Understanding disparity around us

MattMattMattUK

Sea_Shell said:

I've offered budgeting help to family in the past and been declined.

I think they're worried I'd go through their spending with a red pen !!! 

In the meantime, they live in their overdraft!!   Sometimes you just can't help people who aren't prepared to help themselves ☹️

I know someone who refuses help in a similar way. They have a net household income of £5,800 pm, their mortgage is £1,150 pm and yet they are constantly running out of money, the husband has £25-40k of unsecured debt, yet they have "absolutely nothing" left over every month, which is why they have to borrow more. They could cut back on "nothing we could cut back on", yet they spend £250-300 pw on supermarket shopping for a family of two adults and two small children. He spends £40-60 pw on junk food outside of that, £150 pm on lottery tickets, seems to do everything in the most expensive way possible, buys lots of non-essentials etc.

What is worse is that the wife thinks everything is fine, she doesn't know about his unsecured debts and thinks that they are living comfortably (which they should be on their income and fixed costs), the husband thinks that it is work's fault for "not paying me more", however realistically he is already overpaid and would be earning significantly less if he had to find another job.

They think they cannot be helped because she does not know the mess they are in and he is unable to accept and responsibility for the mess he has got them into. To him it is entirely the fault of outside factors, everything they spend money on is "essential" (yes, he claims lottery tickets are essential, or that a human cannot eat healthily for less than £60pw), so no one can help them as he is unwilling to change anything, the only solution he can see is "more money", which will not help as every time he gets more money he does not use it to sort his finances, he spends 110% of it running up more debt. When it comes to finances some people are just broken and cannot be helped or fixed.

Ksw3

As someone who grew up in poverty and is now comfortable through opportunity and circumstance, a lot of these posts are quite upsetting. I drafted a few replies but ultimately felt it too upsetting to respond in depth.

The people you see out and about and shopping, I would say in most cases are people like me who are relatively comfortable and haven't been particularly affected by the budgets over the last few year and have benefitted through lockdown. Things will change soon and the number of people struggling will increase but I think for a long time the gap between the poorest and the majority of everyone else has been increasing. I think it will continue but there will be a greater number of people at the bottom. 

There was a big mental health affect on people through lockdown and I think we are still seeing the affect of people trying to find their way through that. For some people it is enjoying the things they missed for so long which require spending, for others it will be things that don't cost much at all as it is for me but this may change when people feel the pinch in winter and the decisions they make are adjusted. 

Sea_Shell

I get the mental health side of wanting to be able to enjoy a few treats or have some "me money" now, after the last few years...

but at what cost to ones "future" mental health, once the bills land and their debt gets worse and the chaser letters start. ☹️

MattMattMattUK

Ksw3 said:

There was a big mental health affect on people through lockdown and I think we are still seeing the affect of people trying to find their way through that. For some people it is enjoying the things they missed for so long which require spending, for others it will be things that don't cost much at all as it is for me but this may change when people feel the pinch in winter and the decisions they make are adjusted. 

He thing that is key here is delayed gratification (as significant precursor to success), spending on wants when one cannot afford them now, let alone with future rising costs is always going to have a negative impact on both life circumstances and mental health. Lockdowns/Covid were awful for me, the whole mess has probably cost me £130-150k in lost earnings over the last two years (I went from six figures to £15k pa), but I did not spend savings on "nice" things, only on essentials. I have not been abroad since 2018 and whilst I could afford to now I will not now as it would not be a sensible use for the available funds. I do not buy expensive clothes, or go to expensive places, I drive a 14 year old car. I could take lots of holidays, buy a new car, buy designer clothes but I would just be depriving future me of financial security.

For me financial security will always trump having lots of shiny. Others who choose cake today have to live with the consequences of their actions.

zagfles

Sea_Shell said:

I get the mental health side of wanting to be able to enjoy a few treats or have some "me money" now, after the last few years...

but at what cost to ones "future" mental health, once the bills land and their debt gets worse and the chaser letters start. ☹️

Yes, unfortunately there does seem to be an attitude that money/spending is the solution to everything, whereas it's often it just creates further problems.

