Save, don't borrow.

Derivative

Degenerate wrote: »

I made a direct response to that earlier point illustrating how a contingency fund would vanish quickly if you're a homeowner and got made redundant. Interesting debating tactic - just ignore the counter-points and repeat yourself. It would seem to suggest you can't actually refute my assertion.

If your 'contingency fund' is 5k, sure. The whole reasoning behind a contingency fund is to have enough money to tide over until your next employment.

ILW

i think the whole argument is about over committing in the first place.

Derivative

ILW wrote: »

i think the whole argument is about over committing in the first place.

Well, indeed. To take out a mortgage when you can barely keep the repayments + deal with essentials is irresponsible. It is, after all, debt.

Degenerate

EdgEy wrote: »

I do believe Degenerate is simply trolling. Look at any person of wealth and tell me they spend their entire income as soon as they get it.

You like making stuff up, don't you? At no point have I suggested that everyone should spend their income instantly. What I argued against is practising self-denial for the sake of excessively hoarding money, as preached by some people in this thread. This may not apply at all to a "person of wealth" as you put it - if you have already have everything you could want there is no point in spending money for the sake of it - but for normal people there is a balance to be struck between enjoying the fruits of your labours and planning ahead. A balance that you have misjudged if you end up sitting on a pile of money when you're too old to make the most of it.

Many people made millions during the current "recession" as they invested in stocks on the uptick. Whereas if you're fumbling living paycheck to paycheck, there's a decent chance you were made redundant and got screwed.

What does saving/investing vs living paycheque to paycheque have to do with one's chances of being made redundant?

But anyway, suppose you were somewhere in between those two extremes when made redundant. You had a modest saving pot for a rainy day, 3-6 months salary as recommended by opinions4u, but it all went on your mortgage payments. Now a big repair bill for your car has come up and your JSA won't cover it. You're already behind on the mortgage and still waiting for SMI to kick in. You need the car for job-hunting and to get to work if you start a new job. You're facing having to liquidate the house you worked so hard for and did so much work on, but if you can only cling on for a few months maybe you will find a job and everything will be ok... You're tempted to take out some short-term credit tide you over in hope...

YOU STUPID, IRRESPONSIBLE FOOL! IT'S ALL YOUR OWN FAULT! SAVE, DON'T BORROW!

When the boiler breaks you can actually afford to fix it instead of having to wait a month for the next paycheck. Examples go on and on.

May I remind you that when I started in this thread I never said people shouldn't have a rainy day fund, I only sought to point out how it is not always as simple as that and may not always be enough. We only went off on the "under-consumption" tangent because one poster suggested saving to a ridiculous degree such that they would likely end up dying with a big pile of money. There are many risks in life, some people only consider the financial ones. I consider failing to make the most of one's limited time on the planet to be a risk one needs to weigh against financial risks.

I think I've given enough examples of the use of "under-consuming". Now can you give me a reason to spend money on lavish status symbols besides hedonism?

Can you give me one example where I suggested anyone should spend their money on status symbols? Nope, you're just making stuff up.

Degenerate

EdgEy wrote: »

If your 'contingency fund' is 5k, sure. The whole reasoning behind a contingency fund is to have enough money to tide over until your next employment.

And with your psychic powers can you tell people how long that will be?

Would you realistically expect people to save up years of salary on the off chance that they may be unemployed that long?

ILW wrote: »

i think the whole argument is about over committing in the first place.

Is anyone that hasn't saved enough to cover for the worst thing that could possibly happen over-commited?

(Free clue: however much you save, there is always the possibility of something too big for your resources.)

EdgEy wrote: »

Well, indeed. To take out a mortgage when you can barely keep the repayments + deal with essentials is irresponsible. It is, after all, debt.

I already pointed out several times how people who did save up a rainy day fund can still find themselves in trouble.

Derivative

Investing instead of living waiting for next weeks wages means that if/when you do get made redundant, you don't have to get in debt and pay obscene interest rates to get yourself back into work.

I don't care what "opinions4u" or anyone else says, 3 months salary is not a useful amount in case of redundancy.

I don't think we're going to reach an amicable solution because your idea of risk is very different to mine. I consider it a given that at some point in my future, I WILL be made redundant and be jobless, possibly for more than 6 months. I couldn't go through life knowing if I were made redundant I'd have to take out loans just to service loans such as a mortgage.

I don't work to 'enjoy the fruits of my labours', I work to provide myself and any future dependants of mine with security.

Degenerate

ILW wrote: »

My point was that if you have committed yourself to a level of spending that does not allow any saving for a
contingency

I've pointed out several times that people who have saved can still find themselves stuck..

and then get made redundant and take out a loan to tide things over. You will need a higher paid job to not only cover your overheads but also service the loan.

Or you can service the loan with the money you were saving before in the contingency fund that ran out paying your mortgage. Once you're employed you may be able to refinance expensive loans onto your mortgage. People can and do muddle through. OTOH, the odds of falling flat on your face are pretty high too - but when the alternative is losing you home anyway, how much do you have to lose?

Degenerate

EdgEy wrote: »

I don't care what "opinions4u" or anyone else says, 3 months salary is not a useful amount in case of redundancy.

I don't think we're going to reach an amicable solution because your idea of risk is very different to mine. I consider it a given that at some point in my future, I WILL be made redundant and be jobless, possibly for more than 6 months.

Are you saying you've not saved enough for a year or two? How irresponsible. Well, if you get made redundant and are unemployed for longer you'll know you only have your foolish self to blame when you lose your home. Should have spent less and saved more.

Derivative

Years of salary in money kicking around in the bank? Perhaps not.
Years of salary in assets that can be liquidated quickly enough before your cash fund runs out? Sure.

Degenerate

EdgEy wrote: »

Years of salary in money kicking around in the bank? Perhaps not.
Years of salary in assets that can be liquidated quickly enough before your cash fund runs out? Sure.

And how many people can afford that? Are you suggesting that people are over-commiting themselves buying a property unless they can afford a spare?