Save, don't borrow.

Degenerate

EdgEy wrote: »

Enough savings to last until you expect to be back in employment. If that's a year, then so be it.

So peopke making house-buying decisions need to be able to predict in advance when they may be made redundant and how long it will take them to find work?

Derivative

Degenerate wrote: »

So peopke making house-buying decisions need to be able to predict in advance when they may be made redundant and how long it will take them to find work?

People taking loans should weigh up the risk of them not being able to service those loans and take adequate precaution.

Is this idea foreign to you?

Degenerate

EdgEy wrote: »

People taking loans should weigh up the risk of them not being able to service those loans and take adequate precaution.

Is this idea foreign to you?

Not at all, I'm merely asking you to quantify in advance what amounts to "adequate precaution", which you seem unable to do, despite your eagerness to criticize those "irresponsible" people whose precautions turned out not to be adequate.

Derivative

EdgEy wrote: »

Enough savings to last until you expect to be back in employment. If that's a year, then so be it.

Of course the actual adequate amount of savings is your entire mortgage amount. I'm hardly suggesting people save that. But it must be known that taking out a mortgage is a risk, as with any loan.

To reiterate, I would consider 1 years' outgoings as enough. It's impossible to quantify in terms of "how much salary". Outgoings and your salary are only related insomuch as you let them be.

edit: And indeed there is a risk that you don't find reemployment within a year. That amount of backup is personal opinion. I doubt wholeheartedly that anyone of reasonable mind would consider 3 months adequate time if your home relies on it.

Degenerate

EdgEy wrote: »

edit: And indeed there is a risk that you don't find reemployment within a year.

So 1 year then. You do realise that's exactly the sort of financial risk/opportunity cost toss-up that I previously talked about, you just put the balalnce in a slightly different place. Following your logic, if you don't find reemployment in a year then in retrospect you are an irresponsible fool, for the same reasons you criticize others.

Derivative

Degenerate wrote: »

Following your logic, if you don't find reemployment in a year then in retrospect you are an irresponsible fool, for the same reasons you criticize others.

If you wish. Your previous posts alluded to having any significant rainy day fund at all as foolish and "under-consuming". I know which way I'd rather lean.

My point is that if you take out a loan when things go tits up you pay more than if you save beforehand. Financially the second option is preferable.

I consider money something to be nurtured and allowed to grow, I believe you see it as a means to an end (consumption).

At the end of the day, it's paper either way. You can't take it to the grave sure, but neither do you take your memories.

Degenerate

EdgEy wrote: »

If you wish. Your previous posts alluded to having any significant rainy day fund at all as foolish and "under-consuming".

No they didn't. Making stuff up again. I only brought up "under-consuming" in response to this:

Soubrette wrote: »

Personally I would expect someone to always be putting money in their contingency fund.

Soubrette wrote: »

Otherwise the older you are, the greater your contingency fund and even on a modest income there should be more than enough of it after a few decades to not worry about when benefit kicks in. If like most people you don't have to dip in too far (you are lucky enough to not be made redundant or fall seriously ill) - then you will have money for when you are retired.

She envisages an ever-growing rainy day pot being topped up over decades, not something sized appropriately based on a judgement of risk and need.

Derivative

Well, you're probably looking at a decade or so for a reasonable pot in my opinion. That is if you go for the average, not too thrifty, not living at your limits.

Saving until retirement without a pension... While that is inefficient due to tax complexities I don't personally see a problem with it. Trading long-term returns for short-term security.

edit: Of course that would be appropriately diversified, I'm not talking chuck money in an easy access savings account and leave it to rot below inflation. A mixture of liquid and illiquid assets would help you sell off as time goes on.

Degenerate

EdgEy wrote: »

Well, you're probably looking at a decade or so for a reasonable pot in my opinion.

And you've made it clear that people should have the pot in place before they get a mortgage. So people should save for a decade to build up their rainy day pot... then save a deposit... Good luck with that. That puts Graduates into their mid 30s before they buy. I'm in my mid 30s and will shortly have my mortgage paid off. Wanna know how?

Because I mortgaged myself to the absolute limit of affordability at the youngest possible age, and now I'm getting the payback for that risk.

No risk, no return.

labp04

Reckon I've seen enough chest thrusting to stir me as I like everyone else on these boards sit: at some sort of fantastic technology; probably reasonably warm; and clearly with the ability to seek out the perceived wisdom of potentially many by subscribing to this forum. I wont bang on about the people who saved now paying the mortgage interest of those with mortgages for the past couple of years and I will even resist the (huge!) temptation to engage in the general knockabout which seems to have broken out in this thread.

However, I will suggest that some folk put themselves in the position of someone who believes themselves to have no control over their finances for whatever reason, who is not blessed with the short list of attributes above, who worries about how they are going to get to through the day let alone the week or month, who certainly does not have the ability work out a strategy to flourish financially in these complex times and who does not know where to get decent advice from.

Hmm, not easy methinks!

A Happy Christmas and a prosperous New Year to all!:beer: