The recession, benefits, the safety net, and the learning curve

Max_Headroom_3

dopester wrote: »

Max, maybe by max-ing out on the MEW? So thereby having enough capital to see back the repayments for the duration you're out of work.. until you get work or set-up in business yourself. I've never seen the forms so I don't know if they ask about current employment.

Anyway, in MEW you've selected the weakest of the options I've put forward - which I said didn't advise.

Dopester, yes I did, you're quite right, I just really wanted to see how you saw that idea working?

The idea of digging deeply into debt using my one main asset and indeed only residence as collateral for that debt in order to survive a indeterminate period with no income fills me with absolute horror, even if it could in fact be done which I'd doubt (can't see many banks saying "here's £30K, just pay the loan off with the money we've lent you" somehow )

You own a modest-terrace, so perhaps you don't see downsizing as an option. I guess that also depends on it's location. For two areas I monitor closely on Righmove, the cheapest terrace on Righmove is asking £180,000. Were it similar for you, then an option might be to move to move to another terrace but to an area where you get more for your money.

Just for the record, my home is worth a fair bit less than £180K. in theory I could downsize you're right, but how much would that cost in terms of selling and then buying costs, just to live somewhere I don't like, and I've still got no income, just a dwindling pile of money (which, incidentally, will instantly kill JSA payments in the process).

There are two outcomes of that situation. Either I burn through the money and end up right back where I am now, but in a flat not a house, which is of no help.

Or I get a job, wayhay! Oh but !!!!!!, I'm now living in a flat, I've spent £10K moving, so that's gone, I've got to spend another £10K trying to move again to get back to where I was, and I've spent £10K of the equity in the meantime. So a year on and I'm back to square one, but with £30K blown, all borrowed (as I'd have to borrow that to get back to where I started).

Not a great idea either way around.

You're probably very happy where you live now, in your current home. I'm not championing a push to get you to move if you don't want to. By the sounds of it, you still have some money to tide you over, and benefits.. even if it might be tight for a while, until you land a new job.

I just wonder what someone in your position would do if they didn't find a new job within a narrow window of time, didn't have sufficient savings to fall back on.... and began to find they could not meet all the bills and expenditure they have coming in on £60ish JSA a week - for food, energy.. then running a car if they chose to keep it, telephone and broadband, house repairs ect ? Take on debt? I don't know.

Yes Dopester!!! Yes yes yes yes YES!!!!

That, my learned friend, is exactly and wholly the entire point of this thread!!!

I've set myself up as an example simply because this is happening to me now. I'm right at the very pointy end of it.

But forget me, this isn't about me, this is about exactly what you've just written.

How the bloody hell is anyone supposed to survive after losing their job on £64 a week????










(Oh, and there was a whole side rant about the fact that meanwhile other people seem to live for years on just benefits, how fair is that? etc. But as I say, that's just a side rant, you've got the thrust of it! )

Max_Headroom_3

ceridwen wrote: »

Well - I can only speak personally - but I have now spent the last year or so preparing for jobloss at some point in the future - its honestly taken me all that time: to get the food growing in my garden/to fine tune the bills/to get stocked up with stuff/etc/etc - so I would quite definitely have needed an "intro" period (like we used to have!!!) to adapt my finances
- though, having said that, the "dole" is SO incredibly low now after all the cuts during the last few years that I wouldnt be able to manage on it anyway - all my adaptations would just mean that I would suffer marginally less than if I'd carried on regardless as before...

Pretty much where I am my friend.

I saw business dipping badly about four years ago (that's when this all began in my opinion, in a very small way. It went mainstream last year).

I've spent the time since desperately hurling every spare penny at my mortgage, finishing off the necessary stuff on the house (long term project, still not completely finished but perfectly good enough for now), all the while chanting under my breath "don't crash yet, please don't crash yet". Well, I wasn't really, that'd have been insane, but you know what I mean.

Someone said to me recently "If you'd known ten years ago that this was all going to happen, and that you were going to lose your job in 2009, you really couldn't have planned or positioned yourself much better for it". Which was a heartening thing to hear to be honest.

Which is why I have no mortgage, no contract mobile phone, no credit card debt, no Sky TV, no loans, no nothing over and above the bare essentials.

And which is why I find it particularly galling that even after all that, after paring everything to the bone, after positioning myself as well financially as was earthly possible, the dear old benefit system still can't support me. I find that incredible!

And my overwhelming emotion at the moment is actually not for me (I'm ok for now, ask me again in six months..!) but for everyone else in a similar position. I'm really fortunate. I'm prepared, I'd been in a long term job so got a half reasonable payoff, I've got low overheads and I'm set.

But what about the other 95% of people who will be, have been, laid off this year?

With perhaps a tiny payoff, commitments, overheads and debts?

