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    • Money_Or_Cars
    • By Money_Or_Cars 4th Jan 18, 12:07 PM
    • 8Posts
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    Money_Or_Cars
    How much should I be saving?
    • #1
    • 4th Jan 18, 12:07 PM
    How much should I be saving? 4th Jan 18 at 12:07 PM
    I'm new to this and learning how to use the site, so please take it easy.....

    I am trying to get the right balance between saving and enjoying myself. I love cars and have always had an outgoing for cars ever since I started working and earning.

    I currently have a really nice car, but I have been tempted to go for a brand new one on PCP. I totally understand what PCP entails in terms of how much it will cost and not actually owning the car at the end.

    I am able to save 500 per month, even if I go for the PCP deal - so I am not worried about what I can afford. What worries me is how much could this affect me when I want to apply for a mortgage? I am 23 and currently living at home and trying to save enough for a deposit for a house/mortgage.

    Any advice/info would be much appreciated, thanks.
Page 1
    • jimjames
    • By jimjames 4th Jan 18, 1:44 PM
    • 12,653 Posts
    • 11,322 Thanks
    jimjames
    • #2
    • 4th Jan 18, 1:44 PM
    • #2
    • 4th Jan 18, 1:44 PM
    I'd recommend reading the Motoring forum here, in particular the posts about people who are having problems with PCP when their circumstances change. Bear in mind that you'll be paying pretty much all depreciation from your monthly payments.

    If you like cars how about looking at ones that don't depreciate instead or stick with what you've got?

    If you're saving for a mortgage then everything you spend on other things will slow down that end goal
    Remember the saying: if it looks too good to be true it almost certainly is.
    • Bravepants
    • By Bravepants 4th Jan 18, 2:02 PM
    • 402 Posts
    • 436 Thanks
    Bravepants
    • #3
    • 4th Jan 18, 2:02 PM
    • #3
    • 4th Jan 18, 2:02 PM
    What about looking at a modern classic car? As jimjames said, something that will gain value or stay the same if looked after and not lose thousands of pounds as soon as it's driven off the showroom forecourt.

    My partner and I own two cars, a 15 year old Mazda 6, likely needing to be changed at the end of this year; and I have an 18 year old Fiat Coupe 20VT Plus. The latter is fun to drive, looks the business and is appreciating in value.

    I tend to avoid PCP as it reduces cashflow and I don't want to be in debt. I would prioritise your goals. That PCP monthly payment could get you a better house. By better I don't mean bigger, I mean one that doesn't need as much renovation.
    • BBH123
    • By BBH123 4th Jan 18, 2:03 PM
    • 687 Posts
    • 1,296 Thanks
    BBH123
    • #4
    • 4th Jan 18, 2:03 PM
    • #4
    • 4th Jan 18, 2:03 PM
    Cars are nice but a huge waste of money IMO.


    I had a new Porsche when I worked in a job with a salary to match, I had no finance just bought it using my debit card.


    Then decided I hated the job paying the salary and took a sabbatical after which I did a job earning a lot less but I was happier.


    I sold the car as I needed money quick to bid on a piece of land and lost 13k on it in a year.


    Now I lead a simpler life and think what a waste of money.


    You are young and you will think differently in a few years, after all you cannot live in a car no matter how nice.


    Bricks and mortar come first and then when / if you can afford it a nice car.
    • PeacefulWaters
    • By PeacefulWaters 4th Jan 18, 2:19 PM
    • 8,318 Posts
    • 10,656 Thanks
    PeacefulWaters
    • #5
    • 4th Jan 18, 2:19 PM
    • #5
    • 4th Jan 18, 2:19 PM
    Are you maximising your employer's pension contributions?
    • Money_Or_Cars
    • By Money_Or_Cars 4th Jan 18, 2:24 PM
    • 8 Posts
    • 0 Thanks
    Money_Or_Cars
    • #6
    • 4th Jan 18, 2:24 PM
    • #6
    • 4th Jan 18, 2:24 PM
    I work for the local authority. I'm told it's one of the best pension schemes around - Whatever I pay in, they pay double. So essentially I am paying a third of what goes into my pension....
    • enjoyyourshoes
    • By enjoyyourshoes 4th Jan 18, 2:33 PM
    • 1,061 Posts
    • 1,302 Thanks
    enjoyyourshoes
    • #7
    • 4th Jan 18, 2:33 PM
    • #7
    • 4th Jan 18, 2:33 PM
    House _ or Car ?
    Debt is a symptom, solve the problem.
    • Owen1991
    • By Owen1991 4th Jan 18, 2:37 PM
    • 51 Posts
    • 94 Thanks
    Owen1991
    • #8
    • 4th Jan 18, 2:37 PM
    • #8
    • 4th Jan 18, 2:37 PM
    Do you really need that new shinny car?

