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Frank Hovis

Spending Money To Save Money

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This is, of course, ironic.

Somebody was enthusing the other day about how their solar powered automatic watch meant that they never needed to buy another battery again. "Very good" I said - I'm not one to put people down - but it was obvious that this was just an excuse for buying another watch they didn't need. It cost more than a lifetime of changing a watch battery every three years.

As regular readers will know I recently bought a new car, it happened to be a diesel but I bought that for the 140 BHP (hey, that's a lot for me) rather than economy. As it happens RFL is slightly lower. But I am amazed at the number of people who think I have made a canny financial decision in getting a car with higher MPG and lower RFL. When of course I have actually cost myself a lot of money by not keeping my previous car for another ten years. But it's the way a lot of people think; they have to fill up with fuel less often so it's a money saver innit. Er, no.

Now I have (with great effort) finally begun to spend money on stuff I don't actually require but I accept that's there is pleasue to be had from this. Spending for enjoyment. Which I used to think was self-indulgent (because I'm worth it) but now think is fine (hey, if I'm not worth it who is?). Okay, that's my seismic shift. But I am still baffled by this idea of going out to buy something on the grounds that it will save you money when it clearly won't.

Trying to think of other examples, those small turbine generators on houses are one. IIRC they drain power constantly so never actually pay back the purchase price.

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Those are small things....

My ex work colleague got rid of her 2.8 year old Toyota, to buy another Toyota exactly the same model except it was automatic...

Her reasoning was that the road tax was substantially less.... She couldn't quite see how silly it was to spend £10K to save £200 on road tax ~ £600 over 3 years.

Edited by ken_ichikawa

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I have always wanted a wood burning stove, partly for continuity of heating in the event of TEOTWAWKI but I also kid myself that I'll save fortunes come winter on gas.

If you were looking at a fresh install it would take many many years to recoupe the cost of, stove, hearth, flue lining, etc. etc...

Thankfully my house has one already and I would have paid the same were it not to have one so I get to enjoy a real fire, some cost savings and none of the buyers regret I would have had if I had spent a couple of grand putting one in.

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Those are small things....

My ex work colleague got rid of her 2.8 year old Toyota, to buy another Toyota exactly the same model except it was automatic...

Her reasoning was that the road tax was substantially less.... She couldn't quite see how silly it was to spend £10K to save £200 on road tax ~ £600 over 3 years.

Just bought a 210 litre water butt from Tesco for 25 quid (1/3 off!) Should save on tap water for the garden and pay for itself in no time. Sadly I'm struggling to find these kind off ideas. Help!

Oh yes, there's the log burning stove thing......

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As a genuine saving you may wish to investigate RHI:

http://williammartinenergy.com/funding-and-ecas/renewable-heat-initiative

Ok, it only works because of governemnt subsidy but rip out your boiler and replace it with, say, air source heat pump and there you go.

Though you do need to own the house to qualify CD, which you were looking at IIRC.

Ken, your workmate wins for sheer asininity. And this was at an accountancy firm :o

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Those are small things....

My ex work colleague got rid of her 2.8 year old Toyota, to buy another Toyota exactly the same model except it was automatic...

Her reasoning was that the road tax was substantially less.... She couldn't quite see how silly it was to spend £10K to save £200 on road tax ~ £600 over 3 years.

This cars thing is very common. The single biggest cost component of ownership is depreciation.

I own a Mercedes ML 500 which cost me 5k. Go anywhere do anything brilliant build quality, never be worth less than 2 or 3 grand because fo its utility.

I drive two miles per day to work ( or cycle), and if I go further I do so in style and comfort. I do only 8-10k miles per year, so a little more on fuel is ok.

People are brainwashed about cars just the same as they are about houses. There are plenty of superb cars for 2-6k around, and that is the true market value of the utility of a car.

As HPC lifers will know, I rent and I expect 50% off crash to begin now. I've just moved to a smaller place-with a woodburning stove and on a farm-surrounded by trees ie plenty of free fuel. Just in case....

Nick

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The other illogicality I come across a lot is people changing cars because "its not worth spending xxx to repair/service because thats 1/4 1/2 or whatever what the cars worth" and generally saying "wouldn't you be better with a newer one that didn't need so much maintenance".

