Do you ever wonder about the psychology......

randomer

behind debt and (in my case) poor financial management. An over inflated sense of entitlement? A feeling of hopelessness?

crazy_cat_lady

Using spending as a form of comfort.

Tigsteroonie

The soundbite used for a recent television show summed up the misplaced sense of entitlement:

Just because I'm on benefits, why shouldn't I have the nicer things?

Hedgehog99

Tigsteroonie wrote: »

The soundbite used for a recent television show summed up the misplaced sense of entitlement:

The problem for her was that she thought "nicer" = blue lights, not a better energy efficiency or a more reliable model.

Cost her a fortune in the end.

Retailers condition us to feel a buzz when we make a purchase - Anne Robinson's programme was full of them.

I can understand someone ending up in debt because of something they really need, but there are plenty of things they don't need if they're currently in financial strife - a new smart phone, flashy TV, shoes or another baby.

randomer

People in debt are more likely to
experience regret, which is often
linked to decision making,
concerning actions rather than
inactions. Our decisions and
behaviours have consequences,
both for us and for other people.
When faced with bad outcomes we
often think about how they could
have been improved. Regrets can
become burdens which interfere with
your present happiness and restrict
your future or motivation to move forward

quantic

I think money can be deceptive in many ways to people, people tend to think of money relative to what they earn (gross) rather than what they have left.

So someone looks at a new car and its say £10,000. They think to themselves, OK so £10,000 isn't bad, I mean I earn £25,000 so that's less than half my wage. Should be fine. Firstly, the reality is that the £10,000 is closer to £12,500 when they add the interest but not just that, they might only have £300 spare a month - £3600 a year - which is what they should be thinking about, not what they earn gross a year. So suddenly in this context the £209 monthly payments they have just agreed to pay are actually £2500 of the £3600 they have spare.

Add to this other mechanisms like buy now pay later and you really have to be quite strong minded and debt adverse to avoid these things. I think we would see a dramatic reduction in spending if people had to save up and spend the physical money. Can't picture someone handing over £5,000 cash for a watch when they have spent 3 years saving it.

StressedSteph

What is mostly disgusting me recently is the rise in adverts for gambling and also the money lenders like W@nga and QuikQui@.

I find myself explaining the horrendous interest rates to my children trying to impress on them how dangerous they are and to be avoided at all costs.

These adverts get rammed down our throats all the time, especially daytime when most people who watch them are the ones that should avoid it the most.

I even now find it hard to believe that I am going to be scratching around for money for the rest of my life and that I am probably not destined to ever be rich. When I think of it like that it makes me try harder to appreciate what I ACTUALLY do have rather than yearn for more and more.

Hard times..

Cornucopia

There are a number of factors, and it would be a gross generalisation to think that they apply equally to all people in debt or in poverty.

- Budgeting is tricky, and I suspect that many people with money don't really practise good budgeting, they simply have enough money for it not to matter.

- Assessing value, value for money, relative needs are all tricky, not helped by differential rates of inflation whereby a garden ornament can cost less than a tin of soup.

- People seem unable or unwilling to examine spending mathematically. Not helped by the huge number of finance options available for translating capital spend into many small payments taken from income. That's been the case for a long while, but people have become more and more relaxed about it.

Time_to_face_the_music

randomer wrote: »

People in debt are more likely to
experience regret, which is often
linked to decision making,
concerning actions rather than
inactions. Our decisions and
behaviours have consequences,
both for us and for other people.
When faced with bad outcomes we
often think about how they could
have been improved. Regrets can
become burdens which interfere with
your present happiness and restrict
your future or motivation to move forward

It's helpful and polite to credit quotes when using them:

http://www.instituteofwelfare.com/resources/Debt.pdf

TTFTM x

LJB290

Yes to the original question - I think its really interesting!

I wish schools would teach students about money, interest rates, loans, mortgages and budgeting - it seems mad that this doesn't happen! It is a hugely important life skill that everyone should learn - from parents and school!

I was never taught about money and budgeting by my parents. They never borrowed on the "never-never" apart from the mortgage that was only a couple of grand in the early 70's. It would never have entered their heads to use credit for anything.
But, times have changed, they don't understand.

I've never been very good with money. I tend to pick up "bargains" that are second hand which relieves the guilt of buying brand new (and more expensive). But bargains are only bargains if you really need them in the first place - aren't they! (I've reigned myself in over the past 6 months).

My husband was also very seriously ill 11 years ago and there was a 50/50 chance of survival. Luckily, he did survive and is well but this life changing situation also changed the way we felt about living. We felt that spending money on memories (including nice holidays etc) with our children was very important as you never know when things might change.
We didn't want to wait until retirement and the kids had left home so we went for it.

Now, we are paying for it.
I have learnt about budgeting, I keep an eye on the account, bills, spending etc
We are slowly paying off the debt that we built up....

....And then Christmas comes around again

randomer

I wasn't trying to suggest those ideas were mine but thatnks for pointing out the etiquette round here.