1 in 4 households are struggling

lemonjelly

Saw this news story last night. Couldn't bring myself to use the daily express link I found (didn't want to upset purch!), so I've used the guardian. http://www.guardian.co.uk/uk/feedarticle/8720130

If it is correct that 1 in 4 households are struggling to meet basic essential payments, this could mean that the hard times really are starting to filter through, and could get worse with impending fuel costs rising, and the like. Plus Christmas is approaching, and we should be aware how that affects peoples financial priorities.

I wondered what peoples thoughts are on this? I am aware that many (particularly people I see & know) struggle with household bills, mainly because they have skewed priorities, & buying a quad bike for their 12 year old is more important to them than paying their mortgage/leccy bill. But optimistically, I don't believe this applies to the majority. A lot really will be struggling.

Those recently made redundant will be experiencing a culture shock, with a vast discrepency in their income, as it would have gone down. owever, they aren't enough to account for 1 in 4 households struggling.

Understanding of finance, financial products and budgeting skills (or the lack of) will have its part to play in these figures too.

But I also wonder if the alleged cheap cost of living we have (a myth IMO) is a significant factor here. I mean, there is a lot of stuff out there (not just houses ) that to me is overpriced. And household essentials have continued to increase in cost.

Further, what does this say for the future? If they're struggling now, it is only a matter of time before they start robbing peter to pay paul, and a debt burden starts to spiral. It could lead to increases in illegal money lending/loansharking. And if people are struggling now, how will they cope with the tax increases we all anticipate will come in the next 2 years or more? Additional cost burdens aren't going to help, they can't afford stuff now. This increases the likelihood of defaults by people on essentials, taxes and the like. I also suspect there is an increased propensity to commit fraud of some variety.

What do you lot think?

thriftybabe

My friend is a single mum and was made redundant recently. She is very proud and does not give much away but is struggling badly. We go out for coffee and sometimes she cannot even afford that. It is horrible to see that first hand especially for someone through no fault of their own was made redundant. She went to University and is now looking for anything to get money. She told me what she would gets on benefits. She is actually better not working as the work she will get is only part-time as she has kids and is on her own. It really is a horrible situation for her and I am sure there are many more out there. It is going to be a bleak Christmas for many.

bendix

lemonjelly wrote: »

I am aware that many (particularly people I see & know) struggle with household bills, mainly because they have skewed priorities, & buying a quad bike for their 12 year old is more important to them than paying their mortgage/leccy bill. But optimistically, I don't believe this applies to the majority. A lot really will be struggling.

?

You're wrong. The majority will have their priorities wrong. Sky HD is more important that electricity. A second holiday is more important the mortgage. Luxuries paid on credit cards are more important than repaying those credit cards. Our definition of what 'struggling' means has changed drastically in the last 20 years.

This time last year there were around 5% unemployed. Today there are around 9% unemployed. That means still 91% of the UK are no worse off today than this time last year. In fact, many will be better off with low inflation and low interest rates.

So if they are struggling now compared to then it can only be one of two things - either newspaper sensationalism, or - more likely - a gradual realisation that debts need to be paid off, and tightening of credit which means the things they thought they could afford then (but couldnt) cant be bought today.

vivatifosi

lemonjelly wrote: »

But I also wonder if the alleged cheap cost of living we have (a myth IMO) is a significant factor here. I mean, there is a lot of stuff out there (not just houses ) that to me is overpriced. And household essentials have continued to increase in cost.

That to me is the key issue lemonjelly. Costs for things that are inelastic, that people have to buy (staple foodstuffs, fuel for the house and car) remain high. It's great that you can cut a better bargain than ever before on household goods, but if you can't even afford the basics what's the point?

There was an article on Sky News this morning stating that 13% of cars in the UK are being driven uninsured, with areas of deprivation the worst affected. Apparently almost half of all cars are uninsured in one part of Bradford. I don't condone driving without insurance and appreciate that some who are doing it are just plain wreckless, but it is nevertheless a scary statistic if people are running cars but can't afford to insure them.

thriftybabe

I think you are probably right bendix for the most part. However, some people who may have thought there job was alright did not put away for a rainy day and now find themselves without a job. We cannot all be the same. Some people do live for the minute which is a great way to be but on the same hand I could not do it.

