The Vault with Financielle - How To Escape Car Finance & Start Saving Money | The Vault Episode 38

Episode Date: November 14, 2024

Send us a textIn Episode 38 of The Vault, we discuss this week’s controversial opinion, “Money education should be taught in schools”, before diving into our listener dilemmas:“How do I escape car finance?”"Should I give up the opportunity for an interest free mortgage?”We celebrate a listener who, after two and a half years of hard work and switching careers, has finally paid off £13,000 in credit card debt and is now totally consumer debt-free! She’s ready to channel all her extra cash into building her net worth and achieving financial freedom!If you’d like to share your money win, head to the community in the Financielle app or email [e-mail] your (totally anonymous) money dilemmas to [e-mail] and we may feature yours on a future episode 💌Thank you to our partner PensionBee, who are on a mission to help you build pension confidence and create a world where everyone can enjoy a happy retirement. With PensionBee you can combine, contribute and withdraw online. Join over 260,000 customers saving with PensionBee. When investing, your capital is at risk.Sign up and combine your pensions here 🐝Get more out of your money by opening a high interest Cash ISA with Trading 212 here 💸When investing, your capital is at risk. Pies & Autoinvest is an execution-only service, not investment advice or portfolio management. Automatic investing refers to executing scheduled deposits. You are responsible for all investment and rebalancing decisions. This information is not investment advice. Do your own research.As a Vault listener, you can get a whopping 25% off our digital course, The Money Playbook.This is a step by step guide to being financially well. It has 101 lessons where you'll learn how to budget, ditch debt, build savings and grow wealth. Use this offer code at checkout: VAULTCheck it out here 💸Chapters:00:00 Introduction 03:33 Welcome to The Vault03:43 Controversial Opinion: “Money education should be taught in schools"16:44 Dilemma 1: “How do I escape car finance?”32:40 Community Win: £13K Debt-Free!36:05 Dilemma 2: “Should I give up the opportunThe Vault is an entertaining yet thought provoking podcast that answers our community’s dilemmas and confessions surrounding women and money.Visit https://www.financielle.com to download our app.Watch the podcast on YouTube.Follow Financielle for more:▶︎ TikTok▶︎ InstagramAbout Financielle:Financielle is a female focussed finance app helping women to take back control of their money, ditch debt, increase savings and invest in their future.Recorded and Produced by Liverpool Podcast Studios▶︎ Web ▶︎ Instagram▶︎ LinkedIn

Hey everyone, it's Holly here. Before we get into the episode, I want to share something exciting. That's right. If you're looking to take control of your money, the Financial app is your go-to tool. With the app, you can track your spending, create realistic budgets, and hit your money goals faster than ever. In fact, did you know our premium community members save three and a half times more than our free users? That's incredible. Plus, you'll be part of an amazing community where we all support each other on our money journeys. Whether you're starting to pay off debt or planning for your future, the app has everything that you need to make it happen.

So what are you waiting for? Download the financial app today and start your free trial. Trust us, your future self will wish you did it sooner. For those eagle-eyed viewers we have a new bit of decor. Fine and shell pet. I didn't know it was a balloon. No it's not a balloon. It's an ornament but it's pink and it's very fine and shell and Lucy has called it Finny. Finny?? Finny How long did that take? It's very cute It does look like a balloon Still got the price tag on It's from TK Maxx

TK Maxx Oh have you seen In TK Maxx People are doing this thing And it's like They hold up what they want Don't look at the price tag And they go

If this is less than £8 I'm going to get it Did they get it right? Ever? Yeah And then I'm like Surely you're not buying all of that.

The worst thing you can do with TK Maxx is take in your children. Oh God, I bet. Because every, even as an adult, my elbows seem to get

really pointy. I'm like, do you know what you're knocking over? Like vases and glasses and plant pots and homeware and glassware and yeah.

It's like I suddenly become like spaghetti arms. I love going to TKM. I hate it. No. Do you ever find anything? Yeah. It's just, I'm not. You talked to the crockery queen.

Oh, yeah. So I'm thinking more clothes. No. I've told you about crockery before. Like I will literally still have the IKEA ones from seven years ago. A student. You've still got a student. Start a pack. I have still. They came in a box. like I will literally still have the Ikea ones from seven years ago student starter pack

I have still but it came in a box but the clothes I don't understand how people find things in TK Maxx because you need to the effort involved

it's like a permanent sale I think it's good for men like long sleeve shirt jumper jeans women it's like wow like caftan

next to gym leggings crop top Calvin Klein bra set but it's like wow like caftan next to gym leggings like top calvin klein bra set that's not you're like weird yeah weird i love tk max i keep like so my argument for alex coming to tk max with me it's like i watch the football with you and i get really involved for you take him do you and then i'm like why can't you just enjoy TK Maxx with me and then he comes and I'm like why have I brought him here like I love coming here by myself

and being in here for like an hour looking at this one plate and I'm like should I buy it should I buy it and then putting it back going looking at something

and someone else is being done I really like that plate actually I'm gonna get it I'll come with you it's like a sport it is

I think it's also probably I'm always in a rush so you've either got kids with you so you're going don't knock anything over or you've just got kids with you, so you're going, don't knock anything over, or you've just got a window and you can't go to TK Maxx with a window.

