I have £100k in my savings account :)

mollycat

ruinen wrote: »

Some calculations (with plenty of assumptions, but will give you some idea):

Road Tax: £230/year (1999 car over 1599cc)
MOT £50/year
Insurance: £200/year
Fuel: £1000/year (assuming 20p/mile * 5000 miles)
Breakdown: £100/year
Total: £1580


Road Tax: £35/year
MOT £0/year (for 3 years)
Insurance: £150/year
Fuel: £500/year (10p/mile * 5000 miles)
Breakdown: £0/year (was actually included in my insurance for free, but I would be much happier on no breakdown cover on a new VW then a 15 year old Hyundai)
Lost interest on £7k: £70/year
Total: £755

Lets call that £800/year saving.

That obviously excludes the more likely extra costs of keeping a 15 year old car running. But also excludes depreciation of the new car. But also excludes the goverment policy seems set on raising future road taxes on inefficient cars, and I doubt fuel prices are dropping.

In the context of someone that has savings and has already expressed the possiblity of liking a newer car, then I think the sums are worth considering. My example is just one of many options. Go for a year or two old Toyota Aygo and you probably mitigate more of the cost of deprecation.

So about 8-9 years till you break even?

A fair bit less than that if you stick with a banger and have to replace it within that time scale i'll admit.

Not for me, but each to his own

ruinen

breakwater wrote: »

Hello,
I have very little interest in finance and tried to read a few things on investment, funds and shares but got board very fast and didn't really understand anything so kind of gave up on that front, also I don't really like to take risk specially when I don't understand the situation fully.

No immediate pressure, but at some point in the future you'll probably want to re-consider investments/investing. Cash has a hard time earning above inflation. So it effectively loses value. Not really a major concern for a period of a few years. but when you are looking at the long term (i.e. savings that are for retirement) then it can make big differences. Investing doesn't need to be complicated. It might be a house, a pension, or in S&S ISAs (or plenty of other options). I like the S&S ISA route. Not complicated. Look for one of the low cost platform providers http://langcatfinancial.co.uk/2014/03/cut-price-fruit-russian-oligarchs-gary-coleman/ and then pick one (or a few) low-cost tracker funds (plenty discussed here). Personally I just went with Vanguard LifeStrategy Fund in an ISA. Ticks all my requirements. Low cost. High diversification. Still have access to the money if I had a real emergency. No hassl, I put the money in and then leave it and don't think about it.

anotheruser

Just as a point, the fuel consumption wouldn't half.
Insurance may not be any different either as it's a newer car.
Breakdown cover can be had for £39 a year for the AA, quote possibly cheaper elsewhere.

Just because you have hit some sort of magic number, why does this mean you have to spend any money? You got to 110K by saving all you could and earning all you could. Continue and in a few years, it may hit 200K.

chickenboy

A whole 35 quid a year on road tax!! --buy something with lower emissions and its free or 10 quid. If you have a new car I think you can probably spend a bit less on breakdown cover too - more like 20 to 30 quid.

OP - I'd say its time to reward yourself and enjoy a small bit of that money. You can't take it with you...

ruinen

mollycat wrote: »

So about 8-9 years till you break even?

A fair bit less than that if you stick with a banger and have to replace it within that time scale i'll admit.

Not for me, but each to his own

I am not an expert in maths (hopefully people can correct us if we are wrong), but I think you might have it wrong. Lets add in deprications into the sums and look at a 6 year period. Again I make lots of quick assumptions, but i think it will be ballpark. A 1999 Hyundai is probably close enough to being worth £0. In 6 years it is still worth £0 (pretty nice depreciation of £0 :-) ). Lets say a £7k VW Up losses £4k value over 6 years. I am also going to add £100/year repairs on the hyundai, just as a guess at what it would cost extra to keep that on the road vs the new car.

So in six years with the old car:
Spent: £10,080 (£1680 * 6)
Car: 21 year old car worth £0
Bank: £7,000
Effectively down: £3080

New car:
Spent: £4530
Car: 6 year old car worth £3,000
Bank: £0
Effectively down: £1530

So after 6 years you are already £1500 better off, and you've had 6 years driving around in a nicer car. And also who knows what fuel will cost on 6 years, but it will only make the sums better for the new efficient car.

Grumpygit

Whilst I appreciate that I am not actually answering your thoughts but.....

My cousin saved for years (and had in excess of 125k in the bank) wanting to buy a property but believing that she didn't earn enough for a mortgage.....she drifted from job to job and was a librarian for the last few years.

She died at 44 years old from skin cancer and so never actually bought a house or enjoyed her money.

So, what I am trying to say is....there is more to life than saving - take a chance and buy a new car if you want to or buy a place to live in or rent out.....you only live once and it can be taken away from you in a heartbeat.

However, you sound pretty switched on in terms of not wasting money (unlike a lot of us) so don't feel guilty about treating yourself - you can always save some more.....but just get out there an live and take a chance

ruinen

anotheruser wrote: »

Just as a point, the fuel consumption wouldn't half.

Obviously need to know the model of the old car. But an Up is 63mpg. I would guess it is not far off double that of a 15 year Hyundai. OP can adjust the sums accordingly

mollycat

Hi Ruinen,

For OP's sake don't really want to sidetrack his thread with this or get into too much of a debate over the figures.

Glad your happy with your purchase!

Me, I cant even persuade the wife not to buy a new car every 3 years so what do I know.

You originally said you'd spent £7K to save £800 a year.

Like i said, not for me, but each to his own.

I like to spend my cash on other things!!!

laurel7172

ruinen wrote: »

I am not an expert in maths (hopefully people can correct us if we are wrong), but I think you might have it wrong. Lets add in deprications into the sums and look at a 6 year period. Again I make lots of quick assumptions, but i think it will be ballpark. A 1999 Hyundai is probably close enough to being worth £0. In 6 years it is still worth £0 (pretty nice depreciation of £0 :-) ). Lets say a £7k VW Up losses £4k value over 6 years. I am also going to add £100/year repairs on the hyundai, just as a guess at what it would cost extra to keep that on the road vs the new car.

So in six years with the old car:
Spent: £10,080 (£1680 * 6)
Car: 21 year old car worth £0
Bank: £7,000
Effectively down: £3080

New car:
Spent: £4530
Car: 6 year old car worth £3,000
Bank: £0
Effectively down: £1530

So after 6 years you are already £1500 better off, and you've had 6 years driving around in a nicer car. And also who knows what fuel will cost on 6 years, but it will only make the sums better for the new efficient car.

How do you buy a £7k car for £4530?

ruinen

mollycat wrote: »

Hi Ruinen,

For OP's sake don't really want to sidetrack his thread with this or get into too much of a debate over the figures.

Yep agree, best not to divert the conversation further :-) But hopefully I made a point to the OP. I hate unnecessary consumption, but sometimes spending money can counter-intuitively make economic sense. Especially things that have high running costs. Another area is energy efficenct home applicances, but that's getting super side-tracked :-)

**Back on topic** +1 Grumpygit's posts.