What percentage of your wage do put towards motoring?

rodenal said:
That money came from somewhere, if it wasn't a gift or outside of income then its no different (in theory) to someone taking a loan for the same amount, you just paid that out at a different point in time.
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I agree but it was so long ago that it is no longer a part of of any percentage of my earnings, is it? Therefore none of the money I earn now or have earnt for a very long time has gone towards the purchase of this car.

Just like when you buy another graphics card, that money came from somewhere
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Quite - but once its purchased it longer takes any of my wage in purchase costs. Effectively, in Year 1, the car took up a massive percentage of my earnings but the tradeoff is that in Year 7 it's actual purchase takes up none.

Had I chosen to finance the car instead then in Year 1 it would have taken up far less of my earnings but this same amount would then have carried on into Years 2 and 3.

It is now fully paid for and depreciated to zero. It ties up no meaningful capital, has no realistic value and costs me nothing per month in terms of capital expenditure.
 
There is no point averaging out the car's purchase price throughout all the months/years of owning it. That gives you a fluctuating % income figure - e.g. Year 2 % will decrease once you go into Year 3 because the car's cost is divided into more years.
Equally if a car is bought on finance paying out £400/month for 3 years, ignoring lump sums, as the owner goes into their fourth year, does it make sense to start dividing that figure up if they decide to calculate their % cost for previous years, simply because they've owned their car longer?

No, the only things to take into account are the purchase price of the car at the point it's bought or the amount of money that leaves the account each month in the case of finance. Then if you choose to average the whole cost out over several months/years you can still do so to provide a reasonable figure if appropriate.
If required you can also add back in the estimated value of the car at each time period, though personally I would argue that tying up your money in a material asset such as a car is an expense since it's not readily available as cash should you need the money, and so the worth should not be added back on unless you actually sell the thing.
 
[TW]Fox;24520087 said:
I agree but it was so long ago that it is no longer a part of of any percentage of my earnings, is it? Therefore none of the money I earn now or have earnt for a very long time has gone towards the purchase of this car.
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In accounting terms you depreciate the asset over it's useful economic life until it is sold/scrapped.

Your 530i, for example, is still useful and it is economical viable to keep it running. Therefore the purchase price is still spread out over the term of it's useful economic life, and therefore can still be pulled into a % of your income. Exactly the same principle can be applied with all aspects of the upkeep, e.g. tyres, you don't pay for them for every mm of tread they wear, but the purchase was (probably) made in one go. This is the amount that you are spreading, and that is the amount that you are calculating into your monthly % of income cost.

Yes, the figures will change month on month.
 
[TW]Fox;24520087 said:
I agree but it was so long ago that it is no longer a part of of any percentage of my earnings, is it? Therefore none of the money I earn now or have earnt for a very long time has gone towards the purchase of this car.
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Lets put it another way then. How much are you currently saving per month towards your 530i's replacement?
 
I don't include it in a thread like this though as it's asking what percentage of my wage I currently put towards my car. I put no percentage of my wage towards the purchase cost of my car. The question is not about my personal balance sheet its about my month to month cashflow therefore a purchased asset does not factor into it - as there is no monthly cashflow implication.

My car itself is not part of my revenue expenditure, only my capital expenditure :p
 
wingman said:
In accounting terms you depreciate the asset over it's useful economic life until it is sold/scrapped.

Your 530i, for example, is still useful and it is economical viable to keep it running. Therefore the purchase price is still spread out over the term of it's useful economic life, and therefore can still be pulled into a % of your income. Exactly the same principle can be applied with all aspects of the upkeep, e.g. tyres, you don't pay for them for every mm of tread they wear, but the purchase was (probably) made in one go. This is the amount that you are spreading, and that is the amount that you are calculating into your monthly % of income cost.

Yes, the figures will change month on month.
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You normally do this over a fixed period though, 2, 3, 5, whatever years. I'm guessing Fox didn't, and still doesn't know how long he's going to have his E39 for.

The only worthwile way I can see how the outright purchase of a car x years ago can be accounted for over a certain period is by selling it and taking the difference between the original purchase price, and the amount you sold it for, and dividing this by however many months or years you owned it to get an "ongoing" cost. But it's still pointless because it was a one-off cost. Until you sell it, you don't know its value with any meaningful accuracy.

The question of this thread is for on-going costs, and finance / leasing would be included in this alongside fuel, servicing, insurance.


That's what I reckon, anyway.
 
Howard said:
You normally do this over a fixed period though, 2, 3, 5, whatever years. I'm guessing Fox didn't, and still doesn't know how long he's going to have his E39 for.
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Quite. I originally intended to have it for 3-4 years. I have had it 7 years this year. It's depreciated and has no meaningful resale value anymore. Done :p

paradigm said:
So you are never going to replace it?
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I didn't realise I needed to specifically save up for a new car in order to replace my 530i at some point in the indeterminate future :p I'll see what I've got in the savings - which at the moment are for another more important purpose - when the time comes :p Remember I already saved up for and bought its replacement several years ago only to then sell it again and go back to the E39 :p My answer just after buying that would have been different as I'd budgeted to replenish the money spent on it at a certain rate etc etc and that would therefore have been included in the cost of owning my car. I've no need to replenish the money I spent on my 530i as it was so long ago.s
 
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Petrol,tax,tyres,insurance, servicing on the astra vxr I use to have was costing me £570-600 per month. Which at the time was around 35% of my wage.

I am guessing the the ST220 I have now is roughly the same. The insurance has halved but the MPG as took quite a hit.

Saying that, I am with out a job after today so the costs will drop tremendously.
 
Im about to put an offer in on a 335i, and am trying to work out running costs on it.

Not sure how much its actually going to hurt, but including Insurance/Tax/Parking/Servicing/MoT/Mech. Warranty I'd estimate approximately 9% of my net salary, 12% if I include depreciation.

It will be a weekend only car so Im not sure what the fuel bill will be - depends on how pedal happy I am I guess :).

As a prospective buyer this thread has been rather helpful (despite missing what must have been a colossal argument in the middle :p ), looks like I'll be in the middle somewhere in terms of expenditure.
 
wingman said:
Rybo, assume that included finance? And sorry to hear about your job.
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No, i have always paid cash for my cars. I did roughly 25k miles a year, so most of that figure is to do with petrol costs.

No need to be sorry about the job, this one is going my way. I am the winner at the end of this one ;)
 
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