How do people afford nice things?

[Nocares]

Looking for advice or an explanation of some sort!

Me and my DP both earn a good wage and have no kids.

We both drive very old cars and just bought our forever house (doer upper) very cheaply due to the works.

I have 0 debt . We never get anything on credit/finance we just save up for everything.

Although our monthly outgoings are low and we have spare money to save and spend, I don't understand our quality of life compared to others.

So we need a new bathroom first in our renovations which will cost about 4K all inc. We would both like newish second hand cars too at some point. To get something reliable and decent your talking about 7k each.
A new kitchen would be 10K with discount including fitting.
That there alone is 28K

As we pay for everything in cash as we save, I just don't see how its possible to get those things in under a decade of us saving!

A lot of our friends drive nice cars (on finance), have new kitchens or other refurbs done on their house with average incomes.

Even if you were to put everything on credit, after your repayments on top of bills and mortgage you'd have no disposable income left for years until its paid off?

I would get that people did do that, but most people still go on holidays, take maternity leaves etc. So they must still also have disposable income after paying off new car finance, credit card, and doing home renovations?

I feel like maybe we're missing a trick?
I can't imagine every single person I know is in huge debt! Especially as a lot of people have recently bought new homes due to stamp duty. So must have good credit.

I just don't see how its possible for us to do what we want to do within a reasonable time frame without it taking us a decade whilst we also live frugally.

The everyday people we know also have average jobs and income so its not like were surrounded by wealthy people either!

Am I missing something?!

Well for us its careful use of finance. So we will buy some furniture on finance, normally 0% and then aim to pay it off within three months instead of a year. We only do one thing at a time and this normally works out well.

It might also be that people have higher incomes/ability to save more. When you mentioned 28K would take near a decade to save, we could save this in 3/4 years. We would have to be frugal but not super strict.

I think you do extremely well to save 2k from your total so don't really understand the problem. 2k a month is 24k a yr so that's a lot towards your home.

Wow I hadn't read your update. So you could save for a year and get everything you want? That doesn't sound frugal to me...

My question was how do people manage to have both cars on finance and credit cards yet still also having disposable income on top for house renovation and holidays. For us it seems like one thing or the other.

Earn more &/or don't save 2k a month.

The mean income in the UK is around £29K.
Yours isn't near that.

Is that per person or household?

DS has a mortgage of £75K and repayments are around £700 a month over 30 years.

That cannot be right?!

BUT even so, a mortgage of £300pm means they have borrowed a tiny amount- £30K perhaps

That makes no sense either.

You're like us, we have no debt other our mortgage (and we bought at the lower end of what we could afford) and we never put anything on credit. If we want something, we save up for it.

We have a high income, but drive a second hand car that cost us £5k (I love our car though, and it's a reliable make), only take one holiday a year (and never an expensive one), and always keep at least 3 months salary in the savings account in case of emergency. Any "extra" cash is put into overpaying the mortgage.

Some might think us tight, and we certainly live much more frugal lifestyles then most people we know on similar incomes, but DH has an absolute horror of getting into any kind of debt, and I had a financially chaotic childhood which left me terrified of the idea of financial instability, so it suits us.

Sorry, I realise this isn't at all helpful, I just wanted you to know you're not alone - though it can sometimes feel like it when everyone around you seems to be constantly splashing the cash!

@LovelyUserNames

So your car, house and house contents and life insurance comes to £900 a year? Are you sure?

I am just about to renew our house and contents insurance and the best quote I can get it £600 pa. Car insurance combined is around £600 and we don't have life insurance.

Is your house full of diamonds or something? Our home and contents insurance was £119 this year

We pay about £200 pa for house insurance and that's bumped up by DPs vair expensive mountain bike collection, which is always expensive.

We insure 2 cars for about £500 in total.

We don't have separate life insurance - we could both live on our own income (me especially as I'm the higher earner) should the worst happen and DP would receive a big payout from my pension, so I don't see the need.

