Savings down debt up

[Deleted User]

DiggerUK wrote: »

Really. What has brought on this attack of the drama queens.

Debts properly serviced are a good thing. Debts only become a problem when they cannot be serviced.
Where is the leveraging becoming a problem, a la 2007.

Please stop this nonsense, you will frighten the children..._

I'm not a drama Queen trust me dear.:)
Debt is never a good thing especially record levels of the stuff, its an even worse picture when savings v incomes is at a 45 year low.i.e. we are borrowing more and saving less.
Which suggest that record low interest rates have stopped people saving but gdp would not suggest they are going out and splurging the money on the high st.
So where is the money going.....back to my original point its going on everyday living, buying food paying bills etc.

Thrugelmir

DiggerUK wrote: »

Debts properly serviced are a good thing. Debts only become a problem when they cannot be serviced.

Borrowing today against tomorows income will eventually become a drag on growth. Interest free deals aren't interest free. As the cost is built into the selling price of the iitem or service.

When somebody else loses their job it's a recession. When you lose yours it's a depression.

Living month to month is a ticking bomb. As any number of factors can soon trigger the start of a fall down a slippery slope.

Cakeguts

The problem with buying cars on finance and having loans to buy other items rather than saving up for them is that if you get a problem like an illness and can't work it can all go horribly wrong very quickly. That is why people used to save enough money in the bank to pay for things rather than buying them on credit.

There seems to be a culture at the moment of buying whatever you fancy even if you can't actually afford it. The idea of saving and budgeting for things you need to buy seems not to be happening perhaps as much as it should.

I think people don't actually look at what they are spending. It is all the little "it only costs this much" items which when added up cost so much that they can't save anything. If you get a problem when you live like this it can go bad really fast.

BobQ

venison wrote: »

ONS figures for 2017 tell us that household debt exceeded savings for the first time since record began 30 years ago.
On average people saved just 4.9% of their incomes the lowest since records began in 1963.
Step change estimates that 1.4 million households used credit for basic living expenses.

Unsecured debt inc CC's, personal loans, and overdrafts jumped 9.4% to £209 billion last month. If you inc mortgage debt that rises to £1.58 trillion.

Non of this is good news, and the question must be how long can the UK go on living off tick? Are we heading for a disaster perhaps worse than the banking crisis of 10 years ago?

The other issue is that debt is not uniform. It is concentrated in certain groups.

If you have £50000 in the bank and secure employment taking out a car loan is not a problem to an individual. If you are living from hand to mouth and choose to buy a new car on tick or to impress others you do have a problem.

It never ceases to amaze me how may people moan that they cannot afford to buy a house but rent a house in an affluent area and take a couple of expensive holidays each funded on tick.

Getting priorities right has become increasingly difficult in recent times due to the way people cannot save up for what they want but prefer to have it now rather than wait.

PixelPound

Cakeguts wrote: »

The problem with buying cars on finance and having loans to buy other items rather than saving up for them is that if you get a problem like an illness and can't work it can all go horribly wrong very quickly. That is why people used to save enough money in the bank to pay for things rather than buying them on credit.

There seems to be a culture at the moment of buying whatever you fancy even if you can't actually afford it. The idea of saving and budgeting for things you need to buy seems not to be happening perhaps as much as it should.

I think people don't actually look at what they are spending. It is all the little "it only costs this much" items which when added up cost so much that they can't save anything. If you get a problem when you live like this it can go bad really fast.

The likes of BrightHouse and Provident are based on selling the affordability in small chunks - X pounds per week doesn't sound much until you consider the original amount and what you pay over the lifetime for it.

Ultimately we are a consumer led nation, gone are the traditional manufacturing jobs and everything is service led. Getting the economy moving is about getting people spending and easy credit means more people spend now.

Cakeguts

BobQ wrote: »

The other issue is that debt is not uniform. It is concentrated in certain groups.

If you have £50000 in the bank and secure employment taking out a car loan is not a problem to an individual. If you are living from hand to mouth and choose to buy a new car on tick or to impress others you do have a problem.

It never ceases to amaze me how may people moan that they cannot afford to buy a house but rent a house in an affluent area and take a couple of expensive holidays each funded on tick.

Getting priorities right has become increasingly difficult in recent times due to the way people cannot save up for what they want but prefer to have it now rather than wait.

Even if you have £50k in the bank and a secure job you could still get ill. People used to "save for a rainy day." They didn't buy things on loans in case the rainy day meant that you couldn't pay the loan back. You would save up and then buy so people bought cars that they could afford with cash. These days people don't seem to think that they may need to wait for anything until they can afford it.

DiggerUK

venison wrote: »

......Debt is never a good thing especially record levels of the stuff......

Record levels, lowest ever levels.....is an irrelevance. If the debts are being safely serviced, what is the problem?
Seeing dangers does not mean the sky is going to fall in.

Or do you see dangers just around the corner. If so, what do you intend to do? Live debt free? Sell the house to lose the mortgage and rent? Move all assets and investments in to cash? Become a gold bug? Buy land? Buy fine wines? Buy antiques?

None of us would own houses if we thought debt was *never a good thing* The debt we took on for Digger Mansions was *record levels of the stuff* for us, did not do us any harm..._

bugslet

I should be completing on a house in the next couple of weeks - it was built in the 70s and as far as I can tell, last decorated in the 70s bar the bathroom - phew!

I am about to empty out my savings and will no doubt be winding up a debt on the credit card, take a loan out. I also need to do a small amount of cosmetic work on my old house. So my savings/debt ratio will go up. Depending on if I do work on it before I move in or work after, I may get a small ,<25k mortgage.

However I don't have a mortgage on the new property and with the business behind me, I'm as solvent as they come.

Malthusian

BikingBud wrote: »

Yet we absolutely and without question accept that excessive debt to buy a house is good

The vast majority of people who buy a house are not in debt and never will be. Their assets exceed their borrowings.

Most people who buy cars with borrowed money are in net debt, and some of them will never be out of it.

For many day-to-day debt on a credit card is about removing the need to carry cash and ease of payment. Certainly my use enables full visibility and easy reconciliation to keep track of the budget.

A debit card does the same thing. I assume you have a Direct Debit to pay off the balance in full each month?

BobQ wrote:

If you have £50000 in the bank and secure employment taking out a car loan is not a problem to an individual

If you have £50,000 in the bank why on earth would you take out a car loan? If you have £50,000 in the bank you probably don't take out car loans in the first place.

teddysmum

The amount of savings is dropping, because poor interest means your buying power drops over a number of years , making it unattractive and gone are the days where good interest increased the amount of money beyond the break even point of buying power.


'Essentials' requiring debt all depends on your definition of essentials. At one time if you couldn't afford a colour tv, you made do with monochrome, but nowadays people borrow so they can have the biggest and latest technology, without which they feel deprived. (The new image of poverty is not being able to afford the very best and not the picture of people in foreign lands without clean water or sanitation and living in sheds.)