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How Wealthy Are You?


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#31 Cooperman

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Posted 09 July 2019 - 02:18 PM

Unless you get a company car, the best thing is to 'buy smart'.

 

I can only speak for myself, but I always buy a top-quality car about 6 years old with a reasonable mileage. As an example, I bought my 2007 BMW 730D SE in 2013 for just under £8000. It had done around 80,000 miles. It has proved great to drive with its 6-speed auto gearbox and running coasts have been very reasonable. The only real problem I had was a yaw-sensor fault early on in my ownership which was caused by a blocked sun-roof drain pipe.  It is still worth about £3000 which is £5000 depreciation in 6 years or £830 per annum. So for a dep of about £16 a week I have had real high-performance and luxury motoring. That car was c.£60,000 when new. It still drives beautifully.

 

My wife has also had her BMW for 6 years. It is a 2005 BMW 325i SE Auto. When we bought it for £6950 it had done a genuine 37,000 miles. It has now done 74,000 and is super to drive. I would guess it is also worth around £3000 now so that is an even lower depreciation than my 7-Series.

 

When I needed a tow hook on my car just over 3.5 years ago I found that the cost of a hook on my BMW was over £1000, so I bought a Land-Rover Discovery 300 TDi for £650. It is fantastic. I bought it without an MoT, but it passed without any work and has been very reliable. I have changed the cam belt, thermostat and clutch/clutch arm and all that cost about £500, but it is still worth around £1300, so I have broken even. The week before last I went to Scotland and back virtually non-stop with my trailer to collect a Mini. &40 miles with no problems. Last Sunday I did a round trip of 175 miles to collect a glider.

 

It is possible to have reliable and comfortable motoring in quick luxury cars without spending a fortune.


Edited by Cooperman, 09 July 2019 - 02:19 PM.


#32 Icey

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Posted 09 July 2019 - 03:12 PM

The main difference to owning vs leasing is that you have an asset in the end. There is a lot of math but in a nut shell at the end of your lease you hand the car back and if your lucky you owe them nothing and you walk away. All that money you had been giving them is gone and you have nothing to show for it. If you buy that car at the end of the loan you have the car that you can now drive for free basically, sell, or use as leverage for something else. Of course you lost a lot in depreciation but some cars aren't as bad as others.
If you need a new car every 3 years and cant deal with anything slightly used then lease is the way to go. If you can hold onto a car for say 5-10 years then buy it.

 

There's a bit more to it that having an asset or 'wanting' a new car every three years.

 

If you lease a new car your whole motoring cost is summed up in one regular monthly payment, no surprise bills. This is very reassuring if you're on a tight budget. Yes, it's not the cheapest option but when you're balancing a small budget predictability is often as or more valuable than any saving you might make using another approach.

 

My personal example? I used to commute ~50 miles a day in horrendous traffic. So I used a motorbike for the most part but I also needed to move two people around at other times (and myself when the weather was really bad) so had to run a car as well. Both car and bike were cheap, the car was a Mini we built for <£300 and the bike was paid for with a redundancy pay-out (but still only £1800).

 

Then we hit a year where both the Mini and the bike needed major work. When I did the numbers it made more sense to sell the bike and chop  the Mini in on the scrappage scheme (boo-hiss) and get a new, cheap Toyota.

 

For less than the cost of my old London travel card per month I had a new car with full warranty which was in the zero-VED band. Did it save me money? No, it was break-even but it gave me three years of trouble free, low cost motoring (the damned thing did +60mpg).

 

I stayed on the new car wagon for another two rounds because the predictability of payment allowed me to structure my finances. When I then had enough capital I gave the new car back to the finance company and bought a cheap-ish used car. It only had to last a couple of years before it broke-even (i.e. the total cost of the previous monthly payments was equal to the cost of the used car) but I also had enough that should it go bang in a big way, I could buy another without going into debt.

 

Again, there's lots of assumptions that buying a new car is always bad. Life is never that clear cut!

 

Do I think people spend too much on monthly car payments? Yeah, some people get carried away with it, adding +£100s a month with each trade in. But cheap car financing is a very useful tool for many.


Edited by Icey, 09 July 2019 - 03:14 PM.


#33 r3k1355

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Posted 09 July 2019 - 04:19 PM

It's worth mentioning that there's been a sharp decline in lease sales recently, the good deals it seems have gone so far fewer people are actually doing it.

Several years ago there were some stonking deals, alot of younger lads went for fast cars which is why you saw lots of Golf R's, ST Fords and AMG Mercs ploughing around.

 

IIRC VW drove the market several years ago due to the slump in demand after Dieselgate, it coincided with very low interest rates so they went hard on the finance market to get their vehicles back on the road.



#34 Icey

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Posted 10 July 2019 - 08:51 AM

It's worth mentioning that there's been a sharp decline in lease sales recently, the good deals it seems have gone so far fewer people are actually doing it.

 

A lot of that is down to consumer confidence; a large part of the population is unwilling to sign up to optional multi-year financial arrangements until the current economic turbulence has passed. I still get emails and letters from the manufacturers I bought new cars from offering some very good deals, they are getting desperate to shift units.

 

There is speculation that car financing is the next bubble to pop and there may be some mileage in that (pun sort-of intended). I wouldn't bet a huge amount on it though as most finance agreements have zero-cost early exit options so any economic shock that would cause mass defaults would have to be very sharp and very short (in realisation rather than duration). There is one thing lurking on the horizon that may cause such an event but that's not a subject for this thread or forum.



#35 r3k1355

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Posted 10 July 2019 - 10:15 AM

Yes the car finance bubble has been talked about for several years, it never came to fruition though.

