Spending more than we earn

kinger101

pumpkin89 wrote: »

Strange that, at a time of unprecedented spending, we are also seeing unprecedented problems in the retail industry. It would be really interesting to know what all that extra money is being spent on.

The problems in the retail industry aren't unprecedented. Businesses which are either badly run, or no longer meet customers needs, go bust. You'll struggle to find a Rumbalows or a blacksmith on your highstreet.

kabayiri

lisyloo wrote: »

Good point.
We are putting loads into our pensions so our income might look low.
We have a large debt as we are stoozing it.
We might look in debt too.


Have they included those paying for care homes or in retirement?
The ageing population means there will be more people not earning at all and just spending.
Did we just reach a tipping point?

If looking for trend, maybe it's more useful to focus on the lowest 10% (or even 20%).

This group are unlikely to be boosting their pension pots, as a preference.

There was a radio discussion recently which said that more people are now using credit to pay for routine bills.

There is certainly one short term loan company whose tv ads promote high cost loans as a way of covering breakdowns on boilers!

Maybe this sort of lifestyle advertising is working?

Graham_Devon

kabayiri wrote: »

If looking for trend, maybe it's more useful to focus on the lowest 10% (or even 20%).

This group are unlikely to be boosting their pension pots, as a preference.

There was a radio discussion recently which said that more people are now using credit to pay for routine bills.

There is certainly one short term loan company whose tv ads promote high cost loans as a way of covering breakdowns on boilers!

Maybe this sort of lifestyle advertising is working?

I can't help but shout out the interest rates on all these adverts...

Often in the thousands!

Quick Quick think - Quid Quid. Have a look at their calculator. Borrow £200 over 3 month's and you'll pay back just £344!

But look a bit further on their website, and you see this, right above the calculator in bold.

Representative Example: Amount of credit: £300 for 81 days with one repayment of £97.20 and one repayment of £397.20. Interest: £194.40. Interest rate: 292% pa (fixed). 1299.1% APR Representative.

Is that suggesting that your repayments are 1 x £97 and 1x £397?

If so, surely that's a trap. If you are borrowing £300 at these rates, it's highly unlikely you will be able to repay £397 in a single month. So what happens when you can't? I've never looked into it, so I'd guess you are put on a payment plan with them, with your original loan tripling or quadrupling?

Edit:
Ahh, confirmed on Trustpilot - they DO offer you a roll up loan if you can't afford the last payment, and they do all work like this, with a payment bigger than the initial loan as the last payment. You also can't make any overpayment mid-term to reduce the interest.

Can't see the terms of the roll over loan though. Would imagine it's cheaper to please the auditors, but still massively expensive.

kabayiri

Graham_Devon wrote: »

I can't help but shout out the interest rates on all these adverts...

Often in the thousands!

Quick Quick think - Quid Quid. Have a look at their calculator. Borrow £200 over 3 month's and you'll pay back just £344!
...

Well...I wasn't about to mention any names (free advertising!)

The other thing they do is have relatively low maximum loan limits. These are really patch you up/keep you going loans.

We need more Chinese migrant workers. They are really good savers

Malthusian

kabayiri wrote: »

There was a radio discussion recently which said that more people are now using credit to pay for routine bills.

"Now"?

There is certainly one short term loan company whose tv ads promote high cost loans as a way of covering breakdowns on boilers!

Maybe this sort of lifestyle advertising is working?

Hasn't worked very well for Wonga.

michaels

How would it make sense if every year we saved more than we earned? Savings would become larger for ecer and everyone would be dying effectively only spent part of what they earned - why would you want to do that?

Thrugelmir

michaels wrote: »

How would it make sense if every year we saved more than we earned? Savings would become larger for ecer and everyone would be dying effectively only spent part of what they earned - why would you want to do that?

Results in a wealth transfer. To borrow someone needs to lend. Both the Eurozone and China are net savers for example.

Malthusian

michaels wrote: »

How would it make sense if every year we saved more than we earned? Savings would become larger for ecer and everyone would be dying effectively only spent part of what they earned - why would you want to do that?

The pseudo-Christian idea that saving is a sacrifice which is inherently virtuous, rather than to enable increased spending later.

Rather than feeding money into a statue of Moloch, you instead feed it into a savings account that you are never supposed to touch ever.

NineDeuce

ilovehouses wrote: »

Usually a sign that people are feeling confident about their future ability to manage with a reduction in savings and/ or increased debt payments.

Maybe the good times are about to roll again?

Any evidence because on the face of it, this just sounds ridiculous?

Graham_Devon

ilovehouses wrote: »

Absolutely loads but try this as an easy introduction.

http://www.economicsonline.co.uk/Managing_the_economy/Saving.html

See the graph at the bottom of the page and the commentary.



It's not that counter-intuitive when you think about it. People are less inclined to put money into a rainy day fund if they expect sunshine.

That's just savings though.

It's not accounting for debt accumulation.