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europbaron

Debt Education.

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I know a lot of people on here take great delight in mocking MSE forummers on their finances, but I believe that MSE runs some very worthwhile campaigns. Two that immediately spring to mind are:

1. The campaign for clarity on bank statements, especially that interest rates must be clearly stated. This info is not always easy to find.

2. Their headline article on their most recent weekly email. Link Here. Educating our young about debt is surely a good idea, however I do have concerns about how student loans have been portrayed on MSE as "good debt" (to be fair to them this is normally qualified).

I'd also like to see them try to value taking degrees over other career paths.

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I tuned out a couple of years ago when i heard Martin Lewis blabbering on about what he called 'good debt' (mortgages, student loans) and 'bad debt' (loans for consumption)

Putting everything into such broad categories with a readership as daft as MSE scares me. A mortgage can be good or bad, theres no way of telling until you know what the mortgage is held against.

Dont think this is a new campaign. I distinctly recall him going on about this on GMTV 2+ years ago.

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I'm all for debt education but suspect it's beyond that now...

IoM scheme for FTB gives them 23k each towards a new house. That's insane but seen by many as a good thing.

That's still debt for someone - and only benefits the house builders and mortgage companies.

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That IoM scheme seems daft to me. Yes, it is a tax haven and property prices are pushed up by folk relocating from overseas, but surely HPs will rapidly increase to absorb that gift from the govt?

Also, the IoM has a relatively low population density, certainly relative to England and especially the South East. There should be more scope for building, particularly when compared to the likes of Jersey and Guernsey.

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He'd be better off educating their fe.ckless parents first.

Take his explanation of an ISA. Are you sitting comfortably, children? Then let us begin...

isa_cake_with_text_optimized.jpg.jpg

FFS. So it's a tax-free savings product then? Why didn't you just say so.

The only people who would need an explanation like this are simpletons and I would imagine that once they've spent all their disposable income / benefits on booze, fags and credit card minimum repayments the simpletons would have no chocolate... sorry, cash... left to save.

I like MSE and Martin Lewis but if that's the level of education he'll be giving our children then I'd rather educate them myself.

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He'd be better off educating their fe.ckless parents first.

Take his explanation of an ISA. Are you sitting comfortably, children? Then let us begin...

isa_cake_with_text_optimized.jpg.jpg

FFS. So it's a tax-free savings product then? Why didn't you just say so.

The only people who would need an explanation like this are simpletons and I would imagine that once they've spent all their disposable income / benefits on booze, fags and credit card minimum repayments the simpletons would have no chocolate... sorry, cash... left to save.

I like MSE and Martin Lewis but if that's the level of education he'll be giving our children then I'd rather educate them myself.

But if its got cling film on, how does the interest get in? :blink:

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The only people who would need an explanation like this are simpletons and I would imagine that once they've spent all their disposable income / benefits on booze, fags and credit card minimum repayments the simpletons would have no chocolate... sorry, cash... left to save.

That is just plain rude, as well as prejudiced.

Some people can be very clever and talented (eg at playing musical instruments, painting and decorating, teaching English to children) and earn plenty of money, whilst being absolute rubbish with figures, maths and finance.

Anything that helps them understand concepts is useful, and simple is best.

or conversely, how would you explain the difference in investment risk and tax treatment between a current account, cash ISA and shares ISA to a talented artist who earns £35k pa but is dyslexic and got a D at GCSE Maths?

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He'd be better off educating their fe.ckless parents first.

Take his explanation of an ISA. Are you sitting comfortably, children? Then let us begin...

isa_cake_with_text_optimized.jpg.jpg

FFS. So it's a tax-free savings product then? Why didn't you just say so.

The only people who would need an explanation like this are simpletons and I would imagine that once they've spent all their disposable income / benefits on booze, fags and credit card minimum repayments the simpletons would have no chocolate... sorry, cash... left to save.

I like MSE and Martin Lewis but if that's the level of education he'll be giving our children then I'd rather educate them myself.

Spot on.

The explanation looks designed to sow confusion and consternation rather than clarification.

They'll soon be taking in pieces of cake expecting them to be accepted as mortgage payments asking "can I pay with strawberry cash this week instead of chocolate and oh could you advise me whether I need to use cling film".

I agree with the general idea of education on the subject though.

Edited by billybong

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Seems a very sensible campaign to me.

Infact I firmly believe my financial education and upbringing is the reason I got to buy a family house before I was 30 without parental support or a massive wage. Saved hard from an early age and spent very very carefully.

Unbelivably some people still think that my attitude is a bit weird or that I'm wrong to live like this. Funny isn't it?! Work and save and buy a house that's the way it's supposed to work? And that's what I did.

Good luck to Martin.

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That is just plain rude, as well as prejudiced.

Get yourself a sense of humour, scott.

Some people can be very clever and talented (eg at playing musical instruments, painting and decorating, teaching English to children) and earn plenty of money, whilst being absolute rubbish with figures, maths and finance.

Anything that helps them understand concepts is useful, and simple is best.

or conversely, how would you explain the difference in investment risk and tax treatment between a current account, cash ISA and shares ISA to a talented artist who earns £35k pa but is dyslexic and got a D at GCSE Maths?

I wouldn't patronise them by drawing a picture of a cake and talking to them as though they were five.

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Seems a very sensible campaign to me.

Infact I firmly believe my financial education and upbringing is the reason I got to buy a family house before I was 30 without parental support or a massive wage. Saved hard from an early age and spent very very carefully.

Unbelivably some people still think that my attitude is a bit weird or that I'm wrong to live like this. Funny isn't it?! Work and save and buy a house that's the way it's supposed to work? And that's what I did.

Good luck to Martin.

