A timely read

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I have just been reading about car finance deals soaring to an all time record high, which ties in nicely with my previous post about consumerism. My thoughts on consuming less is very timely indeed. The problem I see with the car finance deal, is that you are essentially thinking it is the best deal out there, but how much does a 3 year warranty, 1 year insurance and no more than 10,000 miles per year really cost? Surely financing a car is more expensive than paying for a car outright with cash?

A second hand car is not the end of the world. It’s just not what the Jone’s are driving. Who cares? No body, but you. I have had a car on finance and it is fair to say; I won’t again. If I’d just been able to fast forwarded to where I am now. Know what I know now, I never would have done so.

Take your current car payments, mine some 4 and a bit years ago, were £264 per month. Now save that for 6-10months. That’s £1584–£2640 in cash that is saved. “What am I meant to drive in the mean time?” Buy something cheaper. “How, I have no money?” This is the vicious circle that (I know) “pushes” you into taking out finance. So “find” £500 to get yourself started. There are numerous vehicles out there for around £500 and if you rock up with £400 cash in your hands, you could probably walk away with the £500 car and £100 in change. A quick search online gave me 2,288 cars under £500 – they won’t all be perfect, but there’ll be one for you. One located:

£500 Volkswagen Golf 1.6 SE 5d 105 BHP TRADE CLEARANCE – GREAT VALUE

If you don’t ask, you don’t get.

Buy the car and drive it until it goes pop. Even use the £100 towards a good servicing, to lengthen its service to you. It’s a car! Not a person. It is meant to be used and used until it is no longer usuable. We, as consumers have a responsibility to slow down in our mindless consumption – the earth is only so big and can only disppose of so much. Where will the “unwanted” stuff eventually go?

That car, based on the £264 saved over two months, gives you £528. Now imagine that the car lasts you 12 months. That there would be £264 saved, over the coming 10months giving you potentially £2640. Even if you could save only half of that, it’s £1320. Although the bracket is slightly higher; there are 23,861 cars available at £1,500 or less! So in theory, in a year you could have purchased another new (second hand) car. Keep repeating this method (use the car until it goes pop) and before you know it – you would have a brand new car, but with no finance. Obviously the newer the car that you keep purchasing the longer it is likely to last. Don’t forget though, brand new cars go down in value before you have driven off.

This is similar to what Dave Ramsey talks about over and over again. Get rid of your car payment. Live on less than you earn. It works. It is as simple as that.

 

How many clothes have you got…

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I keep reading about how debt is a huge problem. How people don’t earn enough to get out of debt. Wages are too low. Families, couples and single people can’t save – perhaps due to debt, outgoings, just don’t earn enough etc. Living on or below minimum wage doesn’t help either. Sadly there are millions of people in this boat. Then reading that if you don’t have enough savings to get a credit card for an emergency?! Without going into the detail or pulling in loads of stats; this whole piece is wrong in my opinion.

Just stop. Stop. Think about it. Everything that is raised in the news (about this topic area) is about savings, debt, minimum wage, the breadline etc.

Let’s just stop and forget all of that for 5 minutes (to a lifetime).

For 5 minutes think about consumption. We as consumers, consume too much. I’m talking everything from food, new smart phones, new cars, plastic toys to clothing (and many many more). But why? Think about the behaviour behind it all. The mindset. The reasoning. Why consume so much? Surely it isn’t rocket science? Maybe for 5 minutes if we stopped consuming, or better still, in our lifestyle consumed with 110% purpose and need we’d be better off.

With less consumption comes less spending. Less spending means less consumer debt. Less need for loans, credit cards and financial prison. This would then mean more money at the end of each month, rather than too much month remaining and not enough money.

I am no financial expert. I am not offering financial advise. I have no money qualifications. I did have – at its peak – £40,291.54 of debt: credit cards, personal loan and student loan. This did not include the mortgage. As of today, I have one debt, the mortgage – I see this as a good as repayments are thankfully low. And almost 3 years later I have stayed out of my overdraft. This does make me a real life debt expert, as I faced personal financial chaos. It was my fault. Essentially from what I have learnt, I do have some knowledge of what not to do. The best way to learn in life is via your mistakes. However, don’t let the mistake become too big. It will become a life sucker. I know. I’ve been there. I’m still reminded of it. Oh, and I have not had a single credit card or personal loan in almost 3 years too – I had 4. Never again. I digress.

Why mention it though? Well since watching the minimalists documentary, my behaviour, mindset and most importantly consumption have completely altered. Thanks to my consumption altering, my savings are growing and I have become increasingly happier day-by-day. My worry, anxiety and stress diminished. I sleep far better. I read more. I have more time. I have more space.

In conclusion, I think, we should stop focusing on the debt, wages, savings etc. We should focus more on our consumption, living on less than you take home (earn) and stop trying to be like them. They’re probably up to their eye balls in debt, work all hours and never have time. With less consumption the debt, wages and savings will from my experience adjustment for the better.

Did you need to buy the new smart phone; really need to buy it? How many clothes have you got now, with tags still on?