If my other half and I had the same attitude as some of our neighbours we would most likely be having our property repossessed! We have lost roughly 80% of income since the start of the year! The good thing is we have no debt with our cars or our house and have some savings. They will not last forever but hopefully things will turn round.

I do often think about my neighbours since this happened to us and TBH they would be absolutely devastated if what has happened to us happened to them. At least three of them would lose their houses I think within 6 months as they live life to the full and live day to day.

bendix

thriftybabe wrote: »

I think you are probably right bendix for the most part. However, some people who may have thought there job was alright did not put away for a rainy day and now find themselves without a job. We cannot all be the same. Some people do live for the minute which is a great way to be but on the same hand I could not do it.

If my other half and I had the same attitude as some of our neighbours we would most likely be having our property repossessed! We have lost roughly 80% of income since the start of the year! The good thing is we have no debt with our cars or our house and have some savings. They will not last forever but hopefully things will turn round.

I do often think about my neighbours since this happened to us and TBH they would be absolutely devastated if what has happened to us happened to them. At least three of them would lose their houses I think within 6 months as they live life to the full and live day to day.

And at the end of the day, it all boils down to the issue of personal responsibility. It's something I managed to learn when I was a teenager; and I have little patience for those who don't have it, I'm afraid. You did the right thing to not over leverage; and that has helped you.

Sadly, it's something bereft in modern society.

phil1873football

thriftybabe wrote: »

. We go out for coffee and sometimes she cannot even afford that. .

Have you seen the cost to purhcase a cup of coffe in a coffee shop these days, maybe if these establishments sold their products at a reasonable cost, they might just get more customers.

lemonjelly

bendix wrote: »

You're wrong. The majority will have their priorities wrong. Sky HD is more important that electricity. A second holiday is more important the mortgage. Luxuries paid on credit cards are more important than repaying those credit cards. Our definition of what 'struggling' means has changed drastically in the last 20 years.

This time last year there were around 5% unemployed. Today there are around 9% unemployed. That means still 91% of the UK are no worse off today than this time last year. In fact, many will be better off with low inflation and low interest rates.

So if they are struggling now compared to then it can only be one of two things - either newspaper sensationalism, or - more likely - a gradual realisation that debts need to be paid off, and tightening of credit which means the things they thought they could afford then (but couldnt) cant be bought today.

I'm not sure how you can say "you're wrong", when I actually state in my gambit that there are people who aren't prioritising properly.

Though inflation is low, prices are still creeping up. Incomes are being frozen, & pay cuts are in effect. Therefore in real terms people have less income.

If you read the link, you will see that the research isn't by newspapers, but has been carried out by an insurance company. So not even a bleeding heart charity.

Restricted access to credit will undoubtedly impact on people. As I've said in many previous posts, people have been paying ongoing living expenses by credit & living above their means for years, as credit has been so cheap. The crunch & lack of available credit has brought this to an end.

But I think that it is a tad naive to believe that 25% of the country are struggling because of this given everything else that has happened in the economy in the past year.

JonnyBravo

bendix wrote: »

The majority will have their priorities wrong. Sky HD is more important that electricity.

:rotfl:

They've clearly not thought that one through....... it unintentionally emphasises your point though I guess.

lostinrates

JonnyBravo wrote: »

:rotfl:

They've clearly not thought that one through....... it unintentionally emphasises your point though I guess.

Isn't there a requirement for electricity companies to arrange a payment plan and resist cutting off? I doubt sky provides the same lifeline in distress.

(not that I agree with the etreme in either extreme of the debate. I'm resigning myself to being middleground, middle road, middle England.)

phil1873football

I would agree with Lemonjelly, I have remained in employment, but have agreed to a 10% paycut to help the company through this difficult time. Therefore, I am worse off. On top of this all I see are prices rising, especially petrol, and no matter what is reported, food IS rising gradually. Also, in under 100days, I believe VAT will increase by 2.5% and go back to 17.5%, it has also been rumoured it will rise again to 20% to pay-back what we owe...if we are in the same position as now and VAT increases to 20% and all the further tax increases the various political parties are proposing, then I don't see a light at the end of the tunnel just yet.