Why is personal DEBT so high in this country?

StevieJ

GrammarGirl wrote: »

Did you actually know I did a media studies degree, or was that an (un)lucky coincidence? :rolleyes:

No, It was just an easy target (Dail Mail and the press are always having a go at that one:D) I don't actually know what it entails I reckon the press always have a go because they don't want you breaking the closed shop and pinching their jobs.

GrammarGirl

StevieJ wrote: »

No, It was just an easy target (Dail Mail and the press are always having a go at that one:D) I don't actually know what it entails I reckon the press always have a go because they don't want you breaking the closed shop and pinching their jobs.

:rotfl: I did Media and Popular Culture with Journalism, and I'm now a Copywriter. But, by the Daily Mail's reckoning, I think I should be sat in a squat watching Clockwork Orange and commenting on the use of colour? :rolleyes:

Generali

chewmylegoff wrote: »

it's not rocket science....[please insert punchline here].

Apparently, rocket scientists use the same phrase but about hard things instead.....

EdInvestor

Seems to me it's fairly simple.Around 10 years ago, the economy made a major transformation from the high inflation/high interest rate environemnt to the low inflation/low interest rate environment. This happened at a time when the whole developed world was targeting low inflation and the big new entrants on the developed side (China,India) were just getting into their stride.

In the UK it coincided with the emergence of a new generation of young people who were better educated and able to get better jobs than their parents, with more disposable income, not least because women had joined the workforce on masse and for the long term.

The right to buy had given these young people or the parents an aspiration to own property and improve their lifestyle.Low interest rates and two income families meant they could easily afford a mortgage. The banks were not slow to target these new (and financially inexperienced ) customers for all manner of products,especially credit cards and loans to assist them in achieving the lifestyle they wanted.Nor did they have any compunction in helping them to run up overdrafts via spurious and unlawful charges when they were a bit lax in managing their accounts.

At the same time the cost of the products these consumers wanted ratcheted downwards rapidly as manufacturing moved to China.

In the housing arena this increase in borrowing power prompted the banks to increase loan securitisation to meet the demand. In the UK a limited amount of land and homes caused asset prices to rise due to rising demand and limited supply.(In other countries (the US, Spain) it caused massive overbuilding.)

So as asset prices rose, people had to borrow more to afford their more expensive homes. As house prices rose, the equity markets fell dramatically from 2000 on (the dotcom crash) causing the poor performance of many pensions.This encouraged people to look at saving for retirement in property via a BTL as an alternative, thus further increasing demand for property. The rise in asset prices was again stoked by the need to reduce interest rates again in the wake of the Sept 11 attack in New York, which also stimulated more borrowing because it was so affordable..

The idea seemed to be to put the brakes on this in 2004/05 with the rise in interest rates.But unfortiunately by then the banks and the markets were on a roll, and the authorities effectively lost control.

Conrad

The rise of British materialism has been accompanied by the decline in intelectualism.

Our neighbour laughed out loud when my wife mentioned we watch nature documentaries. Ugly Betty all the way.....

barnaby-bear

Conrad wrote: »

The rise of British materialism has been accompanied by the decline in intelectualism.

Our neighbour laughed out loud when my wife mentioned we watch nature documentaries. Ugly Betty all the way.....

Gosh - a discussion on the benefits of shagging penguins/llamas/meercats to literacy.

StevieJ

barnaby-bear wrote: »

Gosh - a discussion on the benefits of shagging penguins/llamas/meercats to literacy.

You did well to get that one through

robin_banks

The increase in personal debt has been mirrored by the decline of personal responsibility imho, just watch some of those living with debt documentaries, 8 times out of 10 the situation could have been avoided if the individual concerned had sat down and thought about thier situation.

I accept there are some cases where several events occuring at the same time well and truly ***k someone over.

Just because you've got a £20,000 pound limit on your various credit cards does not mean you have to spend up tp the limit, here's another tip - it has to be paid back. MEW'ing doesn't happen to be the way forward either.

Now I'm a little peckish and I'm off to pick up a penguin.

SingleSue

GrammarGirl wrote: »

Don't you feel he will miss out on the whole 'university experience' by staying at home, just to avoid probably the most manageable debt he will ever have to take on?

I stayed at home in my first year of uni for exactly the same reasons - my mum had always brought me up to think debt was bad (which of course, it is) and I hated the idea of a loan hanging around my neck. I missed out on so much in my first year that I grabbed the student loan with both hands and moved out in my second year.

I had a part time job throughout uni and was sensible about my level of debt. I loved the freedom and independence living away from my mum gave me, but I didn't go crazy. I haven't been back home since moving away in my second year, and although I DO have a level of debt, it's small, manageable and has taught me how to budget and plan my spending.

I'm just curious to know if people think choosing a different university experience to avoid student debt is worth considering in the current climate. It's an interesting point to argue, I guess.

I personally feel university should not be about the social side experience but about learning...but then I was always a boring begger.

Although the above is my personal feeling, I have pointed out to my son that he would miss out on the whole uni social life if he stays local but he feels that it is more important to start life with a smaller amount of debt and maybe miss out on the fun side than have loads of debt and the fun, to him it is a small price to pay.

Plus I think he wants me to do his washing! The whole idea of doing that stuff for himself makes him shudder

lostinrates

SingleSue wrote: »

I personally feel university should not be about the social side experience but about learning...but then I was always a boring begger.

Although the above is my personal feeling, I have pointed out to my son that he would miss out on the whole uni social life if he stays local but he feels that it is more important to start life with a smaller amount of debt and maybe miss out on the fun side than have loads of debt and the fun, to him it is a small price to pay.

Plus I think he wants me to do his washing! The whole idea of doing that stuff for himself makes him shudder

TBF learning to do your own washing and budgeting and general survival is valuable too (if one hasn't learned it already, but at 18 I'm amazed people are still afraid of the washing machine :eek: ). But there are pros and cons to both options.