Ksw3

You have to have a faith that things will be different and that there will be an other side. If you see no hope in your situation improving its very hard to deny yourself some enjoyment now for a future you don't think will ever be within your reach. 

I am thrifty, I don't buy new clothes, I don't drive, I don't holiday abroad, I have a £6 SIM only phone deal. I don't do these things because of financial savvy I do these things out of complete and utter fear of returning to my childhood. Sometimes the only defense mechanism you have against fear is to deny it or avoid it. Is it the most effective strategy? No, is it human? Absolutely. We are all just trying to get through life with whatever coping mechanisms we have, to blame people for the choices they make without an understanding of the internal and societal pressures at play I think is counter productive. 

Expotter

MattMattMattUK said:

Ksw3 said:

There was a big mental health affect on people through lockdown and I think we are still seeing the affect of people trying to find their way through that. For some people it is enjoying the things they missed for so long which require spending, for others it will be things that don't cost much at all as it is for me but this may change when people feel the pinch in winter and the decisions they make are adjusted. 

He thing that is key here is delayed gratification (as significant precursor to success), spending on wants when one cannot afford them now, let alone with future rising costs is always going to have a negative impact on both life circumstances and mental health. Lockdowns/Covid were awful for me, the whole mess has probably cost me £130-150k in lost earnings over the last two years (I went from six figures to £15k pa), but I did not spend savings on "nice" things, only on essentials. I have not been abroad since 2018 and whilst I could afford to now I will not now as it would not be a sensible use for the available funds. I do not buy expensive clothes, or go to expensive places, I drive a 14 year old car. I could take lots of holidays, buy a new car, buy designer clothes but I would just be depriving future me of financial security.

For me financial security will always trump having lots of shiny. Others who choose cake today have to live with the consequences of their actions.

I think you've touched here on the key issue of 'Personal Responsibility', which some here are misreading it as a lack of compassion. I'm sure many here, like yourself and me, have gone through times in our lives when we've struggled financially and yet, we refused to see ourselves as victims and through our own personal choices and decisions have managed to come through. Everything I own and have today has been achieved through my own work, never had any help from government (apart from child benefit) or anyone else. When friends and family were going on expensive holidays, I was overpaying the mortgage and whenever there was any spare money, it was allocated to savings.
 I guess it comes down to your own mentality and how you see yourself, too many people in this country have grown accustomed to 'playing the system' and it's very hard not too feel resentful that while some are working as hard as they can just to cope, others get everything paid for from when they're babies, to housing, to all sorts of benefits, to residential care.
Inequality is not exclusive to the UK, it's a worldwide issue; if anything one could argue that in this country with free healthcare, free education and the welfare system it's much easier to overcome than in many other countries. But ultimately, with the exceptions of those who really need supporting, you have to take responsibility for your own choices and that applies regardless of your level of income. Unfortunately though, it seems to me that this victimhood status is, if anything, currently encouraged and nothing is ever your fault.

Lastonestanding

zagfles said:

Yes, unfortunately there does seem to be an attitude that money/spending is the solution to everything, whereas it's often it just creates further problems.

My daughter got a free laptop back in the days of Gordon Brown. Her mother used it, my daughter already had one. I can see such freebies helping some of our poorest, but perhaps a local library with adequate funding would have been better.
Like most, I do have a downer on too many benefits, but I bought my council house.
So it's important that benefits do good too.

zagfles

Ksw3 said:

You have to have a faith that things will be different and that there will be an other side. If you see no hope in your situation improving its very hard to deny yourself some enjoyment now for a future you don't think will ever be within your reach. 

