Personal debt mountain as big as it ever was.

kabayiri

ILW wrote: »

A short period of pain for a better future.

As opposed to the current thinking of a short period of fun, followed by years of heartache.

The majority of credit spending has been going on imported goods anyway.

That's exactly what a recession is supposed to do. A period of contraction in the economy after which we emerge leaner, fitter and stronger.

Except...we had a completely different recession. Labour used a large public sector workforce to cushion employment levels; supported large amounts of QE; introduced the lowest base rates in 300 years; dropped VAT to 15%; supported car scrappage which helped car imports.

This is all very interventionist, and we are playing out the after effects now.

wotsthat

ILW wrote: »

A short period of pain for a better future.

As opposed to the current thinking of a short period of fun, followed by years of heartache.

The majority of credit spending has been going on imported goods anyway.

We need to make thrift fun. To a certain extent I think we're seeing that already. People seem to enjoy looking for a bargain more than they used to. Capitalism may not have driven the banks bust but consumers should destroy any company that doesn't deliver decent products and prices.

I notice where I live the neighbours (and me) seem to place less importance on getting a new car for example. Seems to be more of an attitude of "it'll do for another year". I know they aren't skint but are just thinking that the recession hasn't been that bad so why push it.

It's not pain; more a realisation that fun can be had in ways other than spending money.

RenovationMan

Once again we have a VI group talking about debt and conveniently ignoring assets. Once again I provide the real-world example of my £250k of debt and £450k of assets, and that's only my house, I'm not including my pensions, savings and investments.

pqrdef

wotsthat wrote: »

It's not pain; more a realisation that fun can be had in ways other than spending money.

Starting from one of the highest standards of living in the world, we ought to have a lot of slack for getting by on less.

It's just that competitive wastefulness has been the engine of our economy.

chucknorris

wotsthat wrote: »

I notice where I live the neighbours (and me) seem to place less importance on getting a new car for example. Seems to be more of an attitude of "it'll do for another year". I know they aren't skint but are just thinking that the recession hasn't been that bad so why push it.

I haven't really changed my policy on cars since I bought my first one in 1985, (except I now tend to buy cars about 1 year old rather than new). Buy a one year old car and run it until it is no longer reliable, then repeat. I am only on my fourth car since then and don't expect to get another until about at least 2018.

PaulF81

30 years old, 195K debt, 400K assets, safe job for the next 10 years on 60K+. Wife earns 25K+.Paying less than inflation for the debt, (2.49% vs 3.5%) and have good prospects in my next career. Reduced mortgage by 20% in 3 years.

No credit card debt past the end of the month, no car loan and a savings fund meaning we have all large bills covered before they happen. Am I comfortable with the debt? Not really, but I have the disposable to reduce the capital by 2.5K per month if I really need to. I have trade skills, can wire, plumb, join and do all my own minor car maintainance (servicing, oils brakes etc). Only thing I pay for is cam belt changes. On track to be mortgage free on estimated 450K property by 40.

I dont do consumerist though, and only replace stuff after I have tried to fix it. Our tv is 7 years old, as are all our white goods which I have repaired rather than scrapped on more than one occasion. Thank god I studied mechanical engineering at Uni.

kabayiri

wotsthat wrote: »

...
I notice where I live the neighbours (and me) seem to place less importance on getting a new car for example. Seems to be more of an attitude of "it'll do for another year". I know they aren't skint but are just thinking that the recession hasn't been that bad so why push it.
...

You and your neighbours are clearly not alone.

Used car prices are at a relative high. In the second half of the noughties 2m less new cars were sold compared to the first half.

Supply & demand has obviously impacted used prices.

The irony isn't lost on me that we will have to pay even more for our less frequently changed used car.

That old paradox of thrift eh.

ILW

RenovationMan wrote: »

Once again we have a VI group talking about debt and conveniently ignoring assets. Once again I provide the real-world example of my £250k of debt and £450k of assets, and that's only my house, I'm not including my pensions, savings and investments.

The problem is that a latge part of the personal debt was built up on consumption, not the purchase of assets. Many took out long terms loans to pay for a holiday which lasted two weeks.

Graham_Devon

RenovationMan wrote: »

Once again we have a VI group talking about debt and conveniently ignoring assets. Once again I provide the real-world example of my £250k of debt and £450k of assets, and that's only my house, I'm not including my pensions, savings and investments.

That's because these are total statistics.

Listing total assets against the numbers would make the numbers look good, granted.

But it does not mean that those with the most debt have the assets. You can only do this on a person by person basis.

PaulF81

Generally, poorer people have higher interest debt as they are high risk. Thus, their lower disposable is spent servicing debt.

It would be better if poor people were told not to lead consumerist lifestyles and instead save for stuff. Most well to do's I know wear clothes they have owned for years and drive battered old volvos. They are well to do for a reason.