House vs Car (or both?)

[leginigel]

M3Driver said:

The most important single piece of advice you will ever receive, and I wish I had known this myself many, many years ago, is to save 10% of your post-tax wage, EVERY month.

This will make the biggest difference to your life, far bigger than what house you live in or what car you drive. Learn to invest the money and you will become rich, even with modest earnings.

Set up an automatic standing order to take this money out of your main account on the 1st of every month. Start early and you won't notice it's gone.

Learn to live on the rest and you may be poor at the start but don't take on debt and your life will soon get much better. You'll be surprised at how much you save.

This advice will be life changing 100% true ! I left school with nothing,started work as a hod carrier spent very penny I worked hard to get and maxed out a card,up until I was 23 then saw the light,by then I was running a recovery lorry and on good money and I saved very penny not only putting it in the bank but spending wisely too.when I was 50 with my house mortgage long ago paid off I semi retired to live off the rents of the properties I had purchased over the last 20 years.I have never had a loan for a car and paid up my cards at the end of each month.It was not all ways fun in the early years I missed out on holidays with the boys,cars and all the silly things in life that look fun at the time,but within ten years of starting this I could see the difference it was making to my life and now at 57 with a couple of cars that suit me and holidays life is good but the best bit no pressure.Save hard invest well.

[brickwall]

Buy the house first.

I held off buying a Porsche for a year so I could buy a house. If I'd bought the Porsche before the house, it'd have been financially stressful. Doing it the other way round and waiting a year has meant I don't worry at night about running out of money.

[Digitalize]

A friend has just done this roughly 18 months out of Uni.

If your GF is also on a decent salary it's entirely do-able. They both have cars on finance and a Mortgage around that amount. They did cars first so they (in theory) didn't have sudden repairs etc after buying the house.

[Condi]

leginigel said:

This advice will be life changing 100% true ! I left school with nothing,started work as a hod carrier spent very penny I worked hard to get and maxed out a card,up until I was 23 then saw the light,by then I was running a recovery lorry and on good money and I saved very penny not only putting it in the bank but spending wisely too.when I was 50 with my house mortgage long ago paid off I semi retired to live off the rents of the properties I had purchased over the last 20 years.I have never had a loan for a car and paid up my cards at the end of each month.It was not all ways fun in the early years I missed out on holidays with the boys,cars and all the silly things in life that look fun at the time,but within ten years of starting this I could see the difference it was making to my life and now at 57 with a couple of cars that suit me and holidays life is good but the best bit no pressure.Save hard invest well.

I think we're talking about different eras though, its not so simple in today's world of low interest rates and 0 return on savings. If you keep cash in the bank, you might, at best, get 1.5%, if you chase the stock market, you probably net out around 0. I have a portfolio of funds I actively manage myself, and over the last 2 years one has grown by precisely 0, the other one has managed 1%.

At the same time, house prices are going up faster than you can save the deposit, so buying one home looks increasingly difficult, let alone buying 2 or 3. Also the government now charges extra stamp duty on 2nd homes and so it adds another layer of cost if anyone had the cash to invest in property.

All very well saying 'save' but when you're not getting anything back from savings, and you can borrow at 3% (!!!) if there was ever a time to take on manageable debt then this is it. I think most (all) young people are rather of the mindset that they would rather go on holiday, rather than put cash in the bank earning them nothing, and when buying a house is nothing but a pipe dream there is little incentive there either to save. You could argue that is a short term lookout, but this has been the case since 2007 - a full 8 years - and anyone under the age of 30 has never known any different since they started working.

[leginigel]

Condi said:

I think we're talking about different eras though, its not so simple in today's world of low interest rates and 0 return on savings. If you keep cash in the bank, you might, at best, get 1.5%, if you chase the stock market, you probably net out around 0. I have a portfolio of funds I actively manage myself, and over the last 2 years one has grown by precisely 0, the other one has managed 1%.

At the same time, house prices are going up faster than you can save the deposit, so buying one home looks increasingly difficult, let alone buying 2 or 3. Also the government now charges extra stamp duty on 2nd homes and so it adds another layer of cost if anyone had the cash to invest in property.

All very well saying 'save' but when you're not getting anything back from savings, and you can borrow at 3% (!!!) if there was ever a time to take on manageable debt then this is it. I think most (all) young people are rather of the mindset that they would rather go on holiday, rather than put cash in the bank earning them nothing, and when buying a house is nothing but a pipe dream there is little incentive there either to save. You could argue that is a short term lookout, but this has been the case since 2007 - a full 8 years - and anyone under the age of 30 has never known any different since they started working.

I agree times have changed but you still have to save to get the deposit for the loan,the more deposit you have the more choice of loan,my 2nd house I was up to 19% interest that hurt,buying houses has always been hard now the hurt is the deposit,but spending on curve TV's,sports cars and the must have latest mobile phones don't help.I think that having money in the bank is still the way forward just for life or for house buying.I know a couple of young lads (mid 30s with wife plus 2) who got on the ladder and one has investment property the other buys and adds value and resells slowly working his way up the chain,these are not city boys just local lads.I live in a area where £200,000 mortgage is a must and that's means a £150,000 to £200,000 deposit which I agree is a lot of money,but the last house to sell in my road took the hole of two days to sell at full asking,to a young couple with kids.There's never been a short cut to house buying.

[leginigel]

Sorry The last bit was "There's never been a short cut to buying house's"

[Audemars]

£32k is nothing given the prices of houses these days. Don't even think about a new car until you have 5+ years of work experience under your belt. Hopefully you will see some promotions during that time. Until then look at cars under £4K.

[TwigtheWonderkid]

540 said:

We all learn from mistakes

It's good to learn from your mistakes, but it's better to learn from other people's mistakes.

[Storer]

Audemars said:

£32k is nothing given the prices of houses these days. Don't even think about a new car until you have 5+ years of work experience under your belt. Hopefully you will see some promotions during that time. Until then look at cars under £4K.

x2

You will be amazed how little of the £32k you will have to spend on yourself once tax and NI and possibly pension contributions have been deducted.
If you have never lived where you have to pay all the bills it will come as a shock.

[gangzoom]

Forget the car till the house /mortgage is sorted.

[Sam.]

gangzoom said:

Forget the car till the house /mortgage is sorted.

Exactly what i have done. Used to own 3 cars. RX7, Audi A8 and a run around. Made it to a smaller fleet so sold the RX7 and the run around and put it into savings. The money i saved on insurance, tax and other bits has helped me and my partner get our first house. Just waiting for a completion date. Its been a hard time not having the toys but once we have our own place i can start thinking into new toys.

[AJS-]

Sorry to echo all the other sensible people here, but you don't *need* a £15k car. Nor the running costs that come with it. You can get a bloody good car for £2k, and as someone else suggested save at least 10% of your income. Then blow that on a silly car in a couple of years time.

[Simpo Two]

AJS- said:

Sorry to echo all the other sensible people here, but you don't *need* a £15k car. Nor the running costs that come with it. You can get a bloody good car for £2k

My accountant has never spent more than £750 on a car! He buys bangers and drives them until they break. He currently has a Focus diesel bought at auction, now on 200K miles and can't break it. To be fair I can't think of a cheaper way to go motoring!