It's a bit like a jumble sale as well. It is. A complete jumble sale. Yeah, like the crockery aisle, it's like a bowl, a spoon, like next to each other. Whereas like in a normal shop, everything's categorised. And it's categorised by like... It's not visual merchandise.

No, but I kind of like that because it's like i found a treasure yeah so anyway we've got yep new pet welcome to the vault with financial health this is a safe space where we talk all things life and money and no topics are off limits hello hi good morning happy vault day happy vault day okayial opinion time. Money education should be taught in schools. If I had a pound every time someone said this to us, we wouldn't need to be, we'd still be sat here complaining about money.

Yeah, we wouldn't be sat here. They'd probably teach you wrong. As being someone who was at school much more recently than us,y what do you think um i just completely forgot about school then um did you ever have that class in school and it was like skills for life no no i wouldn't do it definitely not and it was like the most random thing you'd sit in form for like an extra 45 minutes on like every tuesday or something i think it's called personal development now because my daughter calls it PD I've got PD today I've got PD and I'm like PE she's like no PD what does it and what does it entail well I think as you've got older it might be things like CV writing and stuff but it's yeah probably more stuff like that related to I don't have no idea I should ask her we'll ask her what she actually does let's find out but I think the

whole point is that everyone just doesn't listen so it's like they probably did teach it would anyone listen anyway listen i think it should be like an opt-in i feel like the reason that people wouldn't listen is because they just wouldn't make it relatable all you ever have to do is make content relatable to someone and make it relevant relevant to them like my son if i was going to teach him about money i'd be like so ksi i was literally about to say and this prime bottle is worth this but in five years time if you bought a prime bottle every day they will be like you just have to make it comparable like molly may is not married to tommy fury they have a child together she didn't have a will like you know just like you have to make it

relatable because then people would be engaged that's why that combo yeah of course you would that's why we make finance so fun because we don't use the f word so you should never say to someone we're going to do a personal finance lesson we're going to get your money shit together yeah you can't say that in schools no

the kids that we speak to don't know what a mortgage is I almost think it would make people rebel more what do you mean like this system is meant to keep us

down here this is what they tell us to do rebel the man wanted to have a sinking fund yeah I remember when Evie came to work for the week on work experience it was so much fun

and it was a a big realization for us on um she is an absolute like intelligent girl of the world together yeah absolutely got right together has had jobs before like lots of things but when i did a budget with her Holly was like sit her down do a budget like put put ourselves in like her parents shoes about what they've got to kind of pay for and what life's like and she'd like to save for a car at some point she likes to go on holidays and there's just this a few pennies dropped literally she was sat across like what you have to pay for your house you have to pay for your car like what she just could not Laura did like only an example list of expenses as well by the way not

like the actual expense she was like okay top level house car blah blah her face was like white I've never seen someone budget I was I was saying think about what mum has to pay for think about what you do think about your activities think about your mum has to pay for. Think about what you do. Think about your activities. Think about your clothes. You know, 15, 16-year-old, like, you know, on TikTok being influenced constantly. And we built a budget with not every expense, with an imaginary income to effect because we didn't know her mum's income.

And I was like, no, you've busted. You're spending more than then. She's like, what do I take out? I was like, I don't know. What do you want to take out? And it was this like like those the pennies were dropping for her and it was it was lovely for us to see you know by the end of it we taught her a little bit about about a mortgage I showed her how much you end up paying in interest and so when you're buying a home actually so little of it sorry Dylan not to put you off buying a home because I know we talked

about that in the break it's still a great. But the amount that you hand over to the bank, people really don't think through. It is crazy how much you actually pay in interest. Often, especially at the start of a mortgage and with high interest rate, you're paying way more in interest than you are knocking off the house. I challenge people to go have a look at that. That blew her mind. But I showed her the flip side of compound interest, which was at this age, you have time on your side. I am the old the flip side of compound interest which was at this age you have time on your side I am the old person telling you that compound interest the massive impact of it is time not the amount you put in and some really cool exercises that you can show children especially