    I'd just stick to the old one but then again I have an old Corsa that I'm running into the ground because cars don't really do anything for me.
    12k in 2018 - 6450/12000 ~ #101 | Sealed Pot Challenge 2018 ~ #44
    13750 in Lifetime ISA
    • Puddylove
    • By Puddylove 4th Jan 18, 2:41 PM
    • 488 Posts
    • 792 Thanks
    Puddylove
    • #9
    • 4th Jan 18, 2:41 PM
    • #9
    • 4th Jan 18, 2:41 PM
    I understand the attraction of a new car, but if you buy it on PCP, the novelty will wear off long before the payments are finished.

    Could you perhaps hire the car you are thinking of buying for a week or two, to make sure that you really do want it?
    • Lokolo
    • By Lokolo 4th Jan 18, 2:50 PM
    • 19,991 Posts
    • 15,120 Thanks
    Lokolo
    Not really enough information to financially decide. You currently can save 500 a month after PCP. But what is your take home? Do you pay any board for living at home? How much would the PCP be?

    Example:

    Take home 2k. Board 0. PCP 1000. Saving 500. I would tell you you're being an idiot.

    Take home 2k. Board 750. PCP 200. Saving 500. I would say thats OK but it would still be silly not to be saving 700 than 50.

    A new car is always great at first, but the novelty wears off. And you have already said you have a nice car!
    • Money_Or_Cars
    • By Money_Or_Cars 4th Jan 18, 3:20 PM
    • 8 Posts
    • 0 Thanks
    Money_Or_Cars
    Not really enough information to financially decide. You currently can save 500 a month after PCP. But what is your take home? Do you pay any board for living at home? How much would the PCP be?

    Example:

    Take home 2k. Board 0. PCP 1000. Saving 500. I would tell you you're being an idiot.

    Take home 2k. Board 750. PCP 200. Saving 500. I would say thats OK but it would still be silly not to be saving 700 than 50.

    A new car is always great at first, but the novelty wears off. And you have already said you have a nice car!
    Originally posted by Lokolo

    My take home after tax and pension is 1800. I pay nothing for living at home, apart from contributing to buying food.

    My current HP finance is 350. The PCP deal is 370 per month. The new car is a performance hot hatch which I think I will get a lot of enjoyment from.

    I'm on here trying to figure out how to get the right balance of spending on things that make me happy, and saving enough for the future.
    • ValiantSon
    • By ValiantSon 4th Jan 18, 7:13 PM
    • 2,047 Posts
    • 1,895 Thanks
    ValiantSon
    My take home after tax and pension is 1800. I pay nothing for living at home, apart from contributing to buying food.

    My current HP finance is 350. The PCP deal is 370 per month. The new car is a performance hot hatch which I think I will get a lot of enjoyment from.

    I'm on here trying to figure out how to get the right balance of spending on things that make me happy, and saving enough for the future.
    Originally posted by Money_Or_Cars
    Like others I'll give it a go.... Don't waste your money on a depreciating asset that you will decide you want to change again in another year or two. Depreciation on cars is massive. You'll also pay a lot in insurance for your "hot hatch" because of your age and this will further erode your ability to save for a house (and also eat in to your available disposable income for other things).

    If you are serious about buying a house/flat of your own then you need to commit to saving as much as possible. Your take home pay is not huge and you are currently getting an exceptionally good deal from your parents. Make the most of what they are offering you by saving properly and not frittering away your money on an outrageously expensive toy which will only ever cost you more money.
    • IanSt
    • By IanSt 5th Jan 18, 10:26 AM
    • 260 Posts
    • 194 Thanks
    IanSt
    ...

    I currently have a really nice car, but I have been tempted to go for a brand new one on PCP.

    ...

    Any advice/info would be much appreciated, thanks.
    Originally posted by Money_Or_Cars
    Hi there and welcome to the forum.

    I think most people here would put saving ahead of purchasing a new car, especially when you say you already have a 'really nice car'.

    However I can see that for some people switching to the new car could be too great a temptation to resist. If that is the case then does it really have to be brand new? Maybe you could consider purchasing an older version of the car instead so you don't suffer from the massive depreciation loss that a new car brings.
    • Money_Or_Cars
    • By Money_Or_Cars 5th Jan 18, 10:33 AM
    • 8 Posts
    • 0 Thanks
    Money_Or_Cars
    Hi there and welcome to the forum.