Its all about cost per mile and if I have to spend £1000 a year maintaining an old car (which is only worth 2k max say), with my mileage which is about 35k/year, that about 3p a mile maintenance cost plus maybe another 2p/mile for depreciation servicing tax etc. so a TCO of around 5p/mile. Compare that with the depreciation costs alone of owning a £30k bmw ....

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The other illogicality I come across a lot is people changing cars because "its not worth spending xxx to repair/service because thats 1/4 1/2 or whatever what the cars worth" and generally saying "wouldn't you be better with a newer one that didn't need so much maintenance".

Its all about cost per mile and if I have to spend £1000 a year maintaining an old car (which is only worth 2k max say), with my mileage which is about 35k/year, that about 3p a mile maintenance cost plus maybe another 2p/mile for depreciation servicing tax etc. so a TCO of around 5p/mile. Compare that with the depreciation costs alone of owning a £30k bmw ....

Maintainance costs are only high if you take it to the stealers or big nationwide repair chains.

Indie garages are much cheaper.

Doing it yourself is even cheaper but requires investment in time and tools. All of my 3 tool sets including specialist ones have paid back for themselves over a large number of times. Tools cost me £270 or there abouts. A simple oil change at a dealers will cost £80. For me it just costs an oil filter and oil £23 + a 5p washer.

I've even had the engines out on my bikes to do the valves or balance the carbs it's easy if only people had more confidence...

Funnilly enough I remember asking for a repair quote for my car once (when I had one) about 10 years back and the Kwik fit chain who were quoting me obsene amounts were not very careful about the pricing up program.

They showed me the monitor on one side it had markups on parts which were obsene at well over 400%. Thus a pish cheap set of brake pads for £10 were £50 etc.

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Those are small things....

My ex work colleague got rid of her 2.8 year old Toyota, to buy another Toyota exactly the same model except it was automatic...

Her reasoning was that the road tax was substantially less.... She couldn't quite see how silly it was to spend £10K to save £200 on road tax ~ £600 over 3 years.

Automatics need less road tax? I didn't know that.

What's the reasoning behind it?

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This cars thing is very common. The single biggest cost component of ownership is depreciation.

I own a Mercedes ML 500 which cost me 5k. Go anywhere do anything brilliant build quality, never be worth less than 2 or 3 grand because fo its utility.

I drive two miles per day to work ( or cycle), and if I go further I do so in style and comfort. I do only 8-10k miles per year, so a little more on fuel is ok.

People are brainwashed about cars just the same as they are about houses. There are plenty of superb cars for 2-6k around, and that is the true market value of the utility of a car.

As HPC lifers will know, I rent and I expect 50% off crash to begin now. I've just moved to a smaller place-with a woodburning stove and on a farm-surrounded by trees ie plenty of free fuel. Just in case....

Nick

What year is it? the model I mean? Mercs seriously went down hill quality wise sometime in the mid 00s as they realised people simply treat cars as disposible items.

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Quite an interesting thread and I think it comes down to typical buyer psychology. Most people on this site are quite rational so can figure out depreciation and take it into account.

The average person though never takes account of it, because they never ‘feel’ it. There is no handing over of £50 to the petrol station, so it doesn’t exist right?

I heard, and I agree with, that you should never spend more than 25% of a yearly salary on a car (for me that equates to about 6 grand and I spent 3 on my last car).

Many of my friends don’t share this view though.

One mate just spunked 11g on a new GTI, which I find quite ludicrous considering he earns 25g a year. Many others are on ‘finance’ (or mini-mortgages as I call them).

So I drive an older, shabbier, car than them but enjoy the couple of grand a year it saves me.

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Quite an interesting thread and I think it comes down to typical buyer psychology. Most people on this site are quite rational so can figure out depreciation and take it into account.

The average person though never takes account of it, because they never ‘feel’ it. There is no handing over of £50 to the petrol station, so it doesn’t exist right?

I heard, and I agree with, that you should never spend more than 25% of a yearly salary on a car (for me that equates to about 6 grand and I spent 3 on my last car).

Many of my friends don’t share this view though.

One mate just spunked 11g on a new GTI, which I find quite ludicrous considering he earns 25g a year. Many others are on ‘finance’ (or mini-mortgages as I call them).

So I drive an older, shabbier, car than them but enjoy the couple of grand a year it saves me.