if they're like 15 16 if you I think there's facts like you can put like 5 10 grand in and then put nothing else in and it would grow massively because time what it could look like in the market but also practicing like say if you got a part-time job at 16 when you leave school deciding to put 15 to 20 percent of it into either an ISA for when you're older or god forbid a pension and see what time does when you still live your life you still do nice things but if you get into that habit early and so she went and got a job after as well so she wasn't working at that time she was like I'm not I don't need to work like that age your parents kind of fund your fun but you only have fun money so but she was like I want to make my own money and I want to and I want to start

saving up for a car so she said a girl's holiday yeah got a first girl's holiday when she like comes out of college and she went and got a job and she set up girl's holiday yeah first girl's holiday when she like comes out of college and she went and got a job and she set up I did it with her on her app like set up a sinking funds ready to go and I was just like imagine doing that with everyone in high school of high school age what kind of people would come out of it and how financially well people would be and we explained to her about Klarna we're like buying her a pilates she was like what tell me again like she just sees the bright pink like snoop dog

easy check out option all the influencers just being like oh Klarna like look at my Klarna haul or whatever it might be and I think just the penny dropped

and I was like Jesus that's one person that we might have given like a nugget of information that would change the trajectory of their life when it comes to finances

imagine if we could give this help to people but that never happens like that you get boring people coming into these kids and trying to lecture them they don't get down to their level and explain it in a way that it's like relevant to them and I think that's the piece of information that's missing yes I think we should do it but it has to be in a relevant way that they can get the concept going in the brains not just be like sat down and lectured to. There's two things there.

There's one, you set them up for life. And there's different ages you could do that. We've talked about uni time, like people go to university, suddenly handed student loans, suddenly being offered student overdrafts. And it can really escalate. And you then go into your first job and you've already got like two hands tied behind your back.

It's really hard. But the other nice impact that I hope, you you know was for Evie and possibly for for anyone else whose children might be listening to these podcasts even though we swear and who may be taking in bits of this is the impact on the parents because when times are what you want to do is make sure that your kid can handle themselves like if we can raise our children to be good humans and and safe and well and kind and hard-working and resilient like that's just the dream it's not to be the next footballer it's not to be someone famous it's not to be wealthy it's can you can you manage your money and be okay because if you can you've done your job and um you know it when you can see you having a conversation about a new pair of Jordans

or a brand new phone if the child can really understand how money works they're just gonna be a bit more understanding of how that all happens rather than just I remember she was like I feel really bad on my dad she had so much guilt after law she realized because her parents don't live together they're divorced so very difficult like lives with their mom but her dad obviously pays a lot of money and then she goes and stays with her dad and her dad wants to take her out and treat her and she was just and you've come from that type of family dynamic as well where you live with your mom and spend time with your dad and they were separated that juggle that is hard hard enough when you live with both parents

and you're listening to these money conversations and trying to get a grasp of money and whatnot but having two parents much more difficult living in two different houses and balancing a budget on being a single parent like yeah yeah yeah she was she just was like I feel so bad my dad buys me loads of clothes and makeup and I'm just not going to do it anymore I'm going to message her dad and see whether yeah she's great I don't think so Evie I think rocking that white foxtrack scene like so yeah it should be but who's going to teach it you know teachers are absolutely stretched they have so much to deliver I really you know maybe we should do something it's one of the things on our on a list like could you do something that's digital that's like people can do a lingo and follow on their own you know something that but what I have found is even if the schools don't if we as parents and as

cousins and as aunties and people can have these conversations listen to the vault have conversations with them they learn so wolf of Wall Street over here Teddy absolutely like gonna rule the world Ava wants a job in STEM because not only does she like computers she knows it pays more already

she's picking options at year nine like a nice conversation I'm going to be a developer and then I'm going to be a tech entrepreneur but she was

she's motivated by money not by like fame or not by like attention it was oh no because money is the thing that if I've got that I could get a nice house and go on nice holidays like she's understanding that at nine whereas you know everyone I think I was probably following the end of my nose like what's my day you're nine I'll do performing arts yeah I want to call her in I wanted to be home economics they dropped the table sorry guys there was nearly a glass of water all over this um i wanted to be a marine biologist

you so saw that i'll probably watch you like h2o or something um it was an american sitcom trend wasn't it i wanted to work with monkeys? You do. Yeah. Yay. And all my dreams have come true. I swear to God, my mum still laughs at it this day. She's like, do you want to work with monkeys? She probably went to Chester Zoo. How they kept a straight face telling the friend when I'm like,

what do you want to be, Holly? I want to work with monkeys. Mum must have been like, Paul, you need to speak to her. Paul, do you want to do a maths homework with her on that maths is not my forte so you might not have liked personal finance at school

true I wouldn't if you'd have done it relevant to me like what would it have been at the time oh god Spice Girls maybe

oh no I'm not that old there you are in high school Spice Girls wouldn't have been around no yeah what year were you in like year 10 i have no idea oh i was at 2004 oh my god i was literally starting primary school no i left in 2003 left oh no definitely no spice girls in high school they were the price up a little bit. Spice Girls was 1994 to 2001. Yeah.