 

Unlike property its relatively quick and simple to repossess a car, it's even quicker to then sell it back on and get your money back on it so it's relatively rare that the finance companies actually lose on a deal.



#36 rich_959

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Posted 10 July 2019 - 10:33 AM

 

It's worth mentioning that there's been a sharp decline in lease sales recently, the good deals it seems have gone so far fewer people are actually doing it.

 

 There is one thing lurking on the horizon that may cause such an event but that's not a subject for this thread or forum.

 

 

Tell us more Icey!! We're firmly in the off-topic section anyway. Private sector contractor tax/IR35?



#37 Ethel

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Posted 10 July 2019 - 11:33 AM

Think it might begin with B  >_<

 

No tax on leccy company cars either now.



#38 KTS

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Posted 10 July 2019 - 02:00 PM

Think it might begin with B  >_<

 

No tax on leccy company cars either now.

 

Boris ?



#39 DeadSquare

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Posted 12 July 2019 - 02:48 PM

I believe that if you are a risk taker that you may end up wealthier than someone like myself who is risk averse. My aim when I left school was to get a trade, get my own property and retire as soon as I could afford. 

 

I also believe that a good hard  worker will always do well in whatever profession they choose, my initial 5 year apprenticeship in the motor trade ended badly when the company folded, so at 21 while my friends were going out most nights I went to night classes 3 nights a week for 6 years whilst working as a trainee electrician to get my Electrical technicians certificate then moving into project management of major electrical installations and construction projects.

 

I consider myself rich and lucky as I have always been employed. I retired at the age of 60 and I have got to say its the best time of my life, I enjoy my Mini, my grandchildren, holidays and helping family, friends and neighbours with all aspects of building/electrical works.

 

 

 

There is a simple difference between being wealthy and being rich.

 

Someone with a Picasso on the wall is wealthy, even though they can't afford a box of matches, but would be rich if they sold it.

 

Someone who has just collected their unemployment are rich, until they have spent it, but unless something changes, will never be wealthy.

 

Most of us fall somewhere in the middle, and are fairly happy with our lot.

 

As a gentleman, I have never really had a job, but I have done some quite interesting work.

 

I am now well into my 70's, and the most satisfying things that I have done, have almost always been helping others, and somehow, as a result, something has usually 'turned up'.



#40 r3k1355

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Posted 15 July 2019 - 09:44 AM

You've never had a job??

 

You spent your life on the rock n roll ??



#41 KTS

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Posted 15 July 2019 - 11:36 AM

You've never had a job??

 

You spent your life on the rock n roll ??

 

i think maybe it's more along the lines of "Gentlemen don't work, silly. Not real gentlemen."



#42 Mikey205

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Posted 18 July 2019 - 10:09 PM

I’m 39, I own my own home (only quite recently mind), have a decent income for my line of work so I could class myself as comfortable.
I’m not massively frivolous with my income. I’ve a loan, a couple of credit cards and a mortgage. My loan is finished in March, credit cards are small amounts but I’ve a sizeable mortgage. All my vehicles are owned outright, I don’t believe in high rate finance.

I’ve been quite lucky in the fact that in 20 years, I’ve only ever lost money on one car. I’ve always managed to make or break even on them. That’ll change when I wish to change my current car that I’ve had for 3.5 years now but hey ho.

Does anyone here have any decent savings though? I was reading the other day that quite a large percentage of the population don’t have more than a months worth of income. That’s pretty scary if I’m honest.......

#43 kit352

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Posted 19 July 2019 - 06:54 AM

I’m 39, I own my own home (only quite recently mind), have a decent income for my line of work so I could class myself as comfortable.
I’m not massively frivolous with my income. I’ve a loan, a couple of credit cards and a mortgage. My loan is finished in March, credit cards are small amounts but I’ve a sizeable mortgage. All my vehicles are owned outright, I don’t believe in high rate finance.

I’ve been quite lucky in the fact that in 20 years, I’ve only ever lost money on one car. I’ve always managed to make or break even on them. That’ll change when I wish to change my current car that I’ve had for 3.5 years now but hey ho.

Does anyone here have any decent savings though? I was reading the other day that quite a large percentage of the population don’t have more than a months worth of income. That’s pretty scary if I’m honest.......

 

 

I was wondering he same thing in regards to savings.  I have been seeing a lot of stories about how a good chunk of the population has little to no savings and is always on the knife edge of losing everything.  



#44 r3k1355

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Posted 19 July 2019 - 10:31 AM

Does anyone here have any decent savings though? I was reading the other day that quite a large percentage of the population don’t have more than a months worth of income. That’s pretty scary if I’m honest.......

 

That depends on how it's quantified though.  Gross or net??  What about couples, does that count for both?

 

on the face of it it sounds like alot of people have got less than a couple of quid to fall back on, but for a couple of people earning median wage, anything less than 5 grand might be less than a months income.



#45 DeadSquare

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Posted 19 July 2019 - 11:25 AM

It may often not seem to be sufficient, but income is relatively easy to acquire if you are diligent.  If, after paying all expenses, you have 5% left in your pocket, acquiring capital through savings is 20 times harder.  If the Chancellors could legally only tax capital at 1/20th of income tax, they might realise this.

 

Since the war, interest rates have consistently been lower than inflation.  Small wonder then, that so few have savings behind them.

 

On the whole, governments / civil services don't like the population to save money.  They want people to be dependent on them, and grateful to them.

 

They also seem to feel that saved money is wasted money.  It is money that they should have got their hands on, because they know best how to squander it.

 

Economics is the political misunderstanding of commerce.






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