1.6m families in 'extreme' debt

poppasmurf_bewdley

SailorSam wrote: »

Did people ever get into debt before the discovery of the credit card, when it was the norm that you saved up to buy whatever you wanted.

Not really.

Before the advent of credit cards, people got things on the 'never-never' as it was called. I can remember take 9/6d (47 1/2p) to a furniture shop in Levenshulme, Manchester, called Platts for my mum to pay for a bed settee every week, with her always telling me "and don't tell your Dad"!

Or they rented a TV from the likes of Radio Rentals, DER and Granada TV Rental because they couldn't afford to lay out the full retail price (and they were always breaking down).

Ilona

Personal finance lessons should to be taught at school starting with the simple basics of how money comes into the house and how it goes out. It should start in junior school at age 6 or 7, right through to the more complex issues that school leavers might encounter when they step into the world of college, university or work at 16 or 17. If nothing is learned before that age, then it's too late, the damage is done and youngsters will never know the difference between need and want.

If there is no space on the curriculum to deliver these type of lessons, the knowledge from volunteer pensioners could be utilized to cover it. I would be happy to help, but I can't see anyone using their initiative to get it started, and the paperwork needed to register the volunteers would be horrendous.

Another way that children could be taught is by their grandparents, but not everyone has those, and I haven't got any grandkids so I can't help.

I feel sorry for the youngsters who get themselves in a financial mess, it's education that is letting them down, both from schools and from parents. I learnt from my mum, and it has held me in good stead for the whole of my life.

Ilona

Muttipops

" The banks are already strict enough on their lending criteria and people need to start taking responsibility for what they can afford." Quote from takman above.


The problem with that sentence is "what they can afford". I was made redundant after 15 years in the same job, culture of short term contracts turned up and I was stumbling from job to job with long periods of unemployment inbetween, so i could nolonger afford the loans. It seems that in general people expect the good times to continue, but you are lucky if they do.
The other problem is for those who cannot make ends meet, what with rising cost of living, massive rents, etc etc and who borrow just to live.
The answer to debt and why it happens is far from simple, but surely learning the basics of money handling whilst young would stand you in good stead. Maths as a subject surely must have practical applications, it is not an abstract concept!
A quick look on the internet came up with this, http://webarchive.nationalarchives.gov.uk/20130401151715/http://www.education.gov.uk/publications/eOrderingDownload/My-Money_Secondary-Parents.pdf
So it would seem that government is aware of what should be done, but i wonder how much it is being put into practice.

lisa110rry

Ilona wrote: »

I would be happy to help, but I can't see anyone using their initiative to get it started, and the paperwork needed to register the volunteers would be horrendous.

Actually Ilona, it's not horrendous. I did it last year when I was going to have a greenhouse club at the local high school. The papers for Disclosure were only four sides of A4 and the process was free.

On the other hand, a few years ago, I had to do higher anti-terrorism disclosure for working to do with a live gas installation (despite the fact I never left my office in a different county) and that was reams and reams going back to asking my grandparents' names.

The problem with my greenhouse club would likely be same with your idea of volunteering - complete and utter sloth and inertia by the school. They couldn't rouse themselves to change a padlock to one where the keys didn't open other locks in the school.

takman

Muttipops wrote: »

" The banks are already strict enough on their lending criteria and people need to start taking responsibility for what they can afford." Quote from takman above.


The problem with that sentence is "what they can afford". I was made redundant after 15 years in the same job, culture of short term contracts turned up and I was stumbling from job to job with long periods of unemployment inbetween, so i could nolonger afford the loans. It seems that in general people expect the good times to continue, but you are lucky if they do.
The other problem is for those who cannot make ends meet, what with rising cost of living, massive rents, etc etc and who borrow just to live.
The answer to debt and why it happens is far from simple, but surely learning the basics of money handling whilst young would stand you in good stead. Maths as a subject surely must have practical applications, it is not an abstract concept!
A quick look on the internet came up with this, http://webarchive.nationalarchives.gov.uk/20130401151715/http://www.education.gov.uk/publications/eOrderingDownload/My-Money_Secondary-Parents.pdf
So it would seem that government is aware of what should be done, but i wonder how much it is being put into practice.

