What savings should I have?

atush

Archi_Bald wrote: »

The interest rates some of us paid for our mortgages would make your eyes water. But we somehow managed to service the 13%+ loans, and we saved a lot of money by going without mobile phones, internet, laptops, hair extensions, tattoos, acrylic nails and clubbing.

The discretional spending you mention, which many today consider they cannot live w/o is where the money goes.

While I consider internet access to be necessary, it doesn't have to cost the earth. And cheaper end mobiles dont either ( I have a older Galaxy mini).

But many HAVE to HAVE the latest gadgets, iphones, and cable/Sky and then spend enough on grooming etc to pay for a family of 4's food bill. Take outs, you name it.

People need to learn how to budget and cut out waste.

eskbanker

I think I know how the rest of this thread runs....

http://www.phespirit.info/montypython/four_yorkshiremen.htm

kwmlondon

When I was about 23 I started investing. Just £50 a month as I had monumental debts and not much income, but I was happy to gamble on a high-risk fund and in the end I lost some but had a few quid that would otherwise have been spent. A couple of years after that I was given £10k (it's the one and only time in my life I've received a significant amount of cash). I invested half, the other half I used to get myself an MA and bought a new computer, paid off debts, bought a Gibson SG etc.

After getting my masters I ended up unemployed for about 5 months and had to dig into my savings, but then got a job working in research administration and had a huge hike in salary. My previous job had paid £22k a year, I suddenly went to earning £36k a year.

I did treat myself to a few luxuries, but managed to save about £1,000 a month as I was covering maternity leave and knew the good times may not last.

As it happens I did go down a couple of notches in salary, then up a few, but by the time I was 36 I'd managed to get about £27,000 saved and when I got a new job I was able to get a mortgage and pay a 20% deposit on my flat.

When I've been doing well I've saved and overpaid my mortgage.

How much should anyone save?

It's very personal. Depends what you're trying to achieve really. I could afford to save quite a lot and also have a pretty good lifestyle, however, instead of buying a car I joined a car club and had loads of fun driving ludicrous cars (e-type was coolest, Porsche 911 nicest, Subaru Impreza Turbo around the Isle of Man craziest).

You're not living your life for anyone else and I think everyone should make an informed decision on their own circumstances - save enough to be able to do what you want to do in the long term, feel secure, have a pension and a future. At the same time beware sacrificing your life for the possibility of something that may never happen (my partner treats people for cancer, not everyone makes it into middle age let along old age, I'd hate to be dying all bitter that I'd never lived my life, just saved for the future).

That's my approach anyway.

guitarman001

kidmugsy wrote: »

Self-pitying rubbish: you all earn far more than we did back in the 60s and 70s. Stop spending money on "socialising" and put the time liberated into a second job. Do it while you're young and have lots of energy.

Not tosh at all. Our elders bought all the houses cheap and there wage is probably now worth the same as their house cost back then. Do we really think in 10-20 years' time we'll all be earning £200k+? Doubt it! The older generation had it good with big assets like housing, and good pension schemes. Housing nowadays is not fit for purpose and I'm tired of hearing "don't waste your money on iphones" and "we had interest rates of 15%" - yeah, but your house was probably 2-3x a single income. I'm 30 soon, admittedly I wasted away £20k on dodgy investments (in the aim of growing it to buy a house) but have now saved back up to £57k and growing by ~£1.7kish per month - largely due to living at home for so long and not having real bills to pay (though I do pay a low rent). Been working for 8 years. Due to high housing costs people are putting off having families or not having them at all (I wont be having kids!) - my older partner has some savings and a flat and so luckily we could be mortgage free in a house in ~5 years' time but it's been and will be a slog. Car paid off with 65k miles so £1k or so per year is put aside for a new car. I do have a pension but it's not stellar. The price of housing in particular needs to come down for the younger generation to have any sort of life and make work pay, but every time I mention it, even to parents whose children can't afford a place, they just shrug because "I'm alright, Jack". I've waited a long time and will wait as long as it takes (or possibly emigrate, it's on the cards) until housing comes down to affordable levels. Anybody buying now is off their rocker!

I should have much more saved up. Firstly, that £20k which I blew. Secondly, I took out £3k a year at uni and could have gotten away with £1.5k or so per year - took until this year to pay off the £15k debt - 8 looong years! Horrible to imagine students these days with £40k+ debt + car debt + incredible mortgage debt etc, never mind thinking about the costs of starting a family and saving for a pension.

guitarman001

Archi_Bald wrote: »

The interest rates some of us paid for our mortgages would make your eyes water. But we somehow managed to service the 13%+ loans, and we saved a lot of money by going without mobile phones, internet, laptops, hair extensions, tattoos, acrylic nails and clubbing.

Typical response I always hear. I'm one who doesn't spend money on tat - I work hard and save harder. I bet your mortgage was less than 4x single income? I'd MUCH rather have high interest rates for a couple years on a low asset value than low interest rates on a humongous asset value over tens of years - surely that makes MSE sense?

guitarman001

kwmlondon wrote: »

There's a lot of debate to be had around how easy/hard different generations have had it. However, I think you should show some manners and treat this person with a bit more respect than you are doing as you're coming across as bitter, arrogant, rude and unpleasant, which may not be what you're really like at all.

Agree with this - I don't understand the tone of said post.

guitarman001

kwmlondon - too true! Unfortunately I'm riding out the wave waiting for housing to come crashing down as I don't want to pay way over the odds for an overpriced, tiny house in a street I don't like next to neighbours I don't like for so many years lol... I wish I could just buy at a reasonable price and not keep putting things off. Emigration does sound better by the day.

lalman

I agree with kwmlondon and totally disagree with kidmugsy.

1. I am a 28 year old man, 2 degrees and chartered accountant. Although I have a decent income, a 2 bed flat in a poor area of London is £250k. Is it sensible to borrow 5x or 6x my income to just get on the property ladder?
2. I don't drink or smoke - not wasting my money on that...
3. I do travel to see my family up north - but I feel this is a necessity rather than a 'luxury'...
4. When interest rates were 13-15% you do realise that inflation was running at 10% don't you?!?!?! the real value of your debt was getting eroded all the time... were as now we have a low inflationary/ deflationary environment, low interest rates and ridiculously high property prices... wages aren't going up and aren't looking to go up either to help shrink the gap over time....

So I am highly experienced, high educated individual but can't get a flat in a dodgy area... and we haven't got it tough?!?!

You get a state pension... we need to save up our own pensions because we won't have state pensions...

You get free/ grants for University... we had to pay 3k a year... kids these days pay 9k....

Unfortunately our parent's generation i.e. shafted the younger generation (US).

In conclusion - we do have it harder.

guitarman001

Hear hear!

My main worry is that if prices fall through the floor, the currency will be devalued and my savings will be worth a lot less. I don't think I can win. If they were devalued overnight I would probably have a mental breakdown given what I've gone without to have that cash! FYI I work in hi-tech engineering so I'm also another highly educated "youngster" (I also do not drink or smoke) - though I've got it a bit easier in that I'm not working in London. Couldn't imagine that!

lalman

I forgot to mention our parents generation gained from property inflation too. Anyone over the age of 38 who bought in there mid 20's gained from that but screwed the next generation....