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?!

As I see it, buying things on finance does not mean you can have more things (for long) because next year, you will still be paying for the things you bought this year; so will have even less disposable income.

I follow the Micawber principle.

Sorry, have seen you have now put the figures down (though saving £2k a month would surely mean you could buy all the things you mention in just over a year, not a decade!). Perhaps do it bit by bit e.g. upgrade kitchen then, once that is paid off, do the next thing. Do fun things too but prioritise the things you would really appreciate and cut corners elsewhere.

So....if you save £2k a month you’ll have saved enough for a new kitchen in 3 or 4 months

People that drive new cars often have them on HP.

You don’t earn that much between you so you have to be fairly prudent but it’s hardly breadline

Working in collections for the last 10 years. I can assure you that the majority of people are financed up to the eyeballs.
Maxed out on credit cards, car on finance, had people chooooosing to pay their car finance over their mortgage payments.
Seen people spending 600pm for a Range Rover and struggling to pay the minimum on their credit cards.

I admire people who save and buy in cash. But to keep up with the passing fashions, Instagram lifestyle and just keep pace with your friends unfortunately a lot of people are living beyond their means.

A car costs about £150-200 a month on finance. Hardly loads.

If this was a stealth boast it hasn’t worked

We moved into our house (3rd move) in 2001 and gained a pink & grey 1980s kitchen. It wasn't broken, just old fashioned. We finally replaced it in 2014 ( after paying for 2 DD's weddings). The new kitchen looks great from a distance but is shit. When we downsize I'll take quality over fashion.

We actually did it the other way - put a smaller deposit down and had a good bit left in savings to do the work we need on the house!

Mortgage repayments are a bit higher monthly - but the house is done now!

Also do you need 2 cars? We don’t have a car at all which is a massive saving - might get one this year but would share 1!

If you are saving 2k a month that’s a lot of money - surely you can afford holidays and nice things out of that?

You definitely can get the kitchen done on a loan/0% credit card and pay it back monthly

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.

Most people don't.

We have never ever had cars on finance. You end up paying far much more than if you bought outright.

Just a few vague figures...if you buy a decent car for £10K, run it for 10 years, then buy another newer car, that's how to do it.

Don't buy new. Depreciation is dire. Get on 2-3 years old low mileage,

We also pay off the entire credit card bill each month and basically use a CC instead of carrying cash.

I think the bottom line is that although you have a very tiny mortgage - less than monthly rent in very low cost housing areas- this is offset by relatively low incomes. The mean income in the UK is around £29K.
Yours isn't near that.

But Kona84, if you work in collections, the majority of people that you interact with will be in debt - that doesn't mean that everyone in the general population is though. I think this is a bit of a myth that people tell themselves to feel better.

Can anyone link to any data about this?

[quote Nocares]@lockdownalli

I've already said that it was an exaggeration! Not to be taken literally.

And I don't see why 1K is suprising? We have no kids and no debt? Surely it would be strange for our outgoings to be higher?[/quote]
Most people’s mortgages are more than £1k. Our monthly bills are £400 (gas, water, electric, council tax, cheap internet, sim-only phones, house insurance - none of which we can really cut). Plus food bills, train fares, clothes - either your mortgage is absolutely tiny, or something doesn’t add up.

Life’s short. If you can afford it and understand how to manage it, debt isn’t the worst thing in the world

The problem with that is - at the point of taking out any debt, you can always afford it - or you would be approved in the first place.

Then life slams you in the face and a pregnancy turns into triplets or somebody dies or you become disabled or are made redundant or one of a thousand other things happens that you have no control over.

Then, you suddenly can't afford it. And you're fucked. No one is immune and its often the most arrogant that fall the hardest.

I would always caution people against taking ANY debt, other than essential such as a mortgage.

You can build your credit score by taking out lending products without actually being 'in debt'.

What's frightening is the misinformation that you must owe xyz to have a good credit score. Because it's totally untrue.

We had our Ikea kitchen on 2 years interest free credit.
They were really efficient too and sent a statement after the first year.

I think a lot of people benefit from money/equivalent from their parents/other family members - house deposits, inheritances, early inheritances, free childcare, generous gifts etc. Many of my friends have benefited in these ways. This allows them to spend their earned money on the things you see - cars, renovations, holidays etc.

Other possibilities - other people carry more debt; they earn more than you; they spend less than you on nonessential/day-to-day things etc. With good incomes and no kids, you should be able to save quickly OP! Track your spending, find out where it's going, set a budget, cut out nonessentials, set a high monthly savings target and save save save! Good luck!

If you don't spend money on drink at home, rarely eat out, and don't smoke, you are not spending a fair bit of money. Same if you are not a fashionista buying more clothes than you really need. Which if you have the resultant money you can put it to other priorities.

