No Cards, no Loans... am I the mug?! Considering borrowing.
Discussion
I'm mid 20's, never had a Credit card, personal loan etc. Always had an old car, ~£2k, these were by far the most expensive things I'd had, all saved up and paid in cash. Played it sensible-ish through my teens and and after Uni.
Last year I bought my first house, got a decent-ish mortgage despite the 'climate' and my very average earnings. Nothing special in overall terms, but for me, a MASSIVE purchase! 50x more than I'd ever spent on anything!
I rather suspect the latter is a direct result of the former. My Noddle report is 4/5 'Good'. Basically, everything there is Green, its just there's not a lot there.
The mortgage was a bit scary at first, but actually is fine - steadily chipping away at it after my first year! No problems there, super proud of wee Castle Snotrag.
I am rather fancying being able to make a purchase of the obvious kind (
its PH remember). I dont know what, or how much - but it will be very carefully considered and not actually that much. All my cars so far have been ~£2k or less. To be able to spend a MAX of 3 times that would have me like a pig in s
t, very exciting. It would absolutely be something special, as opposed to 'transport'.
In some ways, I feel I am perhaps being way too much of a
I'm not coming over all I want it and I want it now but looking around at the world, I wonder whether I am missing a trick? Is there actually a sensible, affordable way of me having a bit of fun?
One thing that I have no idea whether it makes a difference or not - The 'cost' of such a purchase, would be a 'cost' for my hobby, my fun, a treat - it would not be an 'essential' or day to day cost - IYSWIM. I might borrow 5k to buy a 944 Turbo to polish and take to car shows - but I wont be borrowing 5k for a Diesel Golf that I need to get me to work. I'm under no pretences about it being anything other than a luxury.
So the question is - is it stupid or not, and how on earth do people do it?
Last year I bought my first house, got a decent-ish mortgage despite the 'climate' and my very average earnings. Nothing special in overall terms, but for me, a MASSIVE purchase! 50x more than I'd ever spent on anything!
I rather suspect the latter is a direct result of the former. My Noddle report is 4/5 'Good'. Basically, everything there is Green, its just there's not a lot there.
The mortgage was a bit scary at first, but actually is fine - steadily chipping away at it after my first year! No problems there, super proud of wee Castle Snotrag.
I am rather fancying being able to make a purchase of the obvious kind (
its PH remember). I dont know what, or how much - but it will be very carefully considered and not actually that much. All my cars so far have been ~£2k or less. To be able to spend a MAX of 3 times that would have me like a pig in st, very exciting. It would absolutely be something special, as opposed to 'transport'.In some ways, I feel I am perhaps being way too much of a
Newc said:
“The People’s Front of Judea”
type. Of course, maybe this is what's put me in the situation I am happy with at the moment. I'm not coming over all I want it and I want it now but looking around at the world, I wonder whether I am missing a trick? Is there actually a sensible, affordable way of me having a bit of fun?
One thing that I have no idea whether it makes a difference or not - The 'cost' of such a purchase, would be a 'cost' for my hobby, my fun, a treat - it would not be an 'essential' or day to day cost - IYSWIM. I might borrow 5k to buy a 944 Turbo to polish and take to car shows - but I wont be borrowing 5k for a Diesel Golf that I need to get me to work. I'm under no pretences about it being anything other than a luxury.
So the question is - is it stupid or not, and how on earth do people do it?
interesting question - I in the past was someone who wanted things 'now' and as such had no problems buying cars particularly on credit.
I'm of a slightly different view now i'm getting older (37) I tend to try and buy things for cash, as long as contingency fund isn't compromised in case I lose my job.
However, I can never quite understand how people live the lives they do. In my peer group, I know where I fall on the high earning stakes.....and I certainly couldn't afford the houses and cars that some people I know buy......
I have no idea how they do it!
I'm of a slightly different view now i'm getting older (37) I tend to try and buy things for cash, as long as contingency fund isn't compromised in case I lose my job.
However, I can never quite understand how people live the lives they do. In my peer group, I know where I fall on the high earning stakes.....and I certainly couldn't afford the houses and cars that some people I know buy......
I have no idea how they do it!
RacerMDR said:
In my peer group, I know where I fall on the high earning stakes.....and I certainly couldn't afford the houses and cars that some people I know buy......
This is one of the things that I am getting at. I know more than most how good it is to be debt free, sensible, comfortable. I would hate to be debt-stricken and worrying 24/7 about the next bill. But theres a middle ground in between, I'm just not sure I'm anywhere near the right bit, missing out on the 'sweet spot' by being too cautious?
