What's Changed?

barbiedoll

The banking industry has steered everyone towards using credit as part of everyday life. As soon as people started to be paid straight into their bank account instead of being given cash in a wage packet, it became easier to lose track of what had been earned and how much had been spent. Then along came bank accounts with overdrafts, which were sold as an essential budgeting tool, cashpoints which only dispense amounts of £10 or over (so no more drawing out a fiver for your bus fare, lunch and newspaper in the morning,) immensely complicated interest rate calculations so no-one ever really knows the true cost of borrowing, and the spurious "rewards" for using your credit card.

Add to that, the ease of obtaining credit, (witness the amount of benefit claimants that have been given high APR credit cards), store cards thrust upon unwary shoppers with the promise of "10% discount on everything you buy today", consolidation loans given to debtors who were obviously in financial difficulties and the rise and rise of the "payday" loans, it's easy to see how practically the whole country is up to their eyes in debt. Of course, it's a sad fact of life that we only tend to wise up on financial affairs AFTER we have realised how much we owe and how long it's going to take us to pay it back. Or when disaster has struck and unemployment, sickness or bereavement has pushed us to the point of no return.

It's not always about "keeping up with the Joneses", for some people, it's more about keeping their head above water. The ludicrous rise in housing costs, fuel bills and insurance have left many people in the mire. Charging someone £35 for missing a bill payment for a couple of days really doesn't help anyone (except the bank) and it is easy to slip into the red and suddenly get trapped in the spiral of charges where sticking the food bill on the credit card is the only way that many folk can feed their kids.

I do sometimes yearn for the days where we went to work, came home on Friday with a brown envelope full of cash and if there was none left by the following Thursday, then we went without! Life was certainly a lot cheaper then and somehow the banks still stayed in business.

danothy

Today I walked past "The Money Shop" on St. Mary's Street in Cardiff, there was a stand outside it with music playing and a guy handing out information on their "specials", much like the phone shops had a spate of doing.

I don't know if people are more susceptible to credit being pushed on them as a product than other rubbish they don't need, but I would say it's being pushed more and that has contributed to the overall level.

I guess the idea that it's ok to lend more and more because it's profitable has lead to the pushing, and the prevalence of it has lead the consumer population to be comfortable with it in general (until the bubble somewhat burst).

I wonder if there is a psychological difference in the perception of financial products or if there is data that compares the acceptance rate of credit products when offered unsolicited to the acceptance rate of other types of products offered unsolicited.

iolanthe07

A lot of people have little structure and purpose to their life and are unable to maintain much of a decent relationship, what with multiple partners and dysfunctional families, so the only gratification they can get is material - buying things they mostly can't afford. There seems to be a breakdown of moral fibre these days.

tallyhoh

I sometimes wonder if its because things are relatively CHEAPER than they were years ago. 30 years ago a trip to the hairdressers was a treat to be saved for as were other things like clothes or holidays.

My theory is (looking at my OH) that because things are cheaper we dont notice how the debts are building up. As in "oh its only £xx, I'll have one". 30 years ago we would have thought more carefully about purchases because of the cost??

Well, thats my theory anyway.

Ballyhoo

Interesting you should raise this question... there's a great article in tonight's evening standard (London ed) about "Generation Earn" - some academic reckons that the current middle classes at unni are going to grow up more responsible and focussed on debt having seen their parents caught in a cycle of debt and short-term goals.

It sounds horrible, but I sort of hope its true. I'm a long-time lurker, I am very VERY lucky not to have loads of debt. I worry about my baby sister at college right now, and hope that she's one of this new generation of moneysavers.

TRYINGTOSWIM

great question, I've been wondering this for a while. looking around at friends and family,especially now we have began to live more frugally ourselves and watch what we spend, and try not to waste money on rubbish we dont need.
I think people have forgotton what it means to be working class now,by that I mean people seem to want every latest trend or gadget and will convince themselves they deserve it because others have it.
I have tried to explain to my teenage sons there is absolutely no shame in saying ,"I'd love to do such and such but I cant afford it at the moment", and if they want something then wait until they save.

years ago whole communities were in the same boat so to speak, as in working together in factories and mines, so people were proud to be part of something which held them together and like mixed with like. now with loss of mines,factories etc whole communities are breaking down and we compare ourselves to mr jones in the next street.

I was brought up on a tight budget, have been the person who wants something and therefore haves but now have seen the light and I am proud that we both work hard in manual jobs, we manage to put food on the table ev ery day. I actually get pride from saving up rather than just flashing the credit card.and I think as a family we are happier for it. certainly happier than we were when we had everything we thought we wanted but enjoyed nothing as we were worried over debt.

Squirrel29

Thats a great post trying to swim. Yes and I think also the benefit of those sort of communities such as mining meant you lived nearby so walked to work, you has similar houses so no feeling you had to compete with those that could afford the 4 bed detached place!

I led quite a simple life as a kid and a BIG treat was a family summer drive out to a country pub where I got a bag of crisps and a glass of pop! But I loved those times and they stand out more than the memories of finally going for a week abroad in my mid teens!

dreamdreamer

That was spot on I think, tryingtoswim. Loss of community spirit is responsible for a lot of the things wrong with this country.

I intend to be debt free by the time we have children but I fully intend to involve them in budgeting from the start. My parents saved the good old fashioned way to take us all to disneyworld. They promised us when I was 7, and we helped them save for 5 long years! They involved us, we had a little target thermometer in the kitchen like on a church! It was an amazing holiday and my favourite memory. I think if we'd just been handed it without the slog, we'd have cherished it far less.

cuddlymarm

Hi

I work in a shop and it never ceases to amaze me the ammount of people that pay by card for something that costs £1.50. It is so easy to keep spending and get into trouble if you don't keep track. I use cash for as much as possible cos you notice it going. Also it is rare that you really need what is in the latest sale but we are brainwashed to think we are missing a bargain and where sales used to be a couple of times a year when I was young now it is rare that there isn't some sort of sale on somewhere

Cuddles:)

Peter999_2

I'd very much recommended using financial software like Microsoft Money or Quicken to keep track of finances. I've been using it since 2003 and with internet banking it makes it very easy to keep up with your finances.

Its very useful for running reports (have I really spent £733 since 2003 in Burger King).

The bit I love is that all my direct debits come out on 1st of each month, it looks like nearly all my wages are gone. However, when you enter it into MS money it just gets transferred to the credit card bills etc. and your current net worth only goes down by utility bills etc. and doesn't look half as bad.

You click on a button and it gives you a graph and tells you what your current net worth is, and what it has been over the last 12 months. You can then see if you're losing money or saving money.

Re the comment regarding using a card for everything - I always try to just so its easier to enter it into MS money.