A Life on Credit.
Discussion
Standing in the queue at the bank I noted a mother and her 18/19 year old daughter standing at the counter talking loudly with the cashier.
It appeared the topic for discussion was that the daughter needed to buy her ticket for Global Gathering, those new shoes we saw on Saturday, petrol, and some money for the weekend. Problem was she had no money in her account and was complaining that they wouldn’t extend her overdraft. So mum asks how much was needed (£150) and said she would get daughter the money out. She then finds out she is up to her overdraft limit and so transfers funds over from her business account.
What the heck happened to if you can’t afford it don’t have it? And what a great example her mum is setting for her to follow.
It appeared the topic for discussion was that the daughter needed to buy her ticket for Global Gathering, those new shoes we saw on Saturday, petrol, and some money for the weekend. Problem was she had no money in her account and was complaining that they wouldn’t extend her overdraft. So mum asks how much was needed (£150) and said she would get daughter the money out. She then finds out she is up to her overdraft limit and so transfers funds over from her business account.
What the heck happened to if you can’t afford it don’t have it? And what a great example her mum is setting for her to follow.
Let them have all the credit they want...............and 20 x's their salarys in mortgages as well..............when it all goes tits up just get in there and hoover everything up.
It never fails to surprise at the amount of people using their homes as cash machines & overdrafts as pay check advances etc etc only spend what you can afford, if you cant, then dont, simple?
i have no sympathy whatsoever for people that get themselves into this sort of mess through 'lack' of financial (or more accurately 'common') sense.
i quote "stupid is as stupid does".
It never fails to surprise at the amount of people using their homes as cash machines & overdrafts as pay check advances etc etc only spend what you can afford, if you cant, then dont, simple?
i have no sympathy whatsoever for people that get themselves into this sort of mess through 'lack' of financial (or more accurately 'common') sense.
i quote "stupid is as stupid does".
Ahhhhh dont get me started! Serious head in the sand sindrome that is!
One of my student friends is identical, she has 20-30k debt on credit cards, loans, overdrafts etc etc etc most of it spent on clothes and cd's, the bank has bailed her out no end but she dont learn! Now she's earning, most of her wages go on re-payments
One of my student friends is identical, she has 20-30k debt on credit cards, loans, overdrafts etc etc etc most of it spent on clothes and cd's, the bank has bailed her out no end but she dont learn! Now she's earning, most of her wages go on re-payments
anonymous said:
[redacted]
Thank you, Mr Micawber! It's all about being realistic, but a great many people are not. All of these people remortgaging to take equity out of their houses terrify me. If house prices fall, then they are potentially in real trouble. My single financial priority is to get rid of my mortgage as quickly as possible.
Part of the problem is a government that is reducing the incentive to own your property debt-free by making people use the equity in their houses to fund retirement care.
Yes, sadly there has been a culture of debt cultivated by the ease with which people are able to obtain the next new glittery thing. People think they are missing out if they don't have all the stuff their friends have. More stuff does not mean more joy. Why, oh why, do they not teach personal financial and debt management as part of the basic education??
Your statement on debt management is correct, but people often need to be taught how to manage debt. Someone told me once that it was more lucrative to keep a mortgage rather than paying it all off at once, because I could have kept more of my own money and earned from it by investing it. Umm...no. Only if the earnings are greater than the interest on the mortgage. In which case, you have to find stocks that will consistently earn greater than your mortgage payment, and due to the variability in the market, there's no garantee that you aren't going to have to sell to look for a higher earning stock. It is nearly always better to pay off as much debt at one time than to try earn to counter the interest you're paying. It requires more research than most people can do outside their full time job.
I've heard people trade up their car after 3 years because they can get a new one for only however much more. They think it's a good deal. No it isn't. The only thing that ever really apprecieates in value is property. Because you can't make more land. Cars always depreciate, and the extended life that you buy with a repair is more often than not still cheaper than the expense over time of a new vehicle. It's true (unless your car is really awful). My car is 14 years old and has 176,660 miles on it, but the expenses I've had have fortunately been due to failures well past warranty. Still, those payments spread over a decade and a half are still cheaper than the price of a new car--unless you're comparing the current payment (over time) to the new car payment, not planning to pay either off completely before reselling them, I guess.
Your statement on debt management is correct, but people often need to be taught how to manage debt. Someone told me once that it was more lucrative to keep a mortgage rather than paying it all off at once, because I could have kept more of my own money and earned from it by investing it. Umm...no. Only if the earnings are greater than the interest on the mortgage. In which case, you have to find stocks that will consistently earn greater than your mortgage payment, and due to the variability in the market, there's no garantee that you aren't going to have to sell to look for a higher earning stock. It is nearly always better to pay off as much debt at one time than to try earn to counter the interest you're paying. It requires more research than most people can do outside their full time job.
