Is it getting worse?

worriedDan

I love this forum. I have been posting on here for 10 months and was a long time lurker before that.

Over recent months I have seen so many posts from people totally desperate with high debt levels, pretty much like I was last year. I have also learnt of several people that I know in real life who are dealing with the most horrendous financial circumstance -

A couple we know have been forced to sell their home, enter into an IVA and move in with her parents. They have 2 children and pushing 40. They simply bit off more than they could chew and ended up in a totally unmanageable situation.

Some other friends of ours are deeply in debt and on a massively reduced income. They have had to approach the bank for ask to convert their mortgage to interest only. Not sure what they owe, but pretty much all of their money goes on servicing debts.

My old boss, at almost 70 years old has been left with over 100K of unsecured debts by her t**t of an ex husband. She allowed him to take our credit in her name during their marriage, and he left her, with the debt for another woman. She will be well over 80 before it's paid off via a DMP.

It's truly shocking how many of us are dealing with these issues. I am glad to see the the FCA are putting in measures to help people. despite some of my earlier critical comments. I have never been one to blame the banks for my debt. I knew what I was doing when I took the creidt, however I do think that something needs to be done to sort out this ticking time bomb.

-taff

There are many reasons why people get into debt, and a lot of it is avoidable if the right information were made available or budgeting were taught in schools.


A consumer society does just that, it consumes, because it#s told its good, and if you haven't been taught any differently or hoe to manage an income, you'll believe the lie of buy new, have a holiday, you deserve a new car, you deserve a bigger house, a bigger TV etc etc.....

zippygeorgeandben

I am not sure whether it is getting worse or more people are becoming aware of this fantastic website and forum.
There are too many people though who do not make contingency plans for unforeseen events. There are also far too many people living beyond their means. I know people who have purchased houses within the last 24 months and were quite frank with me that it was, well almost like a poker hand, 'all-in'. One of the couples are now having financial difficulties, the husband had to take a lower salary and they are now paying bills with credit cards and struggling to make ends meet. This couple could end up in the situation that you have described above Dan. The other couple are fine at the moment.

As a teacher I think it's shocking that we do not teach children about the responsibility of money and how you have to save for the future, think about your goals and how you do not have an entitlement to anything and everything.

worriedDan

zippygeorgeandben wrote: »

I am not sure whether it is getting worse or more people are becoming aware of this fantastic website and forum.
There are too many people though who do not make contingency plans for unforeseen events. There are also far too many people living beyond their means. I know people who have purchased houses within the last 24 months and were quite frank with me that it was, well almost like a poker hand, 'all-in'. One of the couples are now having financial difficulties, the husband had to take a lower salary and they are now paying bills with credit cards and struggling to make ends meet. This couple could end up in the situation that you have described above Dan. The other couple are fine at the moment.

As a teacher I think it's shocking that we do not teach children about the responsibility of money and how you have to save for the future, think about your goals and how you do not have an entitlement to anything and everything.

I'm a teacher too and I agree that the kids have no idea about the value of money.

I work with lots of young people ( god I sound old!!) and I see them buying houses with their partners and then they both have a new car, and a new kitchen, and a holiday is Disneyland Florida. Of course, they may have loads of money or inheritance etc, however I would put money on most of these purchases being on credit.

My very best friend and his wife moved to an expensive area a few years ago. He drives a brand new BMW and she has a new Mini. I know that he took out a consolidation loan about 3 years ago for in excess of 20K and I know that he uses credit cards still. Last time I visited him they had had an amazing new kitchen. Now they have decent jobs so I don't think that they are necessarily in difficulty, however their debt must be approaching 6 figures.

fatbelly

worriedDan wrote: »

A couple we know have been forced to sell their home, enter into an IVA and move in with her parents. They have 2 children and pushing 40. They simply bit off more than they could chew and ended up in a totally unmanageable situation.

Some other friends of ours are deeply in debt and on a massively reduced income. They have had to approach the bank for ask to convert their mortgage to interest only. Not sure what they owe, but pretty much all of their money goes on servicing debts.

