The Election Is Over - Tough Times Ahead. Time To Plan!

opinions4u

In Spain the Government has unveiled deep budget cuts.

Jose Luis Rodriguez Zapatero announced a 5% cut to public sector salaries, as well as reductions to pensions and regional government funding.

Perhaps everybody should take a look at their finances and work out how the following would affect their finances, and how they would manage.

- a 5% decrease in pay

- an increase in income tax of 2%

- an increase in the BofE base rate of 3%

I wonder how Cameron and Clegg will deal with the UK deficit? The combination outlined above would hurt me severely (and I like to think I have a good contingency built in to my income and expenditure plan). Build a little bit of a bigger contingency in to your finances now.

Tough times ahead folks. Our Government has borrowed on our behalf, and the time to pay it back will be with us sooner than we'd like.

weehev

this post is scary

no likey _pale_

i agree tho - think times are gonna get worse and worse.

Mark_In_Hampshire

The other things I'd forsee, thanks to our debauchery of the currency:

1. Significant inflation in the cost of food
2. Significant inflation in the cost of petrol

These are ongoing anyway, but personally I'd expect to see the cost of both ramp up very sharply over the next 2 years.

Paul_Herring

Before I start, I realise this won't be the situation of the 'average' household...

opinions4u wrote: »

Perhaps everybody should take a look at their finances and work out how the following would affect their finances, and how they would manage.

I'm probably one of the lucky ones since I started doing that over 5 years ago. (Sadly leaving it over 3 years after clearing my debts...)

- a 5% decrease in pay

We (our household) already gone through over a year of a 33% (roughly) decrease in income (partner quit job, and went to do a course with a view to changing industry. We probably have another year of this.)

In addition I'm contemplating starting up my pension contributions again with a 15% (salary sacrifice) contribution (with employer+employee NI added on top.)

5% in the short term isn't really going to affect us. The contribution will soak up some the money I'll not be putting into regular savings in a couple of months when the term is up. Halifax are having a laugh if they think I'll be continuing this year on 2%.

- an increase in income tax of 2%

Little change for us.

- an increase in the BofE base rate of 3%

Small (fixed rate) mortgage, no other major debts; non 0% stoozed credit cards paid off in full every month, savings to cover the balance on the stoozed cards. Surplus savings. If anything this will help us, rather than be a detriment; assuming of course that the banks don't continue to stuff savers with ridiculous savings rates.

I wonder how Cameron and Clegg will deal with the UK deficit?

No idea yet, but if I were to make some suggestions, Quangos and public sector middle management would be near the top of the list.

The combination outlined above would hurt me severely (and I like to think I have a good contingency built in to my income and expenditure plan). Build a little bit of a bigger contingency in to your finances now.

Make it a long term plan, not just because it's tough now. That's basically what I did 5 years ago, and it's what's helped us over the past year.

It started off as the oft-repeated "3 months worth of expenditure" emergency fund, and by the time I'd reached it, the target had turned into "3 months salary" then "6 months" and I just carried on with it. Once I hit 6 months I started putting the money in places other than savings accounts.

I'm starting to use the savings at the moment, but as a 'top up' so I can go out, rather than needing to use them to live off. I could forgo (some of) the pension contributions mentioned above, but what I'm doing could be viewed as contributing to my pension from my savings, rather than simply living off the savings.

As I said to start with, this won't be typical, but only because I went through all this 5 years ago.

bibise25

:eek::eek::eek:sounds scary

Lokolo

Wooooo better savings rate.

Going back to finish uni next year, so the income tax won't effect me then, but will after.

5% decrease in pay bah. Nevermind eh.

RayWolfe

Lokolo wrote: »

Going back to finish uni next year, so the income tax won't effect me then, but will after.

No it won't. When you flunk your finals for spending too much time on here, you will end up - as I have predicted before - being a hod carrier. People who work on building sites don't have to pay any tax; it's the law.

Lokolo

RayWolfe wrote: »

No it won't. When you flunk your finals for spending too much time on here, you will end up - as I have predicted before - being a hod carrier. People who work on building sites don't have to pay any tax; it's the law.

Noooo, I'll be ringing around houses asking if they want their chimney swept

chris_m

Lokolo wrote: »

Noooo, I'll be ringing around houses asking if they want their chimney swept

Oh no, you wouldn't consider putting kids out of work, would you? :rotfl:

Bloomberg

opinions4u wrote: »

In Spain the Government has unveiled deep budget cuts.

Perhaps everybody should take a look at their finances and work out how the following would affect their finances, and how they would manage.

- a 5% decrease in pay

- an increase in income tax of 2%

- an increase in the BofE base rate of 3%

I wonder how Cameron and Clegg will deal with the UK deficit? The combination outlined above would hurt me severely (and I like to think I have a good contingency built in to my income and expenditure plan). Build a little bit of a bigger contingency in to your finances now.

Tough times ahead folks. Our Government has borrowed on our behalf, and the time to pay it back will be with us sooner than we'd like.

Your post was certainly an interesting one, I think that income tax will rise by four percentage points. Interest rates could well go above five percent depending on how things go. I also think that VAT will rise to twenty percent or alternatively it will be put on food or worse case scenario both will happen.

I also agree with your point that people should seriously start a contingency plan in preparation for the worst case scenario. Without wanting to be alarmist I feel that we are far from over the worst.

Bloomberg

Mark_In_Hampshire wrote: »

The other things I'd forsee, thanks to our debauchery of the currency:

1. Significant inflation in the cost of food
2. Significant inflation in the cost of petrol

These are ongoing anyway, but personally I'd expect to see the cost of both ramp up very sharply over the next 2 years.

I agree with you. My prediction is that by this time next year petrol will be £1.40 per litre. Just out of interest what do you think?