What % of NET monthly salary do you spend on your car

[daemon]

vanordinaire said:

foxsasha said:

vanordinaire said:

Well, I think I must be one of the worst on here for this, currently spending around £7k to £8k on my cars (not allowing for depreciation) and with a current income of exactly £0 per annum, my spend to income rate is infinity...can anyone beat that?

Go on then, explain more, Ill bite

Nothing mysterious, I'm taking some time of work to build myself a new house. Just using savings, no income, massive outgoings, scarey when I think about it.

Worth it in the end though

Took us 2 years planning and a year to build. Great fun to do, but very draining!

[HJMS123]

Granfondo said:

A few boys I know in the oil industry were making £20k pm.

Fixed for you

[walm]

B'stard Child said:

I agree it should be included but if you don't sell a car how can you calculate depreciation???

That's why I said I write off 20% of the purchase price every year

example

SLK - purchased in 2011 for 5K

2012 Value £4200
2013 Value £3200
2014 Value £3200
2015 Value £2560
2016 Value £2048

Current Market value Pretty much in line with above - except I'm not selling it and so I'm ignoring depreciation - if I ever did sell I'd have to consider it a running cost but if you bought a £1000 TV in 2011 whats that worth now?

You seem to have answered your own question about how to estimate depreciation!!

Nevertheless, you have completely missed the point.

It doesn't matter HOW OFTEN you swap cars!!!!!

If your car depreciates 20% a year then THAT IS THE COST.
Just because it only hits your cashflow every 5 years, you can't just IGNORE it!!!

If the costs you did mention were around £1000 and that's your 5.8% then you need to nearly DOUBLE it to take depreciation into account...

I firmly believe simple finance should be taught in schools. The level of misunderstanding from so many perfectly intelligent people still astonishes me.

[foxsasha]

walm said:

You seem to have answered your own question about how to estimate depreciation!!

Nevertheless, you have completely missed the point.

It doesn't matter HOW OFTEN you swap cars!!!!!

If your car depreciates 20% a year then THAT IS THE COST.
Just because it only hits your cashflow every 5 years, you can't just IGNORE it!!!

If the costs you did mention were around £1000 and that's your 5.8% then you need to nearly DOUBLE it to take depreciation into account...

I firmly believe simple finance should be taught in schools. The level of misunderstanding from so many perfectly intelligent people still astonishes me.

Exactly. I worked out what my vehicles cost me in the current 12 month period and half of that total (which includes servicing, depreciation and insurance) is the deprecation of one vehicle! Thats because the car was purchased from a dealer and I looked at private resale so the hit is far bigger in the first year than the second where Id be working from the current private resale to next years private resale rather than dealer purchase to current private resale.

[walm]

foxsasha said:

Exactly. I worked out what my vehicles cost me in the current 12 month period and half of that total (which includes servicing, depreciation and insurance) is the deprecation of one vehicle! Thats because the car was purchased from a dealer and I looked at private resale so the hit is far bigger in the first year than the second where Id be working from the current private resale to next years private resale rather than dealer purchase to current private resale.

That's wrong too though.

To do it properly you need to consider when you will actually sell it and spread the dealer margin (which is what you mean by the extra hit in year 1) over the full period.

So if you aim to keep it 3 years, for example - estimate the private sale value at the end of that time... subtract from what you paid... and divide by three.
That's your depreciation.

[vanordinaire]

foxsasha said:

Exactly. I worked out what my vehicles cost me in the current 12 month period and half of that total (which includes servicing, depreciation and insurance) is the deprecation of one vehicle! Thats because the car was purchased from a dealer and I looked at private resale so the hit is far bigger in the first year than the second where Id be working from the current private resale to next years private resale rather than dealer purchase to current private resale.

You should only work out depreciation by what the car loses in a single year if you will be selling the car at the end of that year. If you plan to keep the car for 5 years, then annual depreciation is one fifth of what it will loose over the 5 years, or if you plan to keep the car for 10 years then one tenth of what it will lose in 10 years and so on.

[otolith]

vanordinaire said:

You should only work out depreciation by what the car loses in a single year if you will be selling the car at the end of that year. If you plan to keep the car for 5 years, then annual depreciation is one fifth of what it will loose over the 5 years, or if you plan to keep the car for 10 years then one tenth of what it will lose in 10 years and so on.

Though, if you are one of PH's inspectors of personal financial probity, you should also be tracking what loss you would make if a change in your circumstances forced you to sell at a fire sale price.

[walm]

otolith said:

Though, if you are one of PH's inspectors of personal financial probity, you should also be tracking what loss you would make if a change in your circumstances forced you to sell at a fire sale price.

Yes but since we are talking about a % of salary here, such a change of circumstances would also imply a change in salary (which is impossible to guess at, I suspect), rendering the fire sale price tracking number relatively moot.

[designforlife]

at the moment it averages about 25%, but i expect that to fall...been quite a few niggles and bodywork/rust bits to sort out.

[Granfondo]

HJMS123 said:

Granfondo said:

A few boys I know in the oil industry were making £20k pm.

Fixed for you

You may be right, one of them has downgraded from a superleggera to a RS6 so times must be hard!