Yeah. They were gone then. That was when Geri would have left, innit? Oh, I thought you meant the other way around. I thought you meant, no, I'm way too young for Spice Girls. Oh no, no, no. Definitely not. Like, I'm throwing you down with me. I meant they wouldn't have been a... I'm trying to think of a concept in high school that would have been relevant to me where I would have gone... Yeah. Like the Molly May version, but I'm too old. I can't remember how old I was or who was around

at that time maybe like Towie no no Victoria Beckham and Dane Bowers okay there you go Towie was when I was in

Victoria and David are going to get married yes they're going to have a purple throne that they're going to hire for £300 and they built a sinking fund

to do it literally that did you have to like choose options was it Olaf's no it was For £300. And they built a sinking phone to do it. Literally that. Did you have to like choose options? Was it O-levels? No, it was GCS. Sorry. In the olden days. Didn't know.

Sorry, I'm so old. Also apologies to people that did do O-levels. They're not laughing at you. Did you have to like choose? Yeah. Yes. We went to school. There was Did you have to like choose? Yeah. Yes. We went to school. There was a chalkboard.

I can't remember. With a blackboard. Don't ask me what they were though. I can't remember. I did history and Spanish and French. Si. I wanted to do French. I made it up.

Oui. Okay, ladies. I've got a controversial money opinion from our friends at PensionBee. Bougie friends impact your financial wellness. Agree? Disagree? 100% agree. Bougie friends can derail you on your money journey, whether you're paying down debt, saving towards a big money goal,

or just want to get to the end of the month with money left over. Yeah, one thing to note here is that your bougie friends may act bougie on the outside, but are probably struggling to manage their money. You heard it here first, ladies. Keeping up with the Joneses is officially out and financial wellness is in. If you want to delve further into this conversation, check out episode 27 of Pension B's Pension Confident podcast. The Pension Confident podcast is available right now wherever you usually get your podcasts. And remember, when investing, your capital is at risk. Okay, time for our first dilemma.

How do I escape car finance? Hello, I've recently became a follower of yours and love your podcast and Instagram content. I'm on my money journey and determined to get out of debt for good and started saving for a house deposit. However, I feel like my car finance is one thing that makes a huge dent in my budget. I wondered if you had any tips at all on how or if I'm able to get out of this. It's like a financial basics. Yeah, car finance. Buckle in.

Welcome, welcome, welcome. So we'll start with car finance is not naughty, evil, bad. If you are driving a car right now that is beautiful and new and shiny and you pay a monthly payment for it, you are not a bad person. So I'm going to say that first because we of situations where car finance can really work is actually if you're quite privileged and well off so if you really don't worry about money you have far more income than your expenses you've just got this room to mess around it's not to mess around but kind of like pick a car here pick a car there swap them change them you do that and actually leasing is a really quick way of just getting stuff over the line rather than transferring large amounts of money or in the car so that's like the other scenarios the real problem with the car finance industry um and we always do this we kind of lift the lid on a product and we get you to look at the other sides instead of looking at

from your point of view which is you see a month of payment advertised in the window you see a big percentage which might be like not percent finance which which by the way, is only applicable to 5% of car deals, like 5%. Most of them are much higher than obviously the free interest, the interest free. It's being sold to you in a particular way. So in that monthly payment, you will probably not look at the value of the car. You will not look at how much is this car? If I was to have this You will not look at how much is this car. If I was to have this money in my bank, how much is that? So firstly, we are proven to spend more with credit and especially with car finance

because it's only positioned to us at the very last minute in a long sheet of paper that you sign what the car actually costs. It won't be at a discount. It'll be at full and or inflated price. The margin, which is the profit that they're making on it, will be in two places. It'll be on the price of the car, but it'll also be in the cost of the finance so that means

like the car finance companies or car sales companies you may have known in the past like you might have been able to offer cash and get a better deal no no now they want you to take out finance because the dealership profits at the margin on the car so the profit on the car they profit on the finance in two ways so you have to know that side because what that makes you do is go okay it's not necessarily too good to be true it's not necessarily amazing it's just you're at least aware of what the retail is selling so now you know that you know that if you're going to finance a car you're going to get a car that you wouldn't if you had the cash you're going to spend a lot of money on a car but it'll feel a little and There's a couple of things

that then impact how a car finance impacts your life. Firstly, it forms a big part of the budget, doesn't it? Massive, huge.