Some people get help from inheritance or family money. We had a big chunk of savings, but living in London our rent made it impossible to save enough to buy a big enough place for our family in the location we were renting. We were forever just under the amount we needed for a down payment, bc as we saved house prices went up. Anyway, my kind parents decided to gift us a nice chunk or change that enabled us to buy our dream home. And shortly after we managed to get more money through dh work (bonus) so have a nice amount in savings for when we want to buy something or renovations. But we do know plenty more people who seem to have endless money. Children in private schools, glamorous holidays etc. Some people who have managed to make an extraordinary amount of money.

@Babdoc

I started out with DH in a slum tenement with no bathroom on £15 a month rent, back in 1977. We saved hard, and bought our forever home in 1983 when the mortgage interest rate was 15%. We were down to our last £30 in the bank when we moved in! We had no stair carpet or tv for 3 years. When we had the DC, DH was allowed one pint of beer a week, as we couldn’t afford any more. We budgeted to the last penny. I think young couples now are not prepared to accept the standard of living that we suffered back then, so they take on a lot more debt, and buy on credit. I was widowed at 35, the mortgage was paid off by the life assurance, and once I was working full time again the DC and I had a comfortable lifestyle. I invested heavily and also inherited from both sets of parents, so I finally got my new kitchen at the age of 60. And was able to give both DC a 50% mortgage deposit. You just have to weigh up priorities, OP, and decide what level of debt you want or feel comfortable with. Everybody’s circumstances are different - those people you envy with lovely new cars/kitchens/holidays might lie awake at night sweating with fear about their repayments. (Or be sad widows who would trade all their possessions and savings to have their DH back.)

Poor DH, one beer a week and died so young

Sighh @LovelyUserNames I said 120 a month, 80 of that is just for cars so 900 a year just for cars. Then 40 a month for our other insurances which is around 480 a year. So all insurances 120 a month. Thats not an odd number at all so unsure why you think so?

@Soontobeseller we've not saved 2k a month our entire adult lives of course. We upped it to 2K a month a while back to boost our savings pot up hugely in order to put down a bigger deposit on whatever we found next as wanted our long term home.
Now we've got the house we'll likely still save 2k in order to get the renovation done.

But you do make a good point and that's what I am considering. I think if I take out some 0% finance and maybe pay 1k off that a month instead and put the other 1k into the savings pot for 'nice things'.

My DP will be shocked at my change of heart thanks to mumsnet

[quote Nocares]@lockdownalli

I've already said that it was an exaggeration! Not to be taken literally.

And I don't see why 1K is suprising? We have no kids and no debt? Surely it would be strange for our outgoings to be higher?[/quote]
Our mortgage is £970 and only two of us (plus a hound) so very easy to go above that.
At a very rough count our regular monthly outgoings are:
£150 - electric (we have two electric cars)
£50 - oil
£100 combined life insurance
We pay for car tax and insurance outright, same for house insurance, but those would add up monthly too
£470 - food & drink including dog food
£90 phone bills
£50 internet and phone
£15 pet plan
£40 pet insurance
£50 water
So roughly £2k in outgoings (not including our cars on PCP!)
Income is circa 4.6k
Obviously some of that stuff is choice, but in the south west I don't think our expenses are too unusual.

OP, the bit that you don't seem to be acknowledging is that you could do everything on your list within 14 months! Whereas other people will be paying it off for years.

So why do you worry about others when you're in such a good position?

Life’s short. If you can afford it and understand how to manage it, debt isn’t the worst thing in the world

It is if your home is repossessed and you are no longer able to get any credit.

Other than a mortgage, we have saved for everything. Nothing has been on credit.

The only time we have used 'HP' was for zero interest deals AND when we had the savings in the bank to cover the cost anyway (but they were a safety net for anything else.)

There's a lot to be said for saving rather than borrowing.

But I don't think the OP's figures add up. It feels an underestimate.

The poster who explained the finance deals the interest free kitchens etc that's spot on. If you wanted you could get a credit card, 0% and have the holidays, pay it back and it's given you a holiday and you just pay your savings into it.

Also there is a book called money by rob moore, that's is a fascinating read, it's explains how money is a concept, how to think differently about it and how to earn more.

So you buy a car on finance that you drive for the next 2 years, your circumstances charge you still have equity in the car and call sell it, so it's a temporary situation, all money is a temporary situation, it flows through your hands and you just need to use it to gain what you'd like to gain.

I said 120 a month, 80 of that is just for cars so 900 a year just for cars. Then 40 a month for our other insurances which is around 480 a year. So all insurances 120 a month. Thats not an odd number at all so unsure why you think so?

You didn't spell it out clearly or I misunderstood.

I still think you are going to have a shock when you start paying new bills and outgoings in a larger house.

@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.

Ours is under £500 for 2 cars and £300 for buildings and contents, you can get house insurance for less than £150 for basic cover, obviously it depends on the house and cars values

So you buy a car on finance that you drive for the next 2 years, your circumstances charge you still have equity in the car and call sell it,

Except its value will be far lower and you will not recoup what you have spent. You don't have equity in car that is not paid for.