There may be many reasons that people end up in debt but from other people I know and what I read on here the majority of people wouldn't be struggling with money if they budgeted effeciently and made sure they had a reasonable amount of money in an emergency fund. If you had put away just £100 a month into savings for the 15 years that you worked then you would have had an £18,000 fund to live on until you found another job.
If you couldn't afford to put away £100 a month then you could have cut out unnecessary spending so that you could afford it.

If you budget correctly and then your income drops or bills start to increase then you can take action before it becomes a problem. This may mean drastic action such as moving to a cheaper house, but is better than just watching your credit card balance increase.

Pixie5740

SailorSam wrote: »

Did people ever get into debt before the discovery of the credit card, when it was the norm that you saved up to buy whatever you wanted.

Of course people got into debt before the advent of credit cards. Why else would they have had debtors prisons across Europe in the 19th century? Look at old Mr McCawber, although a fictional character debt did happen during the Victorian Era.

People used to (and some still do) use pawn shops. I believe it was quite common in Glasgow for the Sunday best to be pawned to get through the week and then bought back in time for church on Sunday only to be pawned again on Monday. I'm sure it happened in other parts of the UK too.

edinburgher

SailorSam wrote: »

Did people ever get into debt before the discovery of the credit card, when it was the norm that you saved up to buy whatever you wanted.

I was reading a book from 1821 yesterday, the main character spent quite a lot of time in debt (well, borrowing money on the strength of his 'expectations' at a margin of 17.5%!)

So yes, I think debt has been around for quite a while.

nkkingston

Credit has been around pretty much as long as money has. In the days when you got paid weekly but bought food daily, most people had credit debts to their grocers and butchers and bakers.

In the late Victorian period the average lifespan of a corner shop in York was six months, because that was the point where its own creditors came calling. The rich bought almost everything on credit, and often didn't pay it back at all (just returned the carriage like a car on HP!). Going to court was costly, so what could the shopkeepers and servants do about it?

The difference between then and now is it's regulated. The grocer can't turn a 3 into an 8 on your slate. The interest can't go up without warning you first. You can't be imprisoned indefinitely for owing a bookseller a shilling.

Debtors jails, btw, were nuts - you weren't allowed out until your creditor agreed you'd paid them off, which was pretty hard to do when not only were you unable to work, but you also had to pay rent and board for being in prison. Often it was only a matter of time before the jail had your spouse arrested for non-payment and imprisoned alongside you! And, of course, your creditor could just lie. Lots of people ended up in debtors prison for political reasons - the church put tons of people in there. If you were wealthy, you could rent a better class of cell, of course, and keep servants in there with you, and order fine food, and go out shopping and dancing.

Plus ca change!

barbarawright

SailorSam wrote: »

Did people ever get into debt before the discovery of the credit card, when it was the norm that you saved up to buy whatever you wanted.

Yep. Hire purchase has been around since the 19th century and plenty of families relied on the pawn shop.


Dickens' father was in a debtor's prison despite earning a pretty good income. He was on £250 a year at a time when a clerk in London could survive on £50 a year (that's what Bob Cratchit earns in A Christmas Carol). He wasn't poor, just lousy with money and leeched off Dickens for the rest of his life

Sanctioned_Parts_List

I'm struggling to see how the reporters managed to create the executive summary and press release from the body of the report, but after about page 8 or so, interesting stuff.

I'm loath to join in the calls to teach personal finance in schools - partly because I remember that it already is, just badly. Maths lessons cover the basics of plus, minus, divide and multiply, as well as simple and compound interest, albeit in the contrived and dehumanised way maths lessons teach everything, plus at least at my old school, the pre-GCSE home economics syllabus hadn't quite degraded to "cookery with a funny name". Just the examples were so unreal to a 13 year old as to have exactly zero impact on the teenage SPL and friends, so we all gladly signed on the dotted line when the student overdrafts were handed out.

Instead I reckon that targeting at-risk groups - the long-term debtors identified in para 4.18, the low-income under-25s from Figure 21, for example - would deliver more immediate results for the time and money invested.

Also, the point made in 4.21 was remarkably sensible.