I am thrifty, I don't buy new clothes, I don't drive, I don't holiday abroad, I have a £6 SIM only phone deal. I don't do these things because of financial savvy I do these things out of complete and utter fear of returning to my childhood. Sometimes the only defense mechanism you have against fear is to deny it or avoid it. Is it the most effective strategy? No, is it human? Absolutely. We are all just trying to get through life with whatever coping mechanisms we have, to blame people for the choices they make without an understanding of the internal and societal pressures at play I think is counter productive. 

It's not a question of "blame", it's a question of understanding what the problem is so you can provide the appropriate solution. All the analysis done on poverty/people struggling seems to purely focus on income. Obviously, income is a factor. But it's not the only factor. If someone is struggling because of a drink/drugs/gambling habit, then increasing their income isn't going to help them, it'd likely make their problem worse. That's why charities and organisations who understand these things encourage people not to give money to homeless people on the streets, instead support a homeless charity, and why they call for stuff like minimum alcohol pricing, and high excise duties on alcohol/tobacco. Make the products that are harming them less affordable, not more affordable. You might feel compassion for a homeless beggar, you might feel compassion for a blind child beggar in India. Watch Slumdog Millionaire to see what that sort of compassion leads to.

OK, away from the extreme examples, the point is not that all people who struggle do so because they have a habit, or they can't budget, or because they're spendthrifts. But some are. Many people manage perfectly well on means tested benefits, some more than others for instance (contrary to popular belief) the benefits system is very generous to single parents, but very stingy towards young single childless people living alone. Also everyone's situation is unique and a benefits system that caters to millions will always have holes, stuff like unexpected bills eg fridge breaks down etc. So some people will struggle because of lack of income in some circumstance eg when the fridge breaks. Others will struggle because they can't budget, and others because they have a habit, or have built up debt etc.

The main problems caused by the introduction of UC weren't the amounts, for those at the bottom they were mostly identical to legacy benefits, it was that it changed to monthly payment, and rent was paid to the claimant rather than direct to the landlord. This caused problems for those who couldn't budget, or had a habit. They'd spend a month's benefit in a week. They'd spend their rent money on other stuff. But that was only 10% or so, the other 90% were fine. But it's the 10% that end up in foodbanks, or being interviewed by journalists about how much they're struggling, with no analysis of why. The 90% who manage fine are ignored. And the implication is it's always that it's down to "poverty" defined in income terms, rather than anything else.

Maybe journalists should start interviewing people on minimum state benefits who don't use foodbanks rather than those who do...

zagfles

Lastonestanding said:

zagfles said:

Yes, unfortunately there does seem to be an attitude that money/spending is the solution to everything, whereas it's often it just creates further problems.

My daughter got a free laptop back in the days of Gordon Brown. Her mother used it, my daughter already had one. I can see such freebies helping some of our poorest, but perhaps a local library with adequate funding would have been better.
Like most, I do have a downer on too many benefits, but I bought my council house.
So it's important that benefits do good too.

Personally I don't have a downer on too many benefits, quite the opposite, I'd give everyone benefits in the form a citizen's income! I have a downer on means tested benefits and high MDRs (marginal deduction rates) which create poverty traps, and thinking that any problem can be solved by throwing money at it.

The problem with targetting money at "where it's needed" is that if the "need" goes, the money goes. So it encourages people to keep the "need", so they keep the money. If they got to keep the money regardless of need (ie a citizen's income) it could be the most "levelling up" thing any government's ever done!

People say it'll be expensive, but that misses the point. You simply set a flat tax rate (no allowance) at whatever makes it fiscally neutral. It's a zero sum game, you're redistributing. Everyone pays more tax but everyone gets the CI. MDRs are the same for everyone. Everyone has the same incentive to work and improve their situation. The system is progressive by nature - when you consider tax minus the CI which will start negative for those out of work and will rise to zero, then become positive as people earn more.

The way the benefits system and welfare budget is going at the moment, it might be the only solution soon!