Congratulations. Out of interest, how old were you when you bought your house? In what year was that? What were interest rates at the time? What were CPI and RPI? How much deposit did you manage to save and what was your mortgage, interest rate and monthly mortgage repayments? Did you manage to save that money by living at home until a certain age or were you living independently and still managing to save up that deposit?

I only ask because I received a financial education too (from my parents), did exactly everything you say you have done and yet still couldn't afford to buy a house. I couldn't afford to buy in 2002 and I still cannot afford to buy now. I have no debt, a good salary and plenty of savings. Where did I go wrong?

I guess I must just be lazy.

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He'd be better off educating their fe.ckless parents first.

Take his explanation of an ISA. Are you sitting comfortably, children? Then let us begin...

isa_cake_with_text_optimized.jpg.jpg

FFS. So it's a tax-free savings product then? Why didn't you just say so.

:lol:

The thing is though, the taxman doesn't take away any slices of a non-ISA cake. If we continue the earlier metaphor of interest being mould growing on the cake then he takes away a small amount this mould each month/year. He doesn't get any slices, just a small amount of the mould.

Whereas with a cling film wrapped ISA cake the mould is protected from the taxman, and you get to have your mouldy cake and eat it!

Edited by Jie Bie

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sounds like MSE on a crusade to get themselves a nice cosy little Quango by being the thinktank for consumer spending or similar...I agree that the lessons dont need to be taught to kids, but to their parents...

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Regarding the IoM FTB scheme and £23k

It is mostly useless in my opinion even though on the face of it seems pretty good. I initially signed up to the first time buyer scheme 3 years ago and I'm yet to be offered a property.

To summarise it though if you buy direct from the Government you have to remain in your property for 10 years before you're able to sell it at market value for a profit but it has to be sold back to the IoM Govt at the value purchased at, even if you've resided there for 9 years 11 months. There's nothing in there confirming what happens if the value drops though...

You also get a grant up to £25k (dependent on wage) to act as a deposit towards the house which is repayable if you sell within 25 years reducing on a straight line basis by 20% every fiver years. (not so bad).

Then you can receive a loan from the Government at -0.5% below base rate up to I think off the top of my head 20% of the value of the property (minimum 0.5). Which you can start paying immediately or leave to accrue interest for a year before making payments.

This all seems pretty good, however I've been around the Islands banks asking in regards to this and many said they would not be interested in giving a mortgage to a customer who is purchasing through the FTB scheme. So you might not get the best mortgage available to you. And one that did (rightly so in my opinion) did not count the 'up to 25K' as a deposit when calculating LTV.

In addition as stated before I've yet to receive a property offer after 3 years which is no doube exasperated by the fact they build around 50 (max) properties a year and there's over 1200 FTB's on the list.

So the other option is to go into the open mark which has its benefits as you dont have to remain in the property for 10 years in regards to the earlier sales restrictions but you lose the option of the Loan, but you are still eligible for the 'up to 25k' grant. However the property must meet a certain size and be under £150k. Having watched the market over here for over 2 years I've yet to find any property (unless you want to live in Ramsey or a criminally rampant drug fuelled area...er...no) that meets this criteria.

Should you sell while the loan or the grant are outstanding also, all funds are immediately repayable having bought from the Gov. or not.

As you can tell...not a fan :-)

As such I've been looking to move off island once I have sufficient funds unless there is a sharp drop in prices!

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Congratulations. Out of interest, how old were you when you bought your house? In what year was that? What were interest rates at the time? What were CPI and RPI? How much deposit did you manage to save and what was your mortgage, interest rate and monthly mortgage repayments? Did you manage to save that money by living at home until a certain age or were you living independently and still managing to save up that deposit?

I only ask because I received a financial education too (from my parents), did exactly everything you say you have done and yet still couldn't afford to buy a house. I couldn't afford to buy in 2002 and I still cannot afford to buy now. I have no debt, a good salary and plenty of savings. Where did I go wrong?

I guess I must just be lazy.

You were born at the wrong time , if you had been born 5 years prior you would have bought if you had been born 10 years earlier you would have been able to buy in 1992 at the bottom of the last slump and would have seen that place go up 4 or 5 fold.

I have a place ( small flat owned outright ) but i am 47, I got no financial education form my parents what so ever apart form fear of money running out. If they had given me some financial education i might not have made some of the unreal mistakes that I have made with money in my life and this small flat could have been a much better house due to the money that has passed through my hands over the years . I do wish someone had taught me more about money. Learnt now but it has been a very long road.

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isa_cake_with_text_optimized.jpg.jpg

"Imagine a couple of cakes, one chocolate(cash) and one strawberry (shares)...."

So where does the mixed strawberry/chocolate cake in the picture fit into it. Ah it'll be in the lesson on Mortgage Backed Securities and mixing everything up together - that'll be why it's got the cherry on top.

Edited by billybong

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Interest... Ah yes, I recall that. Fond memories.

Quite....where can you find out what interest rate is paid?...why is it not on the statement?....why is it hidden in the small print? are they too embarrassed to tell you what it is?

Or....one moment you get it, then you don't....they pay it then take it away and hope you are too apathetic to notice. :blink:

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I wouldn't patronise them by drawing a picture of a cake and talking to them as though they were five.

So you mean you don't know / can't be bothered to think about how to explain ISAs, but just reckon you could do it better than a guy who explains financial concepts for a living :rolleyes:

Based on your post, I'm guessing your day job involves neither explaining financial products, nor dealing with 5-year-olds.

Let me also be clear that communication is a matter of horses for courses: cakes and cling film has it's place, but obviously to an audience financially sophisticated enough to be logging onto HPC.co.uk it will look patronising. That's why it's on Martin's site not here.

But far better to over-simply an explanation than over-complicate it.

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  • 284 Brexit, House prices and Summer 2020

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      • down 5% +
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      • up 5%



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