Our house insurance is about £1500 per annum!

@RosesAndHellebores have you done a price comparison on that? I saved a fortune recently by doing this.

Our mortgage is around £500 p/m. £110k outstanding, about 18 years left.

You need to make credit cards work for you. So if you plan to pay it back each month, spend on it (like you would a debit card) and get one that goes you cash back/ vouchers whatever. So I have an M&S one and use the vouchers for DC's uniform for example.

It's actually smart to use finance as long as you are the one in control. You get consumer credit protection. Last year I bought flights from an airline which went bust. My credit card paid me the money back. If I had paid "cash" I would have lost a lot of money.

Likewise if you buy a new bathroom on your credit card (intending to pay back over 12/18 months at the 0% rate), and your bathroom supplier goes bust before delivering the final item, you have protection.

Sometimes getting into "debt" is a clever way to do these things.

I think 7k is on the expensive side for a used car. I paid 2.5k and 4k for my last two and apart from wear and tear issues, both are still going strong.

@RosesAndHellebores did you auto renew with the same provider or did you look around? Unless you have previously claimed for your house burning down, live in a flood zone AND have lots of valuables I can’t see why it would be more than 10x as much as mine!

You mention several pretty expensive projects.

Lots of people are like you and don’t do those things on credit and are ultimately in a very strong position. They do the things you mention gradually rather than all at once. So one year, one person has the new car costing £5-7k. Two years later the kitchen is done etc etc.

If you insist on having everything right now, you will have to do it in credit and spend more over the long term. If you do it gradually you can avoid that.

Don’t be tempted to get into the cycle of cars on finance with affordable monthly payments for new cars which are far better than you need and which mean you always always pay monthly forever. You will have nice things sooner in the short term, but long term, you will have less money and less choices.

Op, to put it into context, I’m perhaps 15-20 years older than you. By sticking with a used car for an extra 3-4 years each time, by being prepared to stick with a decent but not latest kitchen (wasn’t a do-er upper) for many years and by not constantly replacing sofas and other home furnishings, we were able to pay down our mortgage quicker and eventually pay it off over 10 years early.

Now, the result of our choices is we have loads more disposable income than most people who spending big in their 20s. Our reasonable but not special salaries, along with the fact we saved when younger and didn’t have loads of the nice things you mention, have given us the choice to have independent education for our children and to have a new bathroom paid for outright when we felt we needed it, to buy a 2 year old car when the current one suddenly gets uneconomical, to go on holiday when we want to and crucially to be able to buy all these things outright and not in never never schemes which deplete our incomes each month, so there is never a surplus and we live in fear of a large expense like a boiler breaking down etc.

You can either have all that stuff right now on credit and be in debt and lack the longer term financial security and a back-up fund , or have it slowly over time and build financial security which ultimately will allow you to have more stuff and more security.

You’re starting from a strong position. Don’t compare and value stuff to highly. Know your financial position is good. By not having everything possibly available right now you stay in a strong position and gain more choices over time. For instance, in a few years if you have kids, not spending £28k on credit now which will result in substantial payment requirements, might allow you to work part time and be at hoe with your kids. Whether you choose that or not, it’s about choices.

Insured through a specialist Lloyd's broker because we have some reasonable art and antiques - it ramps up pretty quickly.

It's worth getting a car in finance, especially if you get a 0% deal.

Buy a car £10,000 on finance, £110 per month for 4 years, over 4 years you've paid 5,280 and car is worth approx £4,800 which you can pay as a lump sum or give the car back

Buy a for £10,000 cash, after 4 years it's worth approx £4800, you still lost £5280, you just had the pleasure of losing the money up front in cash.

