Won't it make a run on the banks more likely...

dopester

Pennywise wrote: »

Well, we're on a spending spree if no-one else is. We've just bought a brand new car, spent £17k on renovating our house, and bought all sorts of other smaller items, such as a new computer, furniture, jewelery etc. We're about to spend the rest of our savings as the deposit for buying a new house, on which we'll be spending £50k on a huge extension. We've taken the view that there is absolutely no point in trying to save money, either as savings in a bank, in stocks & shares nor as a pension. We've saved all our lives and we've lost money time and time again (Equitable Life, stock market, etc), so we've had enough and are going to live life to the full now. It's a brilliant time to spend money - a couple of years ago, we couldn't get a tradesman for weeks and then they'd charge a fortune - now we can get a plumber or electrician the same week at far fairer rates. We got thousands off the price of our car and bought loads of things in the sales (not wasting money on things we didn't need, but just bringing forward purchases that we'd have to make anyway in the future). I can see the real value of sterling plummeting due to the prospects of hyper inflation, crazy interest rates and exchange rates.

It has only just started. Deflation. You're right in one way but crazy to go out on a total spending spree right now - right near the beginning of the deflationary process, as this is a long term process - and inflation can't be magicked up like some of the forum believe.

Even if your money is earning near 1% interest, its purchasing value is increasing all the time. Just look at that "gypsy v tradesmen" thread yesterday which confirmed all I've said for a year+.... that electrician saying he would do the job for a lot less pay than before.

You seem to be getting similar better value employing your electrician, but £50K for an extension? You should be able to build a pretty decent house for that in my opinion. Are you sure you couldn't get better value there. Even with the top firms. As an aside, I'd be wary of paying upfront as well.

In recession/depression times, its been said houses are built better (and maybe extensions) as workers aren't in mad-rush to throw up buildings one after the other, job after job on the go, but take their time, are grateful for the work, and get things right - but a bit of oversight also always helps.

dopester

Chris2685 wrote: »

... if interest rates are lowered anymore?

I've got a few grand in cash "out-of-the-system" (a years worth of living costs)- because I think its a sensible measure to cover many possible outcomes - but am not planning major withdrawal. I think my savings are safe enough with NS&I and HSBC.

Old_Slaphead

Deflation - not sure about that.

Bought TV before Xmas from JLP for £349 price now £379. Ditto DVD, now retails for more than 3 months ago.

Also offered £500 below asking price on 9 month old car from main distributor but he wouldn't even negotiate (other than offering £500 less p/ex).

Like Pennywise (also an ex EL), we're looking to spend more provided good deals are in the offing.

Will be keeping some back thought because cash gives you choices.

cowbutt

Like pennywise, I'm less motivated to save at the moment and so I'm spending on stuff I need from savings accrued over the years. I've also paid off about 10% of my (fixed-rate until 2011) mortgage. I'm also treating myself to smaller consumer durables (new computer, second-hand console and a bunch of second-hand games) that I might have previously deferred indefinitely in order to save more.

Rochdale_Pioneers

Some of us aren't in a position to save and weren't when things were going well. We have cash being built up for the kids, but no savings of our own as yet. What we have done is successfully paid off all the debt that you leave university with (£13k in my case). Now that payments in those have stopped there's a much bigger mortgage and kids to pay for.

And frankly there are an awful lot of people out there who don't have the luxury of deciding which hole to sink their free cash into every month. Whines about savings rates are a wonderfully middle-class thing, which when you set it against people in real danger of losing their job and house and whatever life they have slogged their guts out to earn doesn't seem quite as important - unless you are so self-obsessed that you can't see past the end of your nose.

beecher

Rochdale_Pioneers wrote: »

Whines about savings rates are a wonderfully middle-class thing, which when you set it against people in real danger of losing their job and house and whatever life they have slogged their guts out to earn doesn't seem quite as important - unless you are so self-obsessed that you can't see past the end of your nose.

Many people are in danger of losing a life they couldn't afford in the first place and some might say that they are the ones whining now that they've notice the Emperor has no clothes

Retired people who have to live on their savings aren't 'whining' - many are aggrieved at having to endure low interest rates because of the !!!!less spending what they didn't have.

As an aside, I'm on a slightly below average income, have a small amount of savings and live a life which I can afford - I'm not convinced that those who have more 'stuff' but also more 'debt' have slogged their guts out any more than I have.

chunky79

We are looking to build a 2 storey extension and a front porch last year after giving the builder an idea of what we wanted he quoted around 30k no more than 35k he told me he could drop the price now...by a few k. I do trust him he his a long time neighbour of my parents and has done alot of building work on this street and in this village.