    I think most people here would put saving ahead of purchasing a new car, especially when you say you already have a 'really nice car'.

    However I can see that for some people switching to the new car could be too great a temptation to resist. If that is the case then does it really have to be brand new? Maybe you could consider purchasing an older version of the car instead so you don't suffer from the massive depreciation loss that a new car brings.
    Originally posted by IanSt

    I have been considering that. But, due to the higher interest rate on used car loans it would mean that I would be paying 450 per month, which is substantially more - but I will be the owner of the car in the end.
    • No_6
    • By No_6 5th Jan 18, 10:31 PM
    • 640 Posts
    • 129 Thanks
    No_6
    You only pay for food at your home ?
    so your parents are subsiding you, for a new car,
    not a house deposite...so you can move out.
    • ValiantSon
    • By ValiantSon 5th Jan 18, 10:55 PM
    • 2,047 Posts
    • 1,895 Thanks
    ValiantSon
    I have been considering that. But, due to the higher interest rate on used car loans it would mean that I would be paying 450 per month, which is substantially more - but I will be the owner of the car in the end.
    Originally posted by Money_Or_Cars
    Finance to pay for cars is generally a bad idea. Sometimes it is unavoidable, especially early in life when buying your first car. However, by constantly changing a car what someone is doing is turning a theoretical loss in the value of the asset, due to depreciation, into a real terms loss. They then compound this by buying a "new" car on finance and start the whole sorry tale again. I would strongly advise you to avoid any financing, including PCP. Taking on debt to fund your lifestyle is a sure-fire way to never really having enough money. You need to save for the things you want: it might take you a little longer to get them, but it will cost you a hell of a lot less.

    You have a "nice car" already. It really doesn't make sense to buy another one. You are just throwing your money away. Save the money you would have wasted spent on the PCP and, when your current "nice car" starts to become uneconomical to maintain, you will have enough to buy the next car outright (and when you do look at secondhand - the difference on a 1 year old car and new is huge in terms of cost, but not in terms of what you are actually getting).

    The truth is that you don't have the kind of income needed to be throwing your money around on flash cars. Taking on debt to do so is simply stupid. You clearly aren't a stupid person, so don't make a stupid mistake.
    • TheShape
    • By TheShape 5th Jan 18, 11:06 PM
    • 1,293 Posts
    • 1,103 Thanks
    TheShape
    Save more so you can afford a property with off-road parking.
    • theoretica
    • By theoretica 5th Jan 18, 11:19 PM
    • 5,219 Posts
    • 6,483 Thanks
    theoretica
    Get out of the finance trap with your cars. Save money, and when you have enough saved to buy a car then consider if you want to do that, or keep it for a house deposit.

    If you lived alone you would be paying rent or a mortgage, utilities, council tax etc. I suggest you save at least this much for a deposit. Round here it would be at the least half your take home. You really don't want to commit to any long term finances that would leave you unable to afford this. You should also be looking to save something once you move out, so I would encourage you to try saving more on to of this too - for your next car fund, or whatever.

    All that said, I wonder what it would cost for you to hire a snazzy car for a day's treat now and then? But not on credit!
    But a banker, engaged at enormous expense,
    Had the whole of their cash in his care.
    Lewis Carroll
    • enthusiasticsaver
    • By enthusiasticsaver 6th Jan 18, 8:58 AM
    • 6,616 Posts
    • 13,917 Thanks
    enthusiasticsaver
    At the moment your living costs are being subsidised by your parents so you have lots of spare income. If you sign up for a PCP deal for a depreciating asset you are committing to that for usually at least 3-4 years. I think you also sometimes have to pay more if you do more mileage than expected. Would you be able to save for a house and then pay a mortgage and bills while still having this PCP deal? If not, you will be living with parents for a long time.
    Debt free and mortgage free and early retiree. Living the dream

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages and Endowments, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • enthusiasticsaver
    • By enthusiasticsaver 6th Jan 18, 9:03 AM
    • 6,616 Posts
    • 13,917 Thanks
    enthusiasticsaver
    Have you looked into insurance costs for the car?

    Personally I would not touch PCP with a barge pole but we all make different choices with our money.

    Any debt you have will affect the amount you can borrow on a mortgage.
    Debt free and mortgage free and early retiree. Living the dream

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages and Endowments, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
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