[Matt UK]

DELETED: Comment made by a member who's account has been deleted.

These sort of threads always do...

[johnwilliams77]

HJMS123 said:

Fixed for you

Wrong. Many still are.

[daemon]

johnwilliams77 said:

HJMS123 said:

Fixed for you

Wrong. Many still are.

Then i cant say i feel a whole pile of sympathy for the industry now they've started to have to make cuts if thats the sort of figures being bandied about

[johnwilliams77]

daemon said:

Then i cant say i feel a whole pile of sympathy for the industry now they've started to have to make cuts if thats the sort of figures being bandied about

Lots of 'salaried' expats / staff from Europe in US/KL making at least that amount (+bonus, kids schooling and travel allowance).

[foxsasha]

walm said:

That's wrong too though.

To do it properly you need to consider when you will actually sell it and spread the dealer margin (which is what you mean by the extra hit in year 1) over the full period.

So if you aim to keep it 3 years, for example - estimate the private sale value at the end of that time... subtract from what you paid... and divide by three.
That's your depreciation.

vanordinaire said:

You should only work out depreciation by what the car loses in a single year if you will be selling the car at the end of that year. If you plan to keep the car for 5 years, then annual depreciation is one fifth of what it will loose over the 5 years, or if you plan to keep the car for 10 years then one tenth of what it will lose in 10 years and so on.

Agreed but I can only look at depreciation for the period I've owned the vehicle for and I've only owned most of them for 12 months or less. My point was more that the first years hit is a big one but subsequent depreciation will be more palatable. Gives some incentive to hold onto them longer to bring down the average yearly cost

[CS Garth]

johnwilliams77 said:

daemon said:

Then i cant say i feel a whole pile of sympathy for the industry now they've started to have to make cuts if thats the sort of figures being bandied about

Lots of 'salaried' expats / staff from Europe in US/KL making at least that amount (+bonus, kids schooling and travel allowance).

We've now moved from "I earn x", via "I know someone who earns x", to "I am aware of an industry where some people earn some money".

Talk about 7 degrees of separation. Imagine if some of the people on here actually earned a shed load but, big intake, didn't mention it.

I await the "how long is your man sausage thread"

[B'stard Child]

walm said:

B'stard Child said:

I agree it should be included but if you don't sell a car how can you calculate depreciation???

That's why I said I write off 20% of the purchase price every year

example

SLK - purchased in 2011 for 5K

2012 Value £4200
2013 Value £3200
2014 Value £3200
2015 Value £2560
2016 Value £2048

Current Market value Pretty much in line with above - except I'm not selling it and so I'm ignoring depreciation - if I ever did sell I'd have to consider it a running cost but if you bought a £1000 TV in 2011 whats that worth now?

You seem to have answered your own question about how to estimate depreciation!!

Nevertheless, you have completely missed the point.

It doesn't matter HOW OFTEN you swap cars!!!!!

If your car depreciates 20% a year then THAT IS THE COST.
Just because it only hits your cashflow every 5 years, you can't just IGNORE it!!!

If the costs you did mention were around £1000 and that's your 5.8% then you need to nearly DOUBLE it to take depreciation into account...

I don't include it - I'm not ignoring it - yes I know what it is roughly but I don't regard it as an outgoing

I'll treat one of my other cars the same way

Lotus Carlton - purchased in 2000 for 15K

2001 Value £12000
2002 Value £9600
2003 Value £7680
2004 Value £6144
2005 Value £4915
2006 Value £3932
2007 Value £3146
2008 Value £2517
2009 Value £2013
2010 Value £1611
2011 Value £1288
2012 Value £1031
2013 Value £825
2014 Value £660

Current Market value may be a little different - perhaps now you see why I choose to ignore it - it has no impact to me until I sell, trade or scrap the car and I really don't do that very often.

walm said:

I firmly believe simple finance should be taught in schools. The level of misunderstanding from so many perfectly intelligent people still astonishes me.

I agree with the schools bit but that's definately going off topic here

[vanordinaire]

CS Garth said:

I await the "how long is your man sausage thread"

Twelve inches, but I don't use it as a rule.

[CS Garth]

vanordinaire said:

CS Garth said:

I await the "how long is your man sausage thread"

Twelve inches, but I don't use it as a rule.

I once met a man who I believe had a 12 incher and am aware of an industry where 12 inches is common. However he leased it so it doesn't count - 'kin jumped up peasant

[foxsasha]

B'stard Child said:

I don't include it - I'm not ignoring it - yes I know what it is roughly but I don't regard it as an outgoing

I'll treat one of my other cars the same way

Lotus Carlton - purchased in 2000 for 15K

2001 Value £12000
2002 Value £9600
2003 Value £7680
2004 Value £6144
2005 Value £4915
2006 Value £3932
2007 Value £3146
2008 Value £2517
2009 Value £2013
2010 Value £1611
2011 Value £1288
2012 Value £1031
2013 Value £825
2014 Value £660

Current Market value may be a little different - perhaps now you see why I choose to ignore it - it has no impact to me until I sell, trade or scrap the car and I really don't do that very often.

The thread is about ownership costs, of you keep the car until it has no value then the original purchase price is part of that cost.