I am more inclined to go with it now than i was this time last year, i can understrand what pennywise has said but i am still a little weary.

dopester

Rochdale_Pioneers wrote: »

Some of us aren't in a position to save and weren't when things were going well. We have cash being built up for the kids, but no savings of our own as yet. What we have done is successfully paid off all the debt that you leave university with (£13k in my case). Now that payments in those have stopped there's a much bigger mortgage and kids to pay for.

And frankly there are an awful lot of people out there who don't have the luxury of deciding which hole to sink their free cash into every month. Whines about savings rates are a wonderfully middle-class thing, which when you set it against people in real danger of losing their job and house and whatever life they have slogged their guts out to earn doesn't seem quite as important - unless you are so self-obsessed that you can't see past the end of your nose.

What a load of rubbish. You probably took on a mortgage too early and paid too much. Your own fault as far as I'm concerned, instead of renting and continuing to save. Savers aren't middle-class. They are individuals.

And you can save a fair sum in a lifetime with just a few pounds a day and mastering compound-interest... instead of spending it on all your immediate desires and taking on more debt.

What a hang-up you have about savers. "Middle-class thing". I know Rochdale well. As a 6 year old kid I remember Cyril Smith carrying me on his shoulders in a busy Rochdale jumble-sale hall.

In a member of my family's case, worked part-time through Uni, took on an extra £7K to do her post-graduate course, and paid it all off in 3.5 years at £360 a month from her first main job. And then living at home / renting - with me to guide them that house prices are just not worth it. A big bulk of her income towards that debt, but now paid off, with approaching a sum towards a significant deposit for a house.

You make your own decisions in this life - and not all savers are middle-class.

Rochdale_Pioneers

dopester wrote: »

What a load of rubbish. You probably took on a mortgage too early and paid too much. Your own fault as far as I'm concerned, instead of renting and continuing to save. Savers aren't middle-class. They are individuals.

And you can save a fair sum in a lifetime with just a few pounds a day and mastering compound-interest... instead of spending it on all your immediate desires and taking on more debt.

What a hang-up you have about savers. "Middle-class thing". I know Rochdale well. As a 6 year old kid I remember Cyril Smith carrying me on his shoulders in a busy Rochdale jumble-sale hall.

You make your own decisions in this life - and not all savers are middle-class.

You're making some pretty sweeping statements about me there. Too big a mortgage bought too early? Nope, traded up from the last house where we made 120% of the price we paid as profit. We were banking £600 a month for the first few years since we moved in - thats not gone as the family has expanded and my wife has stopped working full time. A choice we maid yes and I am fine with it.

And where did you think I have a hang up about savers? All I am saying is that the interest of people worried about declining interest on savings has to be weighed against the worry of the million or so being dumped onto the dole and those people losing their homes as a result. My comment on attitudes was that too many people have no interest in anyone but themselves - as I'm on a fixed rate mortgage until May 11 (and very happy having saved a bomb as rates shot up far above what I am paying pretty much upon taking the thing out) I'm not making any cash on dropping interest rates nor am I losing earnings on savings. I'm not worried about negative equity (nor in it yet) nor am I in imminent danger of losing my job.

So I have nothing personal in this. I get why people get upset when it affects them, but some people would be happy to screw over others if it keeps them OK. And thats not the kind of position Cyril would have supported either as you will fully well know.

Wookster

dopester wrote: »

It has only just started. Deflation. You're right in one way but crazy to go out on a total spending spree right now - right near the beginning of the deflationary process, as this is a long term process - and inflation can't be magicked up like some of the forum believe.

I think the behaviour of assets and essentials will be opposite. If QE is undertaken then the CPI which is already 3% (having dropped just 0.1% from the previous month in this mad 'deflationary cycle') will continue to rise, and faster. This will be further compounded by a devaluing pound (QE will do no favours for the strengthening pound) as much of our consumption is imported.

Asset prices and other 'big ticket' items on the other hand will continue to fall as unemployment rises and disposable incomes are further squeezed by higher costs (per the above paragraph).

I don't think we will see hyper inflation (which is defined as inflation over 100%) however something between 10 & 20% is entirely possible and would be extraordinarily painful for all of us, except of course people heavily in debt.