living on bare minimum to pay off car loan

Worrierwalker · 19 March 2017 at 3:36PM

Re 5.

You need to forget what everyone else thinks. What's the point of projecting a false image?A lot of people with modest cars don't need to prove anything.

I am the same age as you and totally debt free, but only because I went without for a long time. I know how tempting it is to borrow to get nice things as I have done so in the past. Wishing you well and hope you achieve your goal :-)

jenrm_2 · 19 March 2017 at 3:46PM

I only have a modest VW golf which I bought second hand. It's more the taking back something I've purchased because I can't really afford it that is difficult for me. I had hoped to be more financially secure by now, than I am. I hate the thought of my family and others seeing me as still struggling.

enthusiasticsaver · 19 March 2017 at 3:57PM

jenrm wrote: »

I have one child and have life insurance simply to repay my mortgage so he and his wife aren't saddled with debt when I go and will inherit the full value of my house. I do intend to sell and downsize within the next 10 years but this won't save me much if anything. I have a final salary based pension which is better than average.
Just roughly dividing my outstanding mortgage by 9 (yrs) then by 12, I calculate that I need to pay £713/month to pay off my mortgage when I'm 67. This is an additional £369 /month which doesn't seem impossible.? Okay, so I've just deducted the savings I'll make by halving my spends for groceries, birthday and Christmas and still need to find another £174 every month. I could make this if I take a second job which is a possibility.
I will definitely be shopping around for cheaper boiler cover after my next service in April and I've applied for a water meter plus some free gadgets to reduce my water usage. I've already switched all my other utilities within the last month thanks to MSE.

This forum has helped me to face the stark reality of my situation and I now have a list of challenges.
1. Sell unwanted stuff on Ebay instead of donating it.
2. Find an additional £174/month.
3. Limit grocery bill to £140 and birthday/christmas spends to £55 monthly.
4. Open a separate bank account solely for birthday and Christmas.
5. Look into selling my car - This is a HUGE emotional challenge, it's like me telling everyone that I can't afford to live as I have been doing.
6. Find second job.

End goal - to be debt and mortgage free by April 2026.

It looks like you have realised the challenges ahead of you and well done for looking to address it. As you say prioritise your debt repayments and initially the £22.5k of unsecured debt needs to go before you can even start on overpaying the mortgage. At least you have a decent pension.

I understand you not wanting to burden your son with a mortgage should you die before it is paid off and think an £11k car is out of your budget bearing in mind it is all paid for on debt and has literally doubled your unsecured debt figure only 10 years before retirement. A second job will also help as well as cutting back wherever. I am sure however you are not the only person approaching the latter part of their working life still with debt outstanding.

enthusiasticsaver · 19 March 2017 at 4:02PM

jenrm wrote: »

I only have a modest VW golf which I bought second hand. It's more the taking back something I've purchased because I can't really afford it that is difficult for me. I had hoped to be more financially secure by now, than I am. I hate the thought of my family and others seeing me as still struggling.

I can understand this but ultimately the person who will be affected by you not living within your means is you. Your family will not want to see you struggling with a mortgage on a pension so however you do it you do need to start looking into how to manage your money better because your income will be lower once you retire. The car is costing you more because you are borrowing to pay for it and of course it is one of the most highly depreciating assets there are. You can justify it by saying you are preparing for retirement by not saddling yourself with a high car loan.

Worrierwalker · 19 March 2017 at 4:12PM

Ok but the car I have cost approx half the amount of yours. I don't feel deprived in any way when I'm driving it

imagine halving that one bill and how much of a weight off your mind it would be.

jenrm_2 · 19 March 2017 at 4:41PM

I've just received a few on-line valuations for my car. £14,330 from Auto Trader is the highest. I would list it for £14,500 or should I aim higher?

fatbelly · 19 March 2017 at 7:30PM

jenrm wrote: »

I've just received a few on-line valuations for my car. £14,330 from Auto Trader is the highest. I would list it for £14,500 or should I aim higher?

I just did a check on my car using autotrader - I reckon I would advertise it for £600 above their private guide price. If I were you I'd start at £14995.

If I were looking for a Golf-sized car I probably wouldn't go for a Golf - overpriced because of a reputation that's not really deserved. Maybe a Seat Leon or Ford Focus. 7k will buy a 2013 model as a rough guide - the guys on the motoring board can help here.

armchairexpert · 20 March 2017 at 1:07AM

Hi Jen: with the life insurance, surely if you die and your son inherits your house, he's better off even if there is an outstanding mortgage? He can always sell it and keep the equity if the mortgage repayments are outside his control, or he moves into a house which is already partially paid-off - either of those is a boon, not a burden. I think it's a nice idea to want to bequeath a fully-paid-for house, but it looks like an expense you can't afford, and I'm sure he'd rather you weren't living close to the bone just so that he can inherit a bit extra.

fatbelly · 20 March 2017 at 7:49AM

I agree not to stress to much about the mortgage. The contractual monthly instalment is not high and even after you retire, you may well be able to meet it. You will have a good pension by the sound of it (final salary schemes are increasingly rare) and state pension. Maybe work part-time.

If your income is low, you may be able to get some help with the mortgage interest through Pension Credit.

Concentrate on getting the unsecured debt out of the way - that's do-able.

datlex · 21 March 2017 at 8:09PM

I gave up my car a few years back. Partly for financial reasons and partly because I got panic attacks due to family stress. It has actual saved me a lot of money. I just pay a monthly bus fare which is under £50 which covers most of my travel both to work and social. No car tax, insurance, maintenance or mot.

living on bare minimum to pay off car loan

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