My old boss, at almost 70 years old has been left with over 100K of unsecured debts by her t**t of an ex husband. She allowed him to take our credit in her name during their marriage, and he left her, with the debt for another woman. She will be well over 80 before it's paid off via a DMP.

All these 3 need specialist help from an impartial, but knowledgeable source. National Debtline are a good starting point.

An IVA is insolvency for those wanting to protect an asset, like a home. Something went wrong there and they need to look again at what the best strategy is

Interest-only mortgages should only be short term as the mortgage is a priority and unsecured debts are not. Banks are not debt advisers.

You cannot be forced to repay debts taken out fraudulently, though proving it can be difficult. It's still worth a go.

I'm running a debt-specific drop-in at CAB in a few hours - it will be busy.

natlie

I recently did the Christians Against Poverty (CAP) Money Course, it was offered at work by a colleague who works in finance and it was brilliant. I am not religious and the course didn't pressure me into anything I can't believe its taken me this long to learn how to budget properly. I spoke to my mum about it and she said she didn't have a clue about budgeting she she would never have taught me and no budget help at school. I have now passed on what I learned to my daughter who is off to Uni and I am going to speak to my sister about it as I just have a feeling that she may need some help.

We live is a society that constantly pushes up to buy things - but I feel for the next generation with its billionaire Instagram stars like Kim Kardashian - I see them affecting my daughter she has like 30 pairs of trainers already, fortunately she's worked for all of them but the next generation are wealthy for not working and the youngsters expect to get not work for things - my niece is basically sitting in the house waiting for some man to whisk her away

Nat

worriedDan

fatbelly wrote: »

All these 3 need specialist help from an impartial, but knowledgeable source. National Debtline are a good starting point.

An IVA is insolvency for those wanting to protect an asset, like a home. Something went wrong there and they need to look again at what the best strategy is

Interest-only mortgages should only be short term as the mortgage is a priority and unsecured debts are not. Banks are not debt advisers.

You cannot be forced to repay debts taken out fraudulently, though proving it can be difficult. It's still worth a go.

I'm running a debt-specific drop-in at CAB in a few hours - it will be busy.

Sounds like you do a great job at CAB Fatbelly

With regards to my ex boss. She had a good regular, whereas her ex was self employed and had a sporadic, yet overall high income. When they were happily married she had no issue in allowing him to use her name to obtain credit. I think she did look into disputing her liability when they first split but was met with a dead end. I guess she signed the paperwork and took out the debt knowingly.

Lauralou79

Credit/debt is seen as quite normal in a lot of households. Even growing up in the 80s my parents had credit and remortgaged etc. My grandma taught me how to budget. Yet my partners family are completely anti credit and he hates owing money.

However at 18 I fell into the 'free money trap' store card, then credit card and over drafts. This was consolidated twice. Luckily it was manageable (£10,000) on a very low wage and it took years to pay off but I got there.

I work with people that earn a decent amount of money, they have credit cards, overdrafts etc. No one seems that bothered. I don't have credit apart from mortgage. I save now instead and wait for things. I have a savings buffet for emergencies too. But I learned the hard way.

We live in a society when adverts are everywhere on social media and other people advertise their lives too. People want fast results so the easiest way to get the latest car, furniture, clothes etc is credit and think about it later.

I think education on budgets, credit, interest rates and what can affect your credit record. Would be useful in high school It's easy to spend on credit but not all so easy to repay when balances become high.

System

Hmmmm good thread.


I'm 25 (I mention that because age, and society today and the term 'young people' tends to come up a lot in these sort of threads haha.


Hmmm I've posted a few threads about similar things and I think it's a mixture of factors.
I definitely think that both SCHOOL and PARENTS (guardians/family members etc) should have responsibility in teaching how to manage and use money responsibility. The reason I say both, is because, if one fails (parents who may not be so good with money themselves), the gap can be filled elsewhere -i.e. school.