Hundreds of pounds a month. We know some couples that live together, it's more than their mortgage. Two cars on finance combined. So there's an incredible amount of money to come out every month

and if you can't pay it you're in trouble like you can't just be like you don't own the car yeah yeah you're renting it you're like renting it so so so if you think about your budget with a financial we've got our fit we've got our income coming in we've got all our expenses and the bit left over is the bit that you're meant to put towards paying down your debt building your savings investing buying homes your Your bills, your expenses make that excess smaller. The lower the bills, the higher the excess, also the higher their income, which is really important too. So if you are having two big chunks of your expenses or a big

chunk of expenses going to car finance, it's not adding any value other than giving you a car, which is important, but it's limiting your ability to do the wider, like financially well things. And so as you're in a debt-free journey and you start paying off cards or phones and overdrafts and family loans and you build momentum, what will end up happening is you'll look at that car finance and go, you're a pain in the ass. Like, get out. And the other element to finance, just like your phones,

is this need to upgrade. Because if you do a typical finance agreement in the UK, what happens is you might do like a two, three year deal of payments and then there's a balloon. And you could have put a deposit down. So you find money for the deposit. And if you don't, it just means your monthly payment goes higher. You pay a monthly payment. And then there's a balloon payment at the end, which most people don't save for. Some people do and you kind of then own the car.

Most people go, duh, like, is it renewal time? And then what happens is, and I've heard people say this, oh, this one's even cheaper than my last one. Like, is it cheaper, or is it a lower monthly cost because you spread it out over longer time? Or have you upgraded because your salary's gone up, and you're like, oh, I had this one, and now I've need a four by four like there's so many like that's a very female thing by the way do not think you need a bigger car because you have children it's absolutely

ridiculous you don't you as long as you can fit a pram in a car seat you don't need a four by four chelsea tractor like it's just it's it's a real myth that a lot of women get into a like a fixation over and you can end up spending an awful lot of money for just ferrying the kids around and i promise you they're gonna wreck it they're gonna have toast they're gonna have biscuits like it's just so don't there's this pressure to then add into your budget so we have had so much success helping people not use car finance get out of car finance save up for cars save up for cars that are less than ideal and then they save up the difference and they upgrade them.

So there's a process and it's not to say that buying a car outright is easy. Most people have found it easier to be in a lease and either get like a car loan to pay off the balloon and then pay off the loan like one of your debts in your Snowball or Avalanche or other people save up in a sinking fund for the balloon payment.

And then when the balloon payment comes, they buy the car and they own it. And then what you need is a super good car maintenance fund and just crack on. I mean, my car now is 10 years old and it's amazing. It's like 80,000 miles on it. I get it really well serviced. I'm running it into the ground and it's not in my budget.

When you are financially well, I just don't think you give a shit about your car. Really? Yeah. Like my husband's car is so funny. Like we always joke. Tell the story. Well, it's like a taxi.

Like everyone always says, oh, the taxi's coming to pick us up. It's like a Mercedes estate type thing. And he got it from a guy two neighbours down who was a forensic accountant. So everything's like, the logs are perfect. Like every time he like changed a tyre, like he'd write it in the log book neil's like got this like big bounded like

because he upgraded his car but he had it for years and years looks after it's the most pristine car i think he bought it for about seven thousand pounds i'm not even joking and every mechanic that he ever comes across is like that car's amazing as in it's so well looked after you've got so many more miles in it how much did you pay like they're just fascinated that Neil's driving this like antique little like taxi taxi car but we are so such in a good place with our money I do not give a shit like I do not want a leased Audi Range Rover BMW like it does not interest me me because what we get to do with our money is go on amazing holidays and watch our children do amazing things

and the sports they want to do. We never turn down going to an event. We're not paying off debt. We're in such a good place. I would never put ourselves in a position where we're strung to a car. It literally takes us from A to B. We live in a small village.

We don't need this amazing car. We just really don't it changes your perspective I think I think it really does because I think that's where you know when you are super financially well and you've got a really good excess cash it's the moment that if cars are your thing just like if watches are your thing if travel is your thing eventually if you do this if we wanted to do it then maybe we would but I think we literally go like oh do you think we need and the conversation literally changed after two minutes because I couldn't think of anything worse than handing over like hundreds of pounds a month to someone about our car but I love when we put things like this on TikTok because you know in the comments everyone comes after the like it's so expensive to run an old car like it's always the worst stories you can

ever imagine like I had to pay out thousands of pounds because this was broken and that. Well, you just need a car maintenance fund. Like if you're going to buy a cheaper car and you're going to buy it in cash, it's going to be older. There's going to be problems with it. Brand new cars break down. Of course they do.

And sometimes they're not covered by the lease either. They're not exempt. They're not exempt from crashes. They're not exempt from breaking down. Like the horror stories that come out and it's only because they pay a fortune in car finance that they can't possibly have someone with a different opinion. It's fine to have it.