I think it comes down to the real cost of any debt.
You own a house, so you understand the cost of that debt.
The question is, are you happy to borrow money for a nicer car.....knowing that it could cost you 2k a year in interest (as an example) for a depreciating asset.
If the answer is you can afford it, and you are happy to spend it, then why not?
As long as you are happy you totally understand how much you are paying for the privilege of that debt, then you get the car you want earlier to enjoy it more - but at a cost of the interest.
Remember also, if your circumstances change, you have have to sell the car, and you could still owe more than it is currently worth.
You seem very sensible, and so i'm sure you would go into it with your eyes wide open.
For me, it really is that simple. I had two friends die in 2012.........you buy your ticket, and you take the ride!
Good luck :-)
You own a house, so you understand the cost of that debt.
The question is, are you happy to borrow money for a nicer car.....knowing that it could cost you 2k a year in interest (as an example) for a depreciating asset.
If the answer is you can afford it, and you are happy to spend it, then why not?
As long as you are happy you totally understand how much you are paying for the privilege of that debt, then you get the car you want earlier to enjoy it more - but at a cost of the interest.
Remember also, if your circumstances change, you have have to sell the car, and you could still owe more than it is currently worth.
You seem very sensible, and so i'm sure you would go into it with your eyes wide open.
For me, it really is that simple. I had two friends die in 2012.........you buy your ticket, and you take the ride!
Good luck :-)
RacerMDR said:
You own a house, so you understand the cost of that debt.
The question is, are you happy to borrow money for a nicer car.....knowing that it could cost you 2k a year in interest (as an example) for a depreciating asset.
Gotcha. The house - what I'm paying for is not some illusion that I'm going to make money - I'm paying to live here. (If I did make anything long term, great, but I may lose as well). The question is, are you happy to borrow money for a nicer car.....knowing that it could cost you 2k a year in interest (as an example) for a depreciating asset.
Ref the car - I'm not interested in borrowing a 'lot' at all - Even £5k would be a 'lot' of money for a car to me.
Well, first up, a complimentary packet of larks' tongues to you for having a financial self discipline which is sadly lacking across much of the Western world. I tip my hat to you sir.
For your specific situation, you are really looking at buying time for money. You are happy that you can afford to save up say 6k in 3 years that would buy you a treat at that point. To bring that treat forward to today by using finance will cost you say 1k over three years, plus earlier running costs.
Is that extra cost something that sits comfortably with you - for instance, imagine there was no finance but you had to save up 2.5k per year instead of 2k per year: would that be ok ?
If so then you are Doing Finance Right. You are making a rational decision that the personal satisfaction and utility of having the treat today is worth an extra 1k+ to you, AND you can accomodate that spending in your monthly budget.
This is far different from the 'take out an extended mortgage so I can have a new Audi sitting on the drive every year' insanity.
I would like though to recommend also chipping in an extra twenty a month on your mortgage if you can. You'll be amazed how much difference it makes over time.
For your specific situation, you are really looking at buying time for money. You are happy that you can afford to save up say 6k in 3 years that would buy you a treat at that point. To bring that treat forward to today by using finance will cost you say 1k over three years, plus earlier running costs.
Is that extra cost something that sits comfortably with you - for instance, imagine there was no finance but you had to save up 2.5k per year instead of 2k per year: would that be ok ?
If so then you are Doing Finance Right. You are making a rational decision that the personal satisfaction and utility of having the treat today is worth an extra 1k+ to you, AND you can accomodate that spending in your monthly budget.
This is far different from the 'take out an extended mortgage so I can have a new Audi sitting on the drive every year' insanity.
I would like though to recommend also chipping in an extra twenty a month on your mortgage if you can. You'll be amazed how much difference it makes over time.
This sounds like me posting 10 years ago just a lot more sensible I even bought a 944 S2 which was a money pit.
What I would say is you've done the hard bit and got the house before thinking about what else you can treat yourself to think how safe is your job how safe is the house if you lost the job can you still afford the house or would the bank want it back, if they want it back do you have equity in it? If the answer to these is positive which im sure they are then yes why not treat yourself £5k isn't a great deal repayments will be quite low.
What I would say is you've done the hard bit and got the house before thinking about what else you can treat yourself to think how safe is your job how safe is the house if you lost the job can you still afford the house or would the bank want it back, if they want it back do you have equity in it? If the answer to these is positive which im sure they are then yes why not treat yourself £5k isn't a great deal repayments will be quite low.
OP, I did just the same as you. Not easy when you're young and all your mates have nice cars and are laughing at you.