OP I like others am struggling to make sense of the massive inconsistency between your high levels of saving and your saying it will take decades to get the 28K worth of things you are most hankering after. As far as I can tell, if you don't want credit then you can save for March and April and get the bathroom done, paid in full in cash, in May. Then you can save for May - September and in October get the kitchen done all paid for in cash. Yes there are other things like plastering, flooring etc. but perhaps you can get them done over the following 6 months with the 12K you would then save (or even quicker given OH bonus) and in a year your house is all done despite your having one of the tiniest mortgages I've seen in a long time and certainly a tiny mortgage compared to your large income. By end of 2022 you can then also have saved enough to buy a newish car each.

Given the above you are very well off. You chose to put more deposit down and have a smaller mortgage. You could have chosen to have a larger mortgage and more cash left to do up the place. Despite this you can get the house all done up in around a year whilst still having £350 a month each for fun money. This is a very cushty position to be in.

I can hear, however that you are so worried about money that this still feels like you have less than others. I think others will look at your position and think you have a lot more than them TBH and they might well assume that, like the average person, all the work you are doing so quickly on the house will have been funded by borrowing and if they knew you were loaded enough to just pay for it, they'd be surprised.

I guess the point is that you have a complicated relationship with money and seem to worry about 3000X more than your situation necessitates. I don't mean that critically but if actually what might be most helpful is to try and process whatever experiences have left you with such a complicated relationship to money as going forwards my guess would be that if you don't you will always find something to worry about and you will enjoy life less as a result.

DS has a mortgage of £75K and repayments are around £700 a month over 30 years

Not with any high street lender he doesn't. That's repaying over £250k - it's far more expensive than every mortgage on the market now.

I'd assuming he's taken some kind of sub prime or bad credit mortgage so he must want his head examining. Waiting 6 years for his credit file to clear would literally have saved him over a hundred k.

Happiness, the problem with what you suggest is that most people pay the monthly payment S but can’t afford the lump sum to buy off the rest of the car. So then they return the car and start a new monthly payment scheme.

Yes, loads of depreciation in the first years.

Why not buy a 3 year old car. Ideally this would be outright but if not possible, with a bank loan (will mean higher monthly payments than a balloon payment system) which once it’s paid off, means you can keeep and run the car with no monthly payments. You could probably keep this car for 7-10 years. In that time, you can save for a further car.

This is cheaper long term. It also means that there is no need to commit £200-300 per month for car payments into the very long term or indefinitely (most people buying on finance are always paying monthly) and that money then gives you kore choices in other areas if life...such as paying down mortgage, or other goods you might need, or building a bank of savings.

People don’t need a brand new car. They need a reliable car. Lots of cars are reliable well beyond 3 years. Most people can drive a car for 8-10 years and incur some basic maintenance costs and overall pay far less than facing monthly payments every single month. Yes, you need to be able to pay for those occasional maintenance bills, but if you don’t have any cash stashed away for those kind of costs, it means you’re living hand to mouth and that isn’t financial security at all.

It's worth getting a car in finance, especially if you get a 0% deal

As long as you don't crash or write it off or have someone crash into you.

There are thousands of people left with no car but thousands of debt because the insurance money didn't cover the finance owing. And gap insurance to cover yourself for this is often expensive enough that the example you gave wouldn't work and you'd still be paying over the odds.

I've had cars on finance before and realised its just not worth it (for me). Id rather not have a flash car but have the peace of mind that I own the car I drive.

We never have cars on finance either because you of having to be very careful they don't get damaged, DH's car is a workhorse which we normally buy outright at about 2-3 years old and keep until its about 10 years old, he wouldn't want to be worrying about scratches and mileage limits because some finance company owned it, my car is also bought at about 2 years old and kept until about 10 years old, I do a very low mileage and prefer to just buy a second hand car.

DH and I earn decent money, we have no debt and savings, two cars, nice house, holidays etc. Currently doing up the bathroom. I get a decent bonus every year so we use that for the big luxuries. When I was in my twenties I didn’t earn much, had debt and no savings. I think most people become better off as they get older.