Conspiracy theory or legitimate explanation?

Malthusian

DiggerUK said:

You may underestimate the seriousness of the current situation, but the only assets that you can't be made to spend before benefits are allowed are pension savings and equity in your property.

Not correct. Equity in property is frequently taken into account for means tested benefits, and should always be.

Benefits are designed to stop people from starving in the streets, not to subsidise rich people's mortgages if they were too profligate to keep an emergency fund. (I don't include the current crisis in this principle; the government should pay the cost of its own social experiments, not profligate people only.)

You are correct that pension savings are usually not taken into account (until you reach the point at which you are expected to start drawing them) which is usually massively undervalued by the kind of people who say "put everything into overpaying your mortgage, don't even bother joining your employer's pension scheme, roof over your head herble gerble."

grumiofoundation

DiggerUK said:

bowlhead99 said:

Yes, I expect if I lost my job or had some other crisis and needed £1-2k a month to pay my expenses it's probably better to have nothing in the bank and be able to get £74 a week jobseeker's allowance, than have £10-20k in the bank to get me through the troubling times and get a reduced level of benefits

You talk of £10-20,000 spare cash in the bank and have the cheek to call me a "boomer"??? 
Why do you use "boomer" in such a pejorative manner, am I supposed to be grateful you don't refer to me as undermensch  oh well done you win the argument then 

You may underestimate the seriousness of the current situation, but the only assets that you can't be made to spend before benefits are allowed are pension savings and equity in your property. Any share or equity based assets will have to go first. By way of information there is more to benefits than the basic £74, not much I agree. Good to see you agree
What is the sense in building up such long term assets and then using them for today's living expenses. Explained clearly in the post you quoted

The point that I make is valid (no it isnt). Emergency funds beyond cash in hand are of no always of real use today, they are not wasted capital. Instead of shooting the messenger, play the ball..._ Instead of mixing your metaphors try and understand basic economic concepts...

Obviously you live in a bubble, albeit a mortgage free bubble, therefore you may not be aware that theres a lot of economic turnoil right now and a lot of people are may not be as financially secure as you - therefore your advice/rambling twaddle (delete as appropriate) - is unhelpful and misleading. Hopefully no-one reading your inane babble will actually take you seriously but on the off chance they do your advice has the potential to push people into financial difficulties. 

You clearly believe your approach is 'correct' and you aren't going to listen to anything or anyone else. but I suggest you go away and research how inflation works, how compound interest works and how mortgages works since you demonstrably don't understand. You can keep talking about how cash savings are a waste and are losing money against inflation - hate to to break it to you but the money you have tied up in your house is doing the same.

What you fundamentally misunderstand is the whole point of an emergency fund (the clue is in the name by the way). IT IS FOR EMERGENCIES - if you have the ability to save up and have the safety net of cash in the bank that is invaluable. 

To summarise your position you are claiming it is better to have £5000 in the bank (1.5% interest rate = £75 interest), with a mortgage of £100,000 @ 1.5% (costing you £1500 per year)

than it is to have £55000 in the bank (1.5% interest rate = £825 interest), with a mortgage of £150000 @ 1.5% (costing you £2250 per year).

Since 1500 - 75 = 2250 - 825 your choice is have £50000 in cash or £50000 tied up, very hard to access in your property. 

Now in a unsure economic situation which is better ?????

DiggerUK

To illustrate how unnecessary emergency funds beyond cash in hand are, I would ask you to add up the following.
What you have a.t.m. that counts as cash in hand. (B#gger all interest)
Overdraft limits on current accounts. (Arm and a leg interest)
Amount of interest free overdraft you can obtain. (Current situation)
Total credit available on credit cards. (Arm and a leg if not cleared each month)
Total 0% available on credit cards. (Arrangement fee only if cleared on time)

I've just done Digger Mansions scores on the doors. It is beyond double the  £10-20,000 suggested by a poster here as an emergency fund, our interest free portion is between the sums mentioned above..._

uknick

DiggerUK said:

bowlhead99 said:

DiggerUK said:

All we keep banging on about with them is one thing, forget savings and emergency funds, pay down the mortgage. After all, what real value are they in the current economic situation. 

What real value is an emergency fund when everyone is being told to stay home and incomes can abruptly stop or drop....Are you for real......
........The safety net of paying off your house is ambitious and can take decades, and even if you have that type of safety net, it doesn't pay for your heating or food.

If you are furloughed, you get 80% of income. More than enough to survive on. An emergency fund is not needed.

It's actually 80% of your normal salaried monthly income with a cap of £2,500 per month.  It doesn't include any discretionary payments such as sales commision, tips etc.  All of which is subject to usual PAYE deductions.  I don't disagree that could be enough to live on but, if you're used to £4k per month before tax and have the associated living costs it could be an issue before you sort out payment holidays for mortgage, rent car etc.

Sailtheworld

DiggerUK said:

bowlhead99 said:

Yes, I expect if I lost my job or had some other crisis and needed £1-2k a month to pay my expenses it's probably better to have nothing in the bank and be able to get £74 a week jobseeker's allowance, than have £10-20k in the bank to get me through the troubling times and get a reduced level of benefits

The point that I make is valid. Emergency funds beyond cash in hand are of no real use today, they are wasted capital. Instead of shooting the messenger, play the ball..._ 

Being able to claim a few tens of pounds in benefits isn't much of an argument for not having an emergency fund. The last thing I want to do is to throw myself at the mercy of the taxpayer.

As has been said before there's little point in having a credit line available to use instead of savings either. Emergencies tend to be compounding events rather than things which happen in isolation whilst everything else ticks along swimmingly.

masonic

DiggerUK said:

To illustrate how unnecessary emergency funds beyond cash in hand are, I would ask you to add up the following.
What you have a.t.m. that counts as cash in hand. (B#gger all interest)
Overdraft limits on current accounts. (Arm and a leg interest)
Amount of interest free overdraft you can obtain. (Current situation)
Total credit available on credit cards. (Arm and a leg if not cleared each month)
Total 0% available on credit cards. (Arrangement fee only if cleared on time)

I've just done Digger Mansions scores on the doors. It is beyond double the  £10-20,000 suggested by a poster here as an emergency fund, our interest free portion is between the sums mentioned above..._

So it's just mortgage debt you don't like, you are fine with other forms of borrowing including expensive forms of borrowing?

The trouble with 0% deals is they have a habit of not being available when really needed, and if you don't have the money to repay by the end of the promotional period, you risk rolling over onto something that will cost you an arm and a leg.

If you have any assets beyond your primary residence, then failing to have an emergency fund leaves you at risk of either being a forced seller of your assets or effectively borrowing to invest.