It is like a war

Pobby

MasterBell wrote:

This is a really great read and a very interesting,
as a young trainee i earnt nothing (in a job which is meant to pay well)
yet everyone around seems to think that i should be doing this and that.

Now i accept that i got my self into this situation and i will eventually get out of it.
but i think that society has a lot to blame, i think its all well and good saying that a school should teach kids basic financial issues and morals but surely the blame is with parents to a certain extent also and the ease of borrowing money from banks etc
at the age of 18 i borrowed more than my yearly salary to buy a car and fund the expenses, yet not once was i asked if i could afford it (apart from my dad) add to this a mobile phone, clothes and other items that us as young people feel we should have then, its a disaster waiting to happen
IMO, hope that makes sense

It makes a good deal of sense to me!

Headintheclouds_3

MasterBell wrote:

at the age of 18 i borrowed more than my yearly salary to buy a car and fund the expenses, yet not once was i asked if i could afford it (apart from my dad) add to this a mobile phone, clothes and other items that us as young people feel we should have then, its a disaster waiting to happen
IMO, hope that makes sense

Brilliant thread, all - fascinating reading :T

MasterBell - I know what you mean; as a first year undergraduate if I didn't have £100/week to spend on crap (booze, cigs etc.) I would panic and pop along to my bank to increase the overdraft with nary a thought to how I was going to pay it off. And the bank weren't that concerned either (until I graduated and they wanted their money back)

There definitely needs to be a concerted effort between the government, schools, parents and other adult role models to educate young people on the perils of cumulative borrowing - none of these groups can do it on their own. I could certainly have used that kind of education rather than learning to decline Latin verbs!!

How they would go about that is the big question, though - perhaps Martin should become the Jamie Oliver of finance :eek:

Big_O

Incidentally I noticed a lot of people refer to house prices rises and the need to finance them with dual incomes and spangly new giant mortgages. I contend that these should be swapped around for cause and effect. The massive increase in the number of women employed and with higher incomes meant two things:

1) Couples with joint incomes could afford larger houses.

2) Divorce was an easier option as women became less reliant on the husband.

These combined meant that an increased amount of money available to finance house buying and an increased demand for the number of properties. These both meant increased demand and whilst house building was at the rate it was during the eighties and early nineties things remained stable (over the long term - not mecessarily in the short term!). However, the rate of new build construction has dropped, choking supply. Demand has stayed high (and indeed increased - again, higher incomes, higher population through immigration) but without the supply prices inevitably rose and kept rising. Subsequently (for a few other reasons as well) banks and build ing societies began offering increasingly sophisticated mortgages to finance the purchase of more valuable property. This then INCREASED the supply of money for property, further increasing prices. These mortages aren't going away, do the increase in prices from them is here to stay. And unless the government begin concreting over the green belts, the first is here to stay. Which means a downward house price move can only be caused by an increase in interest rates (although the BoE's lat rate move upwards was actually greeted with another RISE in house prices for soem peverse reason), a giant recession with an increase in unemployment (which barring some unforseen catastrophe seems unlikely), or a collapse of the buy-to-let market. This is far from impossible, but largely linked to interest rates and demand, which is still VERY high, due to large scale immigration, increased numbers of univeristy students and numbers of young professionals moving city and/or job every few months.

Basiacally, I guess what I'm saying is that many of these changes are irreversable as is their affect on house prices. I contend that the worst you'll see is a stagnation of the housing market as wages catch up rather than a crash. But don;t hold your breath, even for that...

Pobby

May well be a possibility that the buy to let lot will suffer.Yields are so low and factor in yoids,refurbs and replacements many landlords are subsidising their tenants.If we do see a rake in interest rates it is possible that a lot of btls will bail out at the same time.

elantan

i'm still really enjoying both your thread and the other thread closley linking this one (can't remember the name oops) it's great to have a discussion lilke this from time to time ...thanks again pobby ..(just don't feel ready to add my 2pence worth)

MasterBell_2

haha the thing is that, debt is widely accepted.
i was talking to a mate about it earlier and it comes down to the simple fact IMO that
peoples pride as said is too blame 20 years ago it was i dont owe anybody anythin etc etc thats certainly how my grandparents are,
now it seems ok as long asyou look good etc etc,

dont think its been bought up, but there have been so many culmenating factors that have caused it that not many people stood a chance against the banks.

Big_O

Absolutely right about BTL yields, Pobby (and can I add my thanks for starting this thread? It HAS been interesting!) so I'll think we see the number of people entering the BTL market dropping off. However, I think that, barring a phenomanal rise in interest rates (and the expected rise in November will probably be the last for some time) the people who got in early will stay there colecting their rent cheques. This will lead to a slowing in house price rises, but little, if any, drop. The aforementioned stagnation.

Pobby

Big O,I feel that the real danger is that people are slowly coming around to thinking that this is a smoke and mirrors economy.I believe,and please correct me if I am wrong,that last month more was paid back on credit cards than was borrowed.In my small business, which is in the leisure industry,sales have been in decline over the last couple of years.comprtitors of mine would also agree that.

The question is,are there a significant number of people realising that they are in a dangerous position with borrowings and attempting to correct this.If this is the case,imho,I suggest that this will herald the end of the``economis miracle``.

ZTD

This may be of interest to people...

Pobby

ZTD wrote:

This may be of interest to people...

Wow!What a read!