What the bloody hell are they going to do??? :eek:

Max_Headroom_3

Could I just also add, whilst I'm in full verbal waffle mode:

I think this has been a really interesting and useful debate. All the input (both agreeing and disagreeing) has been extremely welcome and well reasoned, and it's all good.

So thank you, all.

lynzpower

Max_Headroom wrote: »

I understand that completely, but I fear you're missing my point.

Yes of course the two circumstances are different, but the situation is the same. Both people are living entirely on benefits.

Now if you want to say that benefits shouldn't fund a living, just go toward it, then that's fine.

If you want to say that benefits should afford a person a very basic standard of living then that is also fine.

However, what we actually seem to have is a system that allows one person to afford a living from it, and another person not to because (as you say) their circumstances are different.

What you need to decide is whether or not that's ok?

Is it right that the system supports one, but will not another another?

And that's before you take into account those circumstances, ie I've worked my whole adult life and am desperately looking to get back into work. Whereas she's lived on benefits for a goodly proportion of hers and continues happily to do so seemingly without care or effort to do otherwise.

And that is the whole point. That different circumstances clearly currently allow a large and unfair advantage or disadvantage.

No max!! ONe is living on benefits ( ie you) and the other, the trainer buyer, is living on Benefits ( from the DWP ) tax credits ( for the childs upkeep, that whiuch could WHOLLY of paid for the trainers- and for all you know debt.

i become so very frustrated when I see all this "well theyve got a plasma" chat, as as you ae able to state, if your telly blew up tomorrow, would you be able to save for another one? Over how long? A second hand 20 quid off ebay jobby wouldtake a few weeks to set aside for. If one goes ito brighthouse youll see they dont have he old 1980s grundig analogue tellys anymore on offer for the cheap end, theyve got the 1.5k one with the 30% apr- BUT you can take it today.

Same if your washing machine, fridge or cooker goes- worse, as you ACTUALLY need these things and not live without them like a telly, stereo or othe basic appliance which most would see asa neccesity but is m ore like a luxury- really.

I heard on the radio today that 32% of people have some sort of debt other than thier mortgage. Thats one in three. Look around you- its everywhere, everyone has it, aside from so many on this site - which is somewhat unrepresentative of the general public, I would assert.

As a socail worker, most of my clients had a socail fund loan taken out for things like moving costs ( from hostel to hostel) basic appliances and small gidfts.. One of my clients took a 20 quid social fund loan for a coach ticket to see her sister who lived in Bristol who had had a baby and she wanted to go and see her. That takes 10 weeks of paying £2 back. However, in that time, youve got Xmas coming, so you need to borrow for that and so it goes on.

Do not also forget that debt costs money, espeically if paying back the "low income rate" of whatever Vanquis/ Prov etc and thier ilk are charging- 20% +

This "theyve got a plasma mentality is SO smallminded, why people who seem to be quite intelligent on this site ( not you max, just in general :cool:) cannto see this for themselves.

http://www.brighthouse.co.uk/products/home-entertainment/televisions/display-product-large.asp?id=SONY32

Cheapest washer- ( I just bought this for 199 elsewhere about 3 months ago )
http://www.brighthouse.co.uk/products/kitchen-appliances/washers-and-dryers/display-product-large.asp?id=WH5726WW with credit price over 3 years 464

Max_Headroom_3

Lynz, yet again I can only reiterate that the trainers issue was simply one example. I can give you others, like she has and runs a car, has nights out, etc. Now maybe she's doing all that on credit, but I've known her four years. And she's only one example, I know others too who quite simply ARE able to live on benefits. (Incidently, if she is doing it all on credit, what do you suppose happes when it runs out and she can't repay? They can't take her house, it's not hers. and they can't ask for a remotely sensible repayment, she's on benefits).

To address your other issue, that they get tax credits etc. Call it what you like, the point remains, she (they) are able to fund a modest life on benefits of one sort or another.

I can't.

Dress it up how you like, it's a fact.

dylansmum

Perhaps single person' s allowance needs to go up, rather than family's going down? A single parent with one child will get about 135 per week (he or she gets 64 income support and 53 for the child, then child benefit at 20). Bear in mind that child benefit can be claimed by anyone with kids (any income) and CTC up to around 58k - still an extra ten quid a week. So I see no terrible thing giving a single parent 7k a year for mum/dad and one kiddie, if a high earner can add 30 quid a week to their income. Obviously, my example of single parent will also get housing benefit (including new payments for mortgage interest - though this is still not great I am told).

This means that benefits are less than min wage, even for those with kids - housing benefits/CTC AND WTC credit supplement min wage. So benefits are, cash in hand, less than working for min wage, in spite of some general hysteria sometimes seen about how those on JSA are better off than working. I know someone may come back on this and say 'ah but they are getting paid for nothing' ...another debate perhaps.

