How does the credit crunch affects the average person?

ali82

Can someone please explain to me how the credit crunch affects the average person (renter or mortgage free)?

You are still earning the same money/salary/wages
Your bills are still the same (apart from food and petrol and you only buy what you can afford, but this isn't credit)
You continue to make your repayments on whatever debts you owe


As long as you are not taking out any new credit I don't really see what is the big problem.

Sorry if this sounds really dumb but I just need someone to point out the obvious to me.

Thanks

immoral_angeluk

Current credit is getting more expensive as companies increase interest rates to compensate for lack of new business, therefore eating into the disposable income of families... Businesses and services are having to increase prices to compensate for decrease in business, again leaving families with less money. They then spend less and the companies increase their prices... it's a vicious circle...

SingleSue

It's not actually that simple OP

I have no debts and my income is static but fuel,food and utilities are all going up at a huge rate. This means that each week, my money buys me less and less and my budget becomes tighter and tighter.

I have now cut out non essential journeys due to the increase in fuel but at the same time have had to increase the amount (in money) I put in the car.
I can no longer buy beef/lamb/pork for Sunday roasts as the prices of food have increased dramatically for certain items.
I can no longer take my children out for fun days.
The kids get earache daily from me for leaving a light on.
The pennies in my purse are fewer than they were at the end of the week than they were a year ago.

Pobby

So my question is, just how long can this go on for. My wife recieved the princely pay rise of 1% this year. Was told that that was in line with inflation-lol!

There has to be loads, and I mean loads of folk right at the edge right now.

dhassen

Pobby wrote: »

My wife recieved the princely pay rise of 1% this year. Was told that that was in line with inflation-lol!

:T:rotfl:

1% inflation????????? lol

Lucy1982_2

Yep.

Loads are, I was lucky, got my pay rise today... 3% and in line with inflation (just!)

But I was shopping at Lidl at the weekend and it was packed!!! I mean people everywhere.... We had one woman asking us what the yogurts tasted like because she had never shopped there before, but it was cheaper than everywhere else.

Something has got to give at some point.... and soon hopefully.

Treadmill

If we where given 1% we'd be on strike at my job, We balloted on strike @ 4.8%, accepted 4.9% this year and RPI+0.5% next year.

sam89

My BIL is in the construction industry and was made redundant 2 weeks ago, for 23 years he got £7000, that's not going to go far with 3 kids to support:eek: .

As there is less money to spend (whether real or credit) less can be bought therefore less will need to be made and anyone in any manufacturing (houses, cars, furniture, etc.) will find their job in jeopardy. These people will then not be able to spend on services (eating out, takeaways, luxuries) and jobs in those sectors are cut.

It is a vicious downward spiral and we're just at the beginning of it .

Sam,
x.

Lucy1982_2

I work in commerical property, but if you look at the housebuilders.

Permission have just annouced 1,100 job losses and it is thought that Taylor Wimpy will annouce another 1,000 soon.

It's frightening really.

LilacPixie

I don't think the average person is mortgage and rent free. So you have to factor in either a rise in interest rates on their own mortgage or their landlord raising rents to cover their own overheads for Mr or Ms Average.

Bills are not staying the same. Gas and electric are rising buy 15-20%. Water I guess must be doing the same. Local authorities are getting hit with increased bills too so that can only mean an increase in our council tax come april 09 or a cut in amenities.

Companies like littlewoods/additions etc, basically the catalog companies that those on lower incomes have to resort to to help budget have raised APR to 39.7% for existing customers with balances lower than £1000. Many unsecured loans are also variable rate and as IA pointed out they are also raiseing costs for existing customers to compensate for lack of business. MBNA the C Card company appear to have raised their APR to 30%+ on those they perceive to be a possible risk.

Its also nots as simple as buying what you can afford. Fuel prices are through the roof, not just petrol/diesel but gas and electricity as well. This has a knock on effect to transport costs. My local bus company has increased their monthly season ticket by £9 a month for an adult and are saying they expect to have to raise prices again in October if the government adds another 2p a litre. Finding £18 extra a month for travel for 2 adults too and from work isn't easy where there is no payrises this year.

Food costs are rising too, an average shop is costing me about £8 a week more than it did in feb, thats an extra £32 a month.

We have a budget flexible enough to trim back a little but not everyone does.

Some people who already had a tight budget are finding there is literally a choice between eating and paying for travel going to work. If they chose food and don't work then there income drops too. As a result they are defaulting on credit payments which increases borrowing for us all.

peachyprice

Ali, the big problem is, as pointed out above, people are having to pay more and more just to live, and pay rises in line with rising prices just aren't happening.

Ultimately if faced with a choice between eating and paying CC bills, the CC bills are not going to get paid, there then starts a downward spiral of debt.