Like, it's no problem. But there are alternative ways to owning a car and we're just trying to present a different way that arguably makes you feel more financially well and gives you more options. I think so. And I think for our listener with the dilemma, the first step when deciding whether or not to stop car finance

is, like, ask yourself, can you then do this forever? Because that's the attraction for me, the idea that someone would have a car payment for the rest of their life, like forever. Like what's the plan? At some point, are you going to buy one? Because there's not going to be a lottery win. What's the plan?

Are you always going to pay? Because if you're not, it's a really exciting thing to build a plan. It's overwhelming. It's the biggest one usually. If you're going to do your debts, it's usually the a plan. It's overwhelming. It's the biggest one usually. If you're going to do your debts, it's usually the biggest one. Truncated. We don't include student loans.

But it's actually the one that you usually get a thing for as well. It's like, oh, that's just mine. You get a prize at the end. You get a prize. You get to know it's yours. But what if, like, I always think if me and Neil lost our jobs or something and we had £1,000 worth of car and car finance, like, shit. Yeah, and you can't sleep in them like mortgage is the most important thing bills like and then

the car finance imagine like handing over thousands sometimes in couples thousands of pounds for a car when people in covid everyone used to sit there and look at the car just needed like a ticker monitor of like money just yeah i'm gonna drive around the block just so I can use it. So I think getting to that point where, you know, you see lots of people in the community do it. We've all got paid off cars. Some of them are outstanding cars. Some of them are run around.

Some of them have got names. If you've named a car, it's usually because it's a lovely banger and I'm here for the naming of the cars. It's usually because of a particular type. But you can just have really good maintenance ones. I do think we should do more content on it. I feel like we need an auto trader or someone to quick fit or, you know, like, let's normalize it and not make...

Well, it's like, you know, because people can be overwhelmed. Some people buy a leased car because they trust it more. And I think that's fair. I think it's really hard to navigate. Like, we lean on dad, like, oh my God, to buy our cars. And dad's a car man. He's got a car man that goes and finds you a car if you want a car. And if there's anything wrong with the car, it's like, dad.

But like air in the tyres. You're a 35-year-old married woman of two. Dad, this is me wrong. Dad, the car's making a noise. Yeah, just fill it up, hon. But do you not do that? Literally the other day, I filled up my car. Me and my dad share a car.

It's a long story. It's paid off. I'm very privileged. Yeah, it's in cash and I literally was like what side is the petrol thing on which means she never puts petrol and I was like

did you ring him no I got out the car and looked myself and then I was like is it diesel or petrol press the thing opened it right it's petrol I honestly like what a princess

for the um the reg we didn't know it and we're in the car paying for car park we sound so freaking incompetent right now i remember don't laugh laura actually one time we're in dad's company car oh dad we call him saint paul for a reason right i know what you're gonna say i was pregnant it was 2010 and i was very confused we were like in the middle we were our in the middle of our friend yeah visiting our friends in sunderland and laura put i can't remember which way around the worst way you could possibly diesel petrol in a diesel car i swear to god in the petrol station like literally

turn the car back on went two centimeters and the car just died i'm like shit what's wrong with the car what's going on yeah we had to get two tow trucks later because the first tow truck wouldn't cross the Yorkshire border for some reason to Lancashire so

but we lived to fight another day but um we are competent individuals we sound totally incompetent sorry dad um and I'm gonna call it

actually because Holly's like people might sit there and go well it's alright for you you share one with your dad. Why are you literally with me? Blah, blah, blah.

But Holly, for like literally, I didn't have a car. No, but you did before. Yeah, you did have that. And you said like, when we started, you worked from home, we literally don't leave the village.

You decided to be a one car family, which I think we did a blog on. It's really cool thing, that idea to do it. We did. But before that, you did own a car in cash. Yeah, yeah.

And I think you have talked about in the future if you wanted one like making sure there's a bit of a fund there we've started i've got a sinking fund ready to buy a car like because that situation could change it is a bonus that i get to use my dad's car like it's not a given and it won't be forever it's a period of time so already i'm thinking okay when that's gone money hack yeah one tip listen he basically rents my drive yeah it does actually that was part of the part of the condition because my mum was like I'm fed up of all these cars because he uses it it's his work it's his work car but coming back to how she would do it I think firstly deciding I'm done

and not having that as part of the budget is a really exciting thing but it is daunting so you get ready for it and what you need to look at is what kind of deal are you in? Are you in like a car lease or a car loan? Because you can understand, okay, what's the plan and you build a plan to get out of it. If it's a typical lease, it's probably going to have a balloon payment, which is you pay monthly, monthly, monthly. Oh, and now there's like five grand and then you own it. So if you like that car, if you're super happy with it, then a really good plan could be could be okay that's in two years time and i need to save five thousand pounds and put it in a sinking fund and then the feeling and i've seen people post this in their community when you get there and you can go okay there you go there's

