People will adjust their spending habits in order to afford their mortgage

mundibananas

You can cook economically; make batches of chilli, stew, spag bol etc, - this means you eat healthy, nice food for a smaller cost.
Also, instead of doing a big shop and throwing food away each week, perhaps buy bread, milk, fruit and veg as you need it - lower waste.
Sell your unwanted stuff on ebay or at car boot sales
Make your sandwiches at home instead of buying lunch at work
Go for unbranded goods - check the price per uom when comparing produce at the supermarket
Drive your car at lower speeds - you'll be surprised how much fuel this saves.
Don't be swayed by impulse buys
A lot of people heomaorrage money without realising, if you can identify where the waste is it can be managed better.

Just some ideas - please don't flame me!

nicko33

Graham_Devon wrote: »

Interesting that on page 6, we still haven't really got any ideas on what could be cut, bar luxuries.

Well, if it's not "essential" then it must be a "luxury", so I don't know what other category of spending we should look for, other than efficiency savings within the "essentials".

GhIFA

Graham_Devon wrote: »

Interesting that on page 6, we still haven't really got any ideas on what could be cut, bar luxuries.

Were back to "people will just cope" and a general have a go at Graham for "worrying again" stance.

Those who say this "people will cut" are the very people who won't give the answers as to what they will cut. Instead we have to just assume they are all fine.

Were back to the exact same situaton of interest rates won't rise because it will cause too many issues, but when asked what these issues are, there aren't any as people will cope.

All I'm trying to do is explore the bullish stance on this and actually ask them to provide some detail to their responses. Hence I guess why it aggravates.

The reason we're on page 6 is because you've ignored the examples that have been given and any other viewpoint that doesn't suit your doomsday scenario - it's difficult to have a meaningful debate on that basis.

There's no point in giving examples because different people will have different spending patterns and priorities. What one family may see as an expenditure that can be cut back, another may not. But, even more pertinent is there's no point in giving specific examples because you will choose to ignore them.

So, again, there will be a small number of people who have made no provision for rate rises and will struggle. The vast majority will be aware it will happen and will have planned accordingly. I know that will disappoint you, but that's the reality.

Why you want to take the small number of people who don't plan properly and extrapolate their problems to the entire population of mortgage holders I don't know, other than that scenario being "more" scary than the reality.

Thrugelmir

nicko33 wrote: »

Well, if it's not "essential" then it must be a "luxury", so I don't know what other category of spending we should look for, other than efficiency savings within the "essentials".

If times get really difficult then people will adapt accordingly. The rise in people seeking support from foodbanks is a clear indication of the social divide. Great danger that the UK is becoming like the US. Where if you fall off the ladder then there's a huge distance to fall. As society is less community based and more about ones self.

N1AK

Graham_Devon wrote: »

Interesting that on page 6, we still haven't really got any ideas on what could be cut, bar luxuries.

Were back to "people will just cope" and a general have a go at Graham for "worrying again" stance.

Those who say this "people will cut" are the very people who won't give the answers as to what they will cut. Instead we have to just assume they are all fine.

Were back to the exact same situaton of interest rates won't rise because it will cause too many issues, but when asked what these issues are, there aren't any as people will cope.

All I'm trying to do is explore the bullish stance on this and actually ask them to provide some detail to their responses. Hence I guess why it aggravates.

If interest rates do increase then some people will become unable to afford their mortgages. It's pointless trying to define it to each family and their budget, you need to look at it on a macro level.

If interest rates increase:

1. Some people will be unable/unwilling to afford it
2. Some people will be able to afford it by decreasing savings
3. Some people would make cuts to pension contributions
4. Some people will take less/cheaper holidays
5. Some people will defer preventative purchases (fixing minor breaks before they get worse)
6. Some people will cut back on spending in various areas
7. Some people will cut waste from their spending

It's very hard to objectively measure any of this because not only is it by household, but each household isn't entirely rational. I haven't cancelled an old phone contract (£10pm) even though it hasn't been used for a year if times was tight I'd pull my finger out.

Anyone saying there wouldn't be a considerable number of people who couldn't afford their mortgage if rates when up to 5% almost certainly knows better or hasn't got a clue.

Anyone who thinks that most households couldn't work around an increase to 5% is also at odds with reality.

nicko33

mean weekly alcohol consumption is 21.35 units per adult
http://www.guardian.co.uk/news/datablog/2013/feb/27/how-much-alcohol-do-we-really-drink

so 92.5 per month
so 180 units of alcohol per household per month could be cut
How much does the average unit cost?



UK households spend around £15 billion a year on the consumption of alcoholic
drinks.
http://www.hmrc.gov.uk/research/alcohol-consumption-uk.pdf
so for 26.4m households
that's £47 per month

wotsthat

nicko33 wrote: »

Well, if it's not "essential" then it must be a "luxury", so I don't know what other category of spending we should look for, other than efficiency savings within the "essentials".

There's plenty of scope for that judging by the crap that's piled in most people's ASDA trolleys.

grizzly1911

Percy1983 wrote: »

I suppose shopping in Aldi could help.

Whilst they are cheaper their stuff is on the increase too.

As you said elsewhere once you have pared to the bone prices will only go one way.

Once you've insulated, changed the light bulbs, turned the thermo' down etc, swapped your energy provider , paid by DDR and online, for example, there are limits to what you can realistically do.

kabayiri

People will adapt, I agree.

I think it's been accepted that the flexibility of the workforce after the crash was one of the good points about UK populace. People are probably more adaptable now than they have been for a long time when it comes to work.

We have to accept though, that by adapting, we mean impacting so called lifestyle businesses in our communities. Beauty salons, coffee bars, takeaway businesses. They could all see reduced trade.

Adapting is not a cost free exercise.

ermine

Graham_Devon wrote: »

Nearly everyone I know finance their second hand cars on a loan. They are not going crazy, these are 3-4k cars.

Mebbe everyone you know needs to get a financial clue, then, possibly including yourself.

Doing your spending early in life using a loan makes all your consumer spending dearer. Say you buy a £3k car. Buy it on a loan and you are simply choosing to pay more for it by the interest on the loan. Then you go and do it again! A car is a consumable, buying consumables on loans is simply choosing to pay more for them. Would you go to a forecourt that says "20% Higher Prices Today"? If not, then why buy any except perhaps your very first car with a loan?

It's reasonable to buy some assets on a loan. If you're a plumber it may make sense to buy your van with a loan, but only if the extra work you can do with the van is more than the cost of the loan.

As soon as you buy a car, start saving towards the next one If you can't do that, you need to buy a cheaper car or consider alternatives