SHHHH!!! Let them buy new cars.... without them there would be no second hand market! :lol:

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I used to spend to save a lot as a student.

Bike 'cos I couldn't afford bus fares, but also 'cos it gives much more freedom. Upgrade to a better bike - less easy to justify on economic grounds, but meant I was no longer working full-blast just to keep up with my friends.

Tent 'cos I couldn't afford a youth hostel. Not clear on the eventual economics of that, but it travels to some great places even now I can afford not merely a youth hostel but a hotel!

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As a genuine saving you may wish to investigate RHI:

http://williammartinenergy.com/funding-and-ecas/renewable-heat-initiative

Though you do need to own the house to qualify CD, which you were looking at IIRC.

I've put my whole life on hold....and very relaxing it is too.

Wisdom is knowing when to paddle...and when to just float.

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Automatics need less road tax? I didn't know that.

What's the reasoning behind it?

The auto changes up sooner during the official test so it appears to have lower emissions. The change up points for manuals are at fixed speeds I believe. So although auto transmission means less overall efficiency, the test methodology means lower road tax. (Read all this in EVO a few months ago)

The wonders of regulations.

VMR.

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This is, of course, ironic.

Somebody was enthusing the other day about how their solar powered automatic watch meant that they never needed to buy another battery again. "Very good" I said - I'm not one to put people down - but it was obvious that this was just an excuse for buying another watch they didn't need. It cost more than a lifetime of changing a watch battery every three years.

As regular readers will know I recently bought a new car, it happened to be a diesel but I bought that for the 140 BHP (hey, that's a lot for me) rather than economy. As it happens RFL is slightly lower. But I am amazed at the number of people who think I have made a canny financial decision in getting a car with higher MPG and lower RFL. When of course I have actually cost myself a lot of money by not keeping my previous car for another ten years. But it's the way a lot of people think; they have to fill up with fuel less often so it's a money saver innit. Er, no.

Now I have (with great effort) finally begun to spend money on stuff I don't actually require but I accept that's there is pleasue to be had from this. Spending for enjoyment. Which I used to think was self-indulgent (because I'm worth it) but now think is fine (hey, if I'm not worth it who is?). Okay, that's my seismic shift. But I am still baffled by this idea of going out to buy something on the grounds that it will save you money when it clearly won't.

Trying to think of other examples, those small turbine generators on houses are one. IIRC they drain power constantly so never actually pay back the purchase price.

I wont spend money to save money unless say it means paying a bill in full or in cash rather than by dd or attracting interest.

What I will do is spend money on what I consider to be a good deal, if I can buy things that I know I can sell for more or will be worth more in the future then I will buy it and put it away.

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The other illogicality I come across a lot is people changing cars because "its not worth spending xxx to repair/service because thats 1/4 1/2 or whatever what the cars worth" and generally saying "wouldn't you be better with a newer one that didn't need so much maintenance".

Its all about cost per mile and if I have to spend £1000 a year maintaining an old car (which is only worth 2k max say), with my mileage which is about 35k/year, that about 3p a mile maintenance cost plus maybe another 2p/mile for depreciation servicing tax etc. so a TCO of around 5p/mile. Compare that with the depreciation costs alone of owning a £30k bmw ....

I bought a 52 plate citroen xsara estate for £1100 on ebay, so far in 2 years it has cost me £200 for an exhaust to get it through an mot and £300 for an alternator (mostly because i ignored an oil leak that was dripping into it).

The guys I work with all scoffed at me buying an old car from somewhere like ebay and spouted on about maintenance costs for old cars. They continue to buy new cars which are apparently maint free but consistently forget the cost of servicing which is required for them to keep their warrenties.

In 2 years, including the purchase cost, my car has cost me £1600 and when it dies I will scrap it and buy another. The fools I work with have probably spent that ammount on servicing their new cars in the last 2 years and lost far more through depreciation.

One manager bought a second hand car for £17k, it was less than a year old but he figured it was \ fantastic deal as it was over £12k cheaper than a new one. Retard never stopped to wonder about a car that has lost almost 50% in a year being a wise choice, lmao, there is no helping some.

And, then there are the finance costs....my maintenance has cost far less than most are paying in interest on their loans. Cars are the biggest waste of money ever, new ones anyway.

Edited by richyc

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  • 142 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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