I've heard people trade up their car after 3 years because they can get a new one for only however much more. They think it's a good deal. No it isn't. The only thing that ever really apprecieates in value is property. Because you can't make more land. Cars always depreciate, and the extended life that you buy with a repair is more often than not still cheaper than the expense over time of a new vehicle. It's true (unless your car is really awful). My car is 14 years old and has 176,660 miles on it, but the expenses I've had have fortunately been due to failures well past warranty. Still, those payments spread over a decade and a half are still cheaper than the price of a new car--unless you're comparing the current payment (over time) to the new car payment, not planning to pay either off completely before reselling them, I guess.
B17NNS said:
I can't talk, so I won't
is there room under that paperbag for two?
Certainly is
I agree with the arguments above I really do, however I'm also wary that I'd be pissed off at 60 to be rolling in cash and yet have no memories of my 20's well spent (no pun intended). There has to be a part of one's life to be enjoyed for it's absence of 'responsibilities'. I'm by no means advocating the sort of debts that minimaxx was regaling, but having a little fun while you're young is no bad thing in my book.
As ever, it all depends on one's own circumstances and priorities.
I don't understand it, either. A property payment that you can just make is still a good investment in the long run. If something bad happened, you could still sell it and live somewhere less posh with some earnings from the appreciated value. The other stuff is just appearances. I don't know how people can stand that, having no sense of security, and nothing extra in case of an emergency. It's like they weren't taught the real purpose of money.
anonymous said:
[redacted]
I guess we live in a society with few consequences for failure. People always have comfort of mind knowing they can always go on the dole and live in council subsidised housing. This completely eliminates any need for responsibility, as the 'big brother' will always bail you out.
The other side of the coin is when you have a very good income and a lifestyle to match.
Income takes a dip and you stupidly borrow on your cards because "it's only a blip".
By the time you realise it is not and have to adjust your lifestyle to cope, you also have to stuggle to pay off those extra debts.
It happens. It is all too easy unfortunatelty.
Income takes a dip and you stupidly borrow on your cards because "it's only a blip".
By the time you realise it is not and have to adjust your lifestyle to cope, you also have to stuggle to pay off those extra debts.
It happens. It is all too easy unfortunatelty.
I think for a lot of young people debt is normal... unless your parents are generous and extremely well off, you will probably leave university at 21 with a £9,000 debt... thats to the student loans compnay... perhpas you have taken the offer of a £2,000 overdraft from your bank too...
I have years worth of debt to the SLC (£12k) and a bit of an overdraft (interest free though, I am trying to pay it off). Its pretty crap when I think about it but I try not. Hopefully in 3 years I will graduate and then I will be Dr D_Mike. What do I get for my very specialist and actually quite difficult to achieve qualification? A crappy starting salary (hooray) or the option to go and work in the city, get bored mindless but be comfortably well off (boo). It's great isn't it.
I have years worth of debt to the SLC (£12k) and a bit of an overdraft (interest free though, I am trying to pay it off). Its pretty crap when I think about it but I try not. Hopefully in 3 years I will graduate and then I will be Dr D_Mike. What do I get for my very specialist and actually quite difficult to achieve qualification? A crappy starting salary (hooray) or the option to go and work in the city, get bored mindless but be comfortably well off (boo). It's great isn't it.
sorry to go 'off topic' a little.
I put myself through uni a good few years back. I didnt have any grants or money from parents. In fact i had to work 20-30 hours a week at a supermarket to 'put' myself through the system. I left without any debt whatsoever and owed nobody nothing. Thats the way i wanted it.
What on earth do you spend your money on to get yourself into that much in debt?
I put myself through uni a good few years back. I didnt have any grants or money from parents. In fact i had to work 20-30 hours a week at a supermarket to 'put' myself through the system. I left without any debt whatsoever and owed nobody nothing. Thats the way i wanted it.
What on earth do you spend your money on to get yourself into that much in debt?
cinque said:
I put myself through uni a good few years back....
What on earth do you spend your money on to get yourself into that much in debt?
Question answered Cinque. If it was a good few years back presumably you didn't have to pay tuition fees? Also, in my experience, student accommodation costs rise at somewhat above the rate of inflation.
Not sure how you get to 20-30k I must admit, although if you're not taking any money from parents, and you perhaps add in a masters, you'd be there or thereabouts I should think.
I don’t have a problem getting into debt to buy property, cars or boats but everything else should be paid off at the end of the month. Equally taking equity out of a property should only be done to fund one of the aforementioned or to enhance an existing property to add to its capital value (e.g. an extension or refurbishment).
My course had about 40 hours timetabled a week plus the stuff I had to do outside of that... I wasn't able to work in termtime. Obviously english students are able to do so. I worked in the holidays. I took the minimum (for that is all I am allowed because of what my parents earn) loan each year, for four years, which works out at £12,000 debt to the SLC. I used it to live on.
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