the money and you drive away and it's yours you'll be weird you'll be weird because not a lot of people do that yeah it was very silent then when i said that we're weird we're weird yeah not no you're not no one corrected you um so but if you don't like that car which is also you then build a plan for a different car don't forget like there could be some equity in it if you put deposit down but but you'd have to know what you'd kind of get back if you were to hand it back some people hand it back and there's nothing like that was just like the interest and stuff so you need to work out if i'm not going for that one what am i going for what type of car what female or male friend do i need to walk me through which car i want how much are they like model it as we say build it out

create a goal in the financial app and put the picture of the car that you want and save for it and then when the lease comes to an end you've not got a back to you all which most people do a lot of people i've spoke to them where they just they weren't quite ready so they just go into another lease and they're another two three years you're back in that cycle again yeah and you can um accelerate getting out of your car finance by taking out a loan so i'm not advising you to do that but it's a way that you can say actually buy the car you take out a car loan and it's the same effect. But all you do is then you have the ability to kind of overpay that more quickly if you wanted to. Again, check all the terms.

But I've seen lots of people do that and it speeds up that journey. But it's super exciting. And I don't even regret it. I'm thinking about it. Tells me you want to do it as well. Right. I've got a debt-free win. Oh, we love a debt-free win.

Hi, ladies. First, I wanted to say i love the podcast i listen every thursday i have a mortgage a small emergency fund own my convenient very old car right they don't have a name i'm telling you and i currently invest 300 pounds a month into my pension today i paid off the remainder of my 13,000 pounds credit card debt after two and a half years of paying it down and moving jobs to help do this it hasn't hit me yet that I'm now consumer debt free but I hope it hits me soon as from now on all my excess can go towards building my net worth I've learned so much about money whilst on this journey and I feel in control of my finances and excited for the future. Thank you for helping me in this slug.

I love that word. Slug. It is. That's what it is for a lot of people. This is not easy. Like this is not, we don't wake up one morning and go, paid off my debts.

Got all my sinking funds in order. Like it takes time. It really does. It's also not something that you necessarily share with friends or family. It depends. Loads of people have different perspectives and feelings on debt you know is it a shameful thing was it a secret thing were you quite open about it there's so many different variables so I like that people can come on the vault and share with the right people and

everyone at home is going oh my god and either you you know you're probably listening going I've never touched it anyway that sounds amazing that you wouldn't be in debt or I've done that that feels amazing or I wish I could be like you and you've inspired me to do it and if you are listening and thinking I'm just fed up of my debt as well you can do it and there's like the step-by-step plan the helpful community the little trials and little tricks and milestones that you can kind of work through it if it's a slog but when you do it you'll just never look back i promise you you'll never look back we have had people in the community this past month say like i'm 35 and i've never not been in debt since 18 that is very real that is you know aside from even student loans it's the student overdrafts it's the credit cards that you flogged straight

away it's the car finance we just talked about buying a sofa on finance like it's just so normal yeah it's the default weird and like i said it's the industry that kind of makes it the default because what the constant thinking what else can we finance like how else can we make money and how much how can we make it more attractive like you're not that no one's stupid for doing this is very clever people in marketing that make credit looks so fantastic so appealing so savvy billions are spent on marketing credit billions because it makes more than that yeah well done if you'd like to tell us your win head to the community in the app or email it to the vault at financial health.com we're interrupting this pod to deliver a public service announcement ladies it's time to

put your emergency funds to work that's right it's time to put your emergency funds to work. That's right. It's time to make your money work harder for you. And we know the best place to put it so that you can take advantage of those high interest rates. No more slumming it in a basic savings account. You deserve better. The Trading 212 Cash ISA is the simplest way to save, giving you, at the time of recording, 5.1% interest daily,

the flexibility to cash out any time, and no account fees. Just a side note, we handpick our partners based on products that we like. I personally have this ISA. If you want to get more out of your money, opening Cash ISA with Trading 212 is a great place to start. So head to the link in the podcast description to get started. Okay, next dilemma. Should I give up the opportunity for an interest-free mortgage? My parents are selling one of their rental properties and they've given me first refusal. They've offered to let me pay them in monthly installments interest-free instead of taking out a mortgage with a lender. I've calculated that I'll save over £50,000 in interest fees and be mortgage-free in 13 years.