I decided to stick with the crap car option and just chipped away at mortgage, trade up to bigger house, overpaid on mortgate, went again, and again. It was a slog, but......
now aged 50, have a 4 bed detached family home in London suburbs and no mortgage.
And a £22K car bought for cash.
All my friends still have far better cars than me, mainly on finance of some kind, and they still have huge mortgages. Still, I could keel over tomorrow and then what was it all for?
Just my story, not saying it's right or wrong.
I decided to stick with the crap car option and just chipped away at mortgage, trade up to bigger house, overpaid on mortgate, went again, and again. It was a slog, but......
now aged 50, have a 4 bed detached family home in London suburbs and no mortgage.
And a £22K car bought for cash.
All my friends still have far better cars than me, mainly on finance of some kind, and they still have huge mortgages. Still, I could keel over tomorrow and then what was it all for?
Just my story, not saying it's right or wrong.
TwigtheWonderkid said:
OP, I did just the same as you. Not easy when you're young and all your mates have nice cars and are laughing at you.
I decided to stick with the crap car option and just chipped away at mortgage, trade up to bigger house, overpaid on mortgate, went again, and again. It was a slog, but......
now aged 50, have a 4 bed detached family home in London suburbs and no mortgage.
And a £22K car bought for cash.
All my friends still have far better cars than me, mainly on finance of some kind, and they still have huge mortgages. Still, I could keel over tomorrow and then what was it all for?
Just my story, not saying it's right or wrong.
Pretty similar to me. You just have to be careful you don't take it too far... That would be my advice.I decided to stick with the crap car option and just chipped away at mortgage, trade up to bigger house, overpaid on mortgate, went again, and again. It was a slog, but......
now aged 50, have a 4 bed detached family home in London suburbs and no mortgage.
And a £22K car bought for cash.
All my friends still have far better cars than me, mainly on finance of some kind, and they still have huge mortgages. Still, I could keel over tomorrow and then what was it all for?
Just my story, not saying it's right or wrong.
I'm 28 now, and whilst most of my friends are either out drinking or splashing out on expensive things, I've been chipping away at the mortgage instead. In just over 5 years, we've paid off a total of almost £100k. We started on wages of £16k and £12k!
Now we're in a more comfortable position, I don't foresee us continuing at the same rate, as the worry is over. We're now on higher pay, and can enjoy the comfort that brings (albeit not much higher).
Just don't take it too far, or you can lose sight of the simple, but important things in life.
TwigtheWonderkid said:
We started on wages of £5K and £4.5K 
In 1983.
In 1983.
I'm guessing house prices were a lot lower then as well though!
Our house price, based on the market, just keeps going down and down... Yet oddly the larger houses we want to move on to are getting more expensive! Odd market, clearly.
Pulse said:
TwigtheWonderkid said:
We started on wages of £5K and £4.5K In 1983.
In 1983.I'm guessing house prices were a lot lower then as well though!
Our house price, based on the market, just keeps going down and down... Yet oddly the larger houses we want to move on to are getting more expensive! Odd market, clearly.
Pulse said:
I'm 28 now, and whilst most of my friends are either out drinking or splashing out on expensive things, I've been chipping away at the mortgage instead. In just over 5 years, we've paid off a total of almost £100k. We started on wages of £16k and £12k!
You and your over half have been living on 8k a year? That means when you take into account income tax, NI, council tax, water, gas and electric, fuel for a car, insurances ect, ect. That means you must have had about £5 a week to feed and clothe yoursleves.xstian said:
Pulse said:
I'm 28 now, and whilst most of my friends are either out drinking or splashing out on expensive things, I've been chipping away at the mortgage instead. In just over 5 years, we've paid off a total of almost £100k. We started on wages of £16k and £12k!
You and your over half have been living on 8k a year? That means when you take into account income tax, NI, council tax, water, gas and electric, fuel for a car, insurances ect, ect. That means you must have had about £5 a week to feed and clothe yoursleves.otolith said:
xstian said:
Pulse said:
I'm 28 now, and whilst most of my friends are either out drinking or splashing out on expensive things, I've been chipping away at the mortgage instead. In just over 5 years, we've paid off a total of almost £100k. We started on wages of £16k and £12k!
You and your over half have been living on 8k a year? That means when you take into account income tax, NI, council tax, water, gas and electric, fuel for a car, insurances ect, ect. That means you must have had about £5 a week to feed and clothe yoursleves.Pulse said:
We're now on higher pay, and can enjoy the comfort that brings (albeit not much higher)
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