't necessarily have everything. Also that it can quite easily all go pear shaped.

HighlandPete

[Frobius]

Originally Posted by gangzoom

I fear to think whats going to happen when interest rates do go back up to 5-6-7% which use to be the norm, I think alot of people are going to be shocked by how much their repayments rocket up.

It's already starting to happen - people are just sticking their heads in the sand though. Did you see the articles that were in the papers a few weeks back about all the people who bought interest only mortgages and are now claiming that they "had no idea" that their mortgages wouldn't get paid off and now what are they meant to do?

I mean, wtf did people think interest only meant. You've got to be a mug if you thought it'd magically pay itself off. Ok, we used to have a situation where house prices were going up £1k a month, but jeez, did people on interest only not see it coming after how long now?

[Kerr]

Originally Posted by HighlandPete

My observation as well. Even the current financial crisis has not been a big enough wake up call either, that we can't necessarily have everything. Also that it can quite easily all go pear shaped.

HighlandPete

It's the way everybody expects to have everything these day and don't care how they get there.

I'm only 34 and remember the days when I was young.

It used to be an achievement to get a council house for the majority. Now everyone expects a nice new build in a private estate.

If car had MOT and tax that was good enough. You barely see an old banger on the road with most people driving about in a good standard modern car.

You had a bath once a week and had to share it with your siblings and got you big brothers hand me down clothing.

My daughter now requires all the designer gear and high end tech gadgets just to keep up.

A holiday to Butlins was a major treat. Now everyone expects expensive far afield holidays.

Yet everyone seems to complain that this country is bad and not what it used to be.

It actually angers me at times.

The basic standard of living is a mile higher that it was 20-25 years ago.

These days people just expect absolutely everything, borrow and keep borrowing to get it, then blame everyone else when they can't keep it up.

They say that 50% of adults in the UK are living on the financial edge.

I understand that some people have fallen on hard times, but most people I know struggling have done so by wanting a lifestyle way beyond their means.

Working in the oil industry there are many guys earning very good money, yet they've still genuinely not got a penny left to their name after they have covered all the bills.

Nobody is willing to make any adjustment to their life because they think as they work hard and earn good money, they deserve the good things in life.

I just don't understand why so many people are so willing to take on such high levels of finance to fund a lifestyle and put themselves under so much pressure all the time.

Then when the shit does hit the fan, it's just because this country is shit and it's everyone else's fault.

[Frobius]

/like

[MEGA]

I seem to have inadvertadly set Kerr off on a bit of a rant there.

[gIzzE]

Originally Posted by MEGA

I seem to have inadvertadly set Kerr off on a bit of a rant there.

It is true though.


Having said that it is very difficult to compare two different areas.

I am in Edinburgh at the moment, and that is probably one of the most materialistic cities in Scotland, but it is so far behind London in that respect.

I live in Norfolk and Norfolk people tend to be more sensible with their money (tight) than 50 odd miles down the road into Essex. The rich people here drive 10 year old Volvos and Mercs, down there everyone drives brand new BMWs and Porsches.

You do get caught up with what is going on around you.

And to be fair, if you are in an area where everyone is in new houses, offices, cars etc. if you don't keep up you will loose out business wise as well.

I found it very hard to break away from having all the latest and greatest gear a couple of years back, but I have now done it and I feel so much better for it.

Used to upgrade my macbook every year but typing this on my 3 years old macbook air, I am using my iphone 4s on an £18 contract rather than upgrading this year, driving an 02 plate ML270cdi that I gave £3500 for, which is what I normally put down as deposit (and loose!) sold my Merdian system that was never used and just kept some speakers (£10,000 paid off debts) and hired a villa in Xabia, Spain for £550 for the week instead of St.Tropez at £2500.

Don't feel I am missing out on anything, but I have cut my monthly outgoings down by around £1200 a month

Still paying debt off, but I can see it going down and now have a chance of having a nice property that is paid for in 18 years with no other debt.
I can't see me in a new car again, just don't get the enjoyment from it enough anymore.

I run my business and I can see how up and down the economy is, I want to go back to a lifestyle that I can sustain if I need to go and get a job stacking shelves for a couple of months, having £4000 of outgoings each month was just too much, if meant if things did go wrong I would be out on the street, that is just too much to worry about.

[xs2man]

I actually have a £250k mortgage, just moved it a month or so ago, with a 10% deposit. I got a YBS offset mortgage at around 4% over 25 years. Payments are around £1200pm. Between my wife and myself, we have a similar income to your household. Our critical illness cover comes to £175 pm between us, so not cheap. We are actually about to get rid of this, as we can save £150 per month here, and we are pushing to have the house paid off in the next 10 years.

I would keep the car, and try to get into an offset mortgage. Your ability to save bodes well for this type of mortgage.

The only way it is worth getting rid of your car is if your willing to drive a shitter for a couple years. It was a decision I was going through a few months back (hence why my car was in the classifieds). If your only planning on saving a couple hundred a month as you go for a slightly older motor, it is barely worth it. Take the hit for a couple years, buy an old golf 1.9TDI and run it on vegetable oil (90p per litre), and save a real amount of money. Or stay with what you have, and enjoy it. The middle ground isn't going to be worth it as you will still be paying out for a car you barely like.

[Bob S]

I agree with HighlandPete and Kerr on this one. Everyone is in charge of their own destiny and things aren't looking particularly bright out there in the big wide world at the mo.

I'm old enough to remember right back to my first mortgage in the early 80's. Mortgage interest rates rose to almost 15% which was an out and out killer even in those days. It can't be too long before base rates shift off 0.5% if as the politico's would have you believe, there are signs of a "recovery" out there. Not likely that we're going to hit the heady heights of Maggie's day but even a wee increase right now would tip lots of mortgage holders into difficulties.

It's funny how the dice rolls in life sometimes and for me, there's been a big change in personal circumstances recently and I've decided to batten down the hatches for a while. Sadly, the 325d had to go. Repayments were hurting; I was doing high miles so fuel costs could have been bettered. So I've now gone over to the dark side and bought something to go with my pipe and slippers.......begins with "H" and ends with "a". Absolutely does the job for me at the moment. Over 4 months it has averaged 72 to the gallon, the best being a run to the west and back over a couple of hundred miles when I averaged 80 No road tax to pay and if I was in London, no congestion charge either.

I've thrown some PV panels on the roof of the house and have now halved my outgoings on gas and electric. That's a big help especially as the deal goes on for 25 years......probably longer than I will

If my house wasn't on the side of a hill, I'd probably have started building an ark in the back garden by now.

Basically, I figured that in a time of stagnant pay increases, sod all interest on savings and prices going up steadily, the only way to make an impact on net income was to cut costs.

Maybe it's also about when you get on a bit......as I am these days......you kind of get a gut feeling when things just don't feel right and in those circumstances, the old self preservation instincts kick in.