It seems like a no-brainer and I have 11.5% of the deposit to purchase it from them but the property needs a bit of work, about £2,000 and I don't have the conveyancing fees saved up yet which are around £1,500. I could probably get this together by July 2025. My intention is to rent out the property and have it pay for itself. While my partner and I continue to rent by choice, we like a fairly nomadic lifestyle and move around a lot. What does everyone think? It's likely I'll have to take out a small amount of credit for this, which I vowed I'd never do again. but how often does the opportunity come around to have an interest free lunch no I'm so glad you said that because I was literally like in my head I'm like this doesn't sound right oh no okay yeah no not

no no no yeah I don't know if you're gonna like snatch your hands off I was like this does not feel good it feels like icky like I feel like she's she's even writing it for the sake of it yeah like it's just like oh it's like too good of an opportunity but is it people over complicate stuff it's like when people go oh not percent credit it's the best like it's the cheapest you can ever lend something use it and it just turns into different things so firstly um lending money from family stressful because you just don't you can't predict the future it changes it when you go on your nomadic like lifestyle because because it's called like um it's not a formal interest only mortgage in terms of with like a provider it's a loan from

your parents so it sounds like they own the house and they'll let them pay it off regularly. That's a loan. So there's just, if you go on a holiday and you miss a payment and it was their house first, even though it was a rental, you suddenly want to do some changes to it. There might be a comment here and there like, oh, we wouldn't have knocked that through or we spent thousands of pounds putting that wall up

and you just knocked it straight down. But also really weird things like, imagine your parents separate and suddenly it's like oh actually we need to divide assets so there's so there's that element to it which is borrowing more money from family when you don't have to like she doesn't have to this is more like a oh i could save money on interest that's one side the other side to it is do you really want to be a landlord no so i think people just see these like, you know, real estate moguls, mortgage, like, yeah, like real estate empire building. It is really hard work being a landlord. The legislation is going up and up and up as it should do. There should be, like, you know, there's so much about tenants' rights. There's so much about no-fault evictions.

And, you know, I am a landlord and I'm lucky that I formally rent through a contract, but to a family member and I wouldn't do it otherwise you know I love that I have that facility but there's the first hand that like because she's family it works out really well she is not super demanding I can imagine if she was I'd be like oh my god like what else do I have to sort so if you think you're off traveling and you've got to fix the boiler or you've got to do this you need a really good emergency fund for a rental property the other side to it is it is you have to pay tax on it. So you have to pay tax on the gross. You don't pay tax on the profit in rentals,

especially in the UK anyway. You pay tax on the growth and you get a little bit of a tax credit. One, like through self-assessment, but two also you can set off some interest of which she's not paying any interest so she can't set off any interest. And so it's not paying any interest so she can't set off any interest and so it it's not a business model i always say this to people that might want to like um rent out a property that was their first home so someone always says i'll buy my starter house and then i'll buy another

house and then we'll rent that one out but the fine act like if you were going to say i'm going to be a landlord i'm going to set up a business you would look for the right property with the right rental yield the right cash flow with the right costs and then you'd make an investment decision not the house that you happen to live in or the house that my parents happen to rent out so that like you become this landlord and you want to travel so it's not free money it's a saving of money that that you're not having to pay the the difference would be if she wants to live in it genuinely which sounds like she doesn't she doesn't want to live in this house there's no emotional connection with it like you're going to be resentful of it i'm telling you now if you're a nom if you have

have a nomadic lifestyle and you want to travel here and everywhere like laura said you're going to be attached to the you're a landlord effectively so you're going to be on call 24 7 a day whether you like it or not or you don't have to pay someone to do that for you so you're going to pay someone yeah like a management company or something your parents are doing a lovely thing like do not get me wrong they're offering you an opportunity that for a different person different time in their life might be quite attractive but I genuinely get the impression that that 50,000 pounds like it's a massive draw to you to think that like you're saving and you're getting a deal you're getting a bargain but I actually think it would be a bit of a burden on you in the long run

if I'm totally honest with you the bigger nicer thing for the family to do would be like sell what you don't want and gift deposits when people are ready why is it like that it's like

can you get your parents on who just gives the cash literally because what they're giving is then she can buy the house that she does want eventually maybe not take this rental

and it's just very messy complicated complicated keep things simple especially when it's family and then like i said fine at like business and finance affairs like the obviously the thing is she's not got money for it yet so she'd have to wait until whenever um but she also would lose she'd have to um she would lose like the first time privileges like first time buyers now it's not a first time mortgage but she would be she would have been a first time homeowner yeah so i i don't know the industry well enough but i feel like there's sometimes some really beneficial rates there's

sometimes like you know some savings incentives that i don't think she'd be able to use because even though she's not getting a mortgage because she's learning it from her mum and dad she wouldn't be able to use so don't do it mess it your nomadic lifestyle gonna live in portugal or something don't stop it any final words keep things simple yeah especially with family oh yeah yeah simple culture really fucking simple very simple that's all for this episode the vault is now closed and just a quick disclaimer the vault is just a chat around life and money topics. We are not giving financial advice.