I also think once you become aware of certain things like debt, be it through personal experiences or seeing someone else struggle, and how credit can go horribly wrong, are you then able to change or be smart to such things and not get sucked in.


I also think somewhere between the gap between college/sixth form and university, teaching money and debt management needs to be addressed, from my own experience and what seems like many others on forums such as these, it seems university is the first time people have access to a lot of essentially 'free' money - which isn't really fully theirs, and it is often so easy to extend your overdraft, and quite normalised.
Things like student credit cards are advertised as normal, when essentially it should also be said, that if you do not have a regular income (getting money from parents, and student loans should not count in this) then there is no point, in my opinion.


I completely think it is atrocious, again it's only since becoming good with money or more aware and wanting to make my money work for me, have I noticed the increasing amount of payday loan adverts that are advertised as a quick easy fix to solve all problems and I wholeheartedly do not agree with this. Adverts saying 'car broken, or in need of repair, call quick quid' are wrong, it's like no 'car broken/in need of repairs? Do you need to get to work?' well how about 'you get the bus/train for a few days? Or ask mum/dad/partner/friend to give you a lift, and when you next get paid, (or better yet have an emergency fund that you can use to pay for this problem), you pay to sort this out and have your car back?'


I also think on top of parents vs school responsibility, adverts, and personal experience is key , like I've said before, and there are a lot of reasons why people get into debt, or get things on credit that they cannot afford. Some may have grown up poor, and once they are able to actually 'afford' to buy nice things, it can spiral out of hand, so while they may 'deserve' and can afford these nice things, its' got out of hand how good these things make them feel, make them look, and the need to keep up with the Joneses.


I also think this whole 'it's hard to get on the housing ladder these days for young people', 'young first time buyers are doomed' etc hype from the media does not help at all. Whilst I'm not denying at all it's harder out here, or not as easy as it was for my parents, I think media with such headlines does not actually encourage SOME young people/first time buyers to look into such options and see what is actually available and see that it is actually possible.


I'm currently saving to buy, and in my opinion, all this scaremongering in some ways almost encourages people not to save, not to buy, and just think it's impossible. And I think we need to rise above that, and understand that the media is essentially build around hype.


Anyway, I hope I haven't gone off on a tangent, but I wanted to put my two pence in haha, and hope I've addressed the OP's post as well as the other topics bought up as a result.


Enjoy your day

GlendaSugarbean

While budgeting is a skill you can learn, what hasn't been mentioned is the fact that many more people are living in poverty than before - and many more families who are working simply don't bring in enough to pay the bills. It isn't all reckless spending - rents, house prices and the general cost of living have increased more than wages. Which of course is the best time to roll out Universal Credit where you wait weeks before getting any payments at all...

I would not expect people who are on the minimum wage and renting in the South East to be able to solve all their problems with a budgeting course.

enthusiasticsaver

There are many reasons why people are in unmanageable debt and some are obviously due to divorce, death, redundancy and sickness. Things many of us assume will never happen to any of us but statistics prove a percentage of us will have to tackle these emergencies.


Irregular or low income and high housing costs/ travel costs (due to area) are another reason why people struggle. Self employed people often don't allow for poor months.


In spite of the last few recessions and the 2008 financial disasters it still amazes me that lenders are still lending irresponsibly to people already in high unsecured debt. People get sucked into a debt spiral and it can get out of control very quickly. Often they get sucked into consumer debt (new holiday, car, kitchen) and believe the hype that buying on affordable credit is fine. It is if they never have any emergencies, aren't already in considerable debt and have a regular income.


The last reason is simply not enough income, low wages, spiralling costs. Not necessarily anything people have done wrong but they live in an expensive area and cannot seem to do anything about it. I do not think anyone on minimum wage can live in London or the south east and not get into debt. Only solution is move which is easier said than done.


It was always the case though that people struggled with debt. Mortgage repossessions in the 90s were far higher than they are now due to low interest rates but rental evictions are rising. There is access to free debt charities and much more advice available over the internet than years ago when there was no internet and people struggled silently. I think people are more willing to talk about debt problems now than they were years ago too.