But the single element of 64 is just rubbish. I was on the dole in the 80s (and then child benefit got knocked off income support - didn't have kids then but recall that reduction) and it was blooming awful. Miserable.

Living on 60 quid is really tough - bills, food - can be done and I have done it, but not easy. And living on 130 quid with a kiddie seems not to be too much! Kids cost money.

Good luck Max.

PasturesNew

So if you have a kid, you get £53+£20 for them ... which is more than the single person having to pay all the building overheads etc. Which means you can say £10 to feed the child from that £73 and £63 "fun money" to buy them stuff.

Shakethedisease

The famous "British understatement" methinks....."a bit harsh" to be forced to sell ones house because of a (hopefully temporary) spell of unemployment. Can I phrase that in more "international" language? How about "b****y outrageous" - I think that sums up it more accurately...

Happens to tenants all the time every 6 months. 'No Dhss/No kids' is usual. Replace the word 'sell' with 'tell the landlord we're claiming benefits' and welcome to the world of trying to rent while unemployed and there is no social housing to be had.

PN.. in all honesty and with respect. I don't know much about 'fun money'. I do remember my kids sharing a cup-a-soup between them when things got really bad. Social fund loan for beds and bedding and a 3 piece suite when I got the council house, catalogue bills for a washing machine/clothing and a provy loan for £150 ( @ 50% interest ) for the Xmas before, nappies etc..on top of the utility bills generally took care of the extra £50 nicely each week.

When I started my midwifery course ( I put my breeding experience to good use ).. and I had to take a day off 2 weeks after starting because I was ill. I got a huge lecture on how I should've phoned in. They were a bit taken aback when I said I didn't actually have a phone...

Building 'overheads' was a distant dream.

SingleSue

Max_Headroom wrote: »

But Sue, that's the point. I couldn't! As I've repeatedly said, on what I'm due I can't afford to eat, so do you really think I'm going to be carefully saving £2-50 a week to buy someone some £140 trainers, or do you think I'm more likely to buy a loaf of bread and some cheap jam?

You and me both Max, I would never save £2.50 a week (or even half that!) for a pair of trainers.

It is harder for you at the moment as you have been used to a higher disposable amount, I'm a master at it now! :rotfl: I had the same problem when it happened to me, I had been used to going in the supermarket every Monday and getting the shopping for the week at £60 (sometimes more!), all of a sudden the amount I had appeared as if it would never stretch to me being able to eat.

It is a horrendous change in circumstances and it does take a while to adjust, not just the way you shop but also with any already contracted to items, the way you use your heating or lighting, the amount of clothes you buy etc.

The last clothing item I bought for myself was 2 years ago and that was a pair of jeans for a fiver in the sales, in the winter, heat is very severely rationed at all times the water is conserved etc....it was thanks to another very kind member of MSE that I even had a coat to wear in the winter.

When I think of the life I had before (our combined earnings was circa 60k a year), which was not really extravagant, to life now....it hurts.

As I have already said, I get through it by selling items.....those items are fast running out, so in the warmer months, I try to put that £3 or £4 away to help out in the winter.

It probably seems very overwhelming for you right now Max (oh begger, here she goes again being emotive you all say!) but it does improve with practice....the juggling skills become quite finely honed.

Snooze

dopester wrote: »

I think it is very relevant.

If you had a house, with no debt secured on it, value of £250,000... £500,000, or £1 million You have an asset of value. You have the choice to sell it, go rent somewhere else with the money release, or downsize to a house of lower value, in perhaps a less affluent area. By selling and renting or downsizing... you could get off benefits immediately and perhaps even start your own business with some of the money released.

Instead you expect the benefits system to support you with higher benefits, when you have such an asset of significant value.... because it is just a house? Whilst also complaining the benefits are not enough to comfortably get by on...

By my way of thinking the system leaves people in your situation with the choice to make... and it is part of the process. I know it sounds harsh, and it isn't personal but just addressing the issue, but others can come in who can afford the home and to run it, without just scraping by on JSA. It is all part of market readjustment. You have a few options, and the JSA is not much higher else it would hinder with market readjustments.

I know the other stuff is injustice... but I can't help but see it as would-be injustice if people who own homes valued at say £500,000... but little by way of savings and income.... got big increases in benefit, allowing them to comfortably keep those homes, without being forced to make adjustments or even liquidate. Even for home owners with homes valued at £70,000 or £100,000. If they can't make good from it, they can get housing benefit in the future.

!!!!!!?!! :rolleyes::rolleyes::rolleyes:

Quite possibly the most ridiculous post of the year :rolleyes: and I am gobsmacked at how utterly thick you are being.

If your proposal actually existed then one of two things would happen :

1. No-one would ever buy any property or assets
2. People would stop paying their taxes

Rob