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Born To Borrow

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When I was a kid (and I'm still in my twenties now) I'm sure that everything I subconsciously learnt about debt indicated that it was a negative concept. From parents, tv, books, films, everything that surrounds us gave me the impression that being in debt was a shameful situation.

I think that culture started to change when I went to university 10 years ago. One of the first things most students had to do was borrow several thousand pounds from the Student Loans Company just to pay for a meagre living (i.e. subsistence plus a few nights of getting p*ssed on the cheap per week). And most students I knew also had a part-time job to help, and worked summers. Of course, the reason we had to borrow was the reduction and eventual abolition of student grants.

For me, and I'm sure many others, that first brush with debt was a formative experience. It was like a gentle introduction (by the government, oddly) to the ways of debt. The office that issued the loans was run by some old ladies and gents drafted in for the annual process. Respectable old folks, who would otherwise have been at the bowling club. The loans were offered at inflation rates, so there was no question of usury or being ripped off by some evil money lender. You just had to pay back what you borrowed in real terms, which seemed reasonable.

Since then, that generation has become conditioned to subsist on debt, resulting in the massive credit bubble we now live in.

I think in a short time this trend will be reversed. The truth about debt is slowly emerging. The old wisdom is coming to the fore again, and future generations will look back at the past 10 years as an abject lesson in the evils of debt. This generation will warn their children of the dangers and the shame of indebtedness and hopefully help them to avoid it.

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One thing's for sure, when you indulge in debt to the extent the UK has, something's gotta give.

I think your link with the introduction of student loans has some merit.

You may be just too young to remember, but before the maintenance grants were "abolished" students also lost their entitlement to housing benefit during the summer months.

Interesting post.

NDL

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I was born in 1974, I grew up in the eighties. When i was a kid, I remember a relative taking out loans to fund holidays, etc and my dad commenting on how everyone one was doing it (my parents were against debt, but they were definately in the minority). Student loans only came about in the early 90's (ish), so I don't think the two are linked. I think it's more the boom, bust thing.

I must say that I did get into a about £3000 worth of debt, mainly student debt, but some other as well, in my younger years. But soon became scared and paid it off about 7 or 8 years ago, now I'm a dedicated saver. However, my Brother (18 months younger) is a complete debt junkie, constantly going to ma and pa for help. He went to a local uni and had a generously paid part-time job, so never had any student debt.

I have to say, the only thing student loans did for my spending habits is dampen them. My first pay packet had a chunk of money missing, money that I p***ed up the wall when I was 19 (tuition fees were still paid when I went to uni, so I did actually spend most of it on ciggies and booze). What I'm trying to say is, I think it was my student debt that actually put me off from getting into even more debt by giving me a shock, when I was still relatively wet behind the ears. As my brother didn't have this early wake up call, he's gradually gotten used to it and now borrowing is a way of life for him.

Edited by laughing_goat

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I was born in 1974, I grew up in the eighties. When i was a kid, I remember a relative taking out loans to fund holidays, etc and my dad commenting on how everyone one was doing it (my parents were against debt, but they were definately in the minority). Student loans only came about in the early 90's (ish), so I don't think the two are linked. I think it's more the boom, bust thing.

I must say that I did get into a about £3000 worth of debt, mainly student debt, but some other as well, in my younger years. But soon became scared and paid it off about 7 or 8 years ago, now I'm a dedicated saver. However, my Brother (18 months younger) is a complete debt junkie, constantly going to ma and pa for help. He went to a local uni and had a generously paid part-time job, so never had any student debt.

I have to say, the only thing student loans did for my spending habits is dampen them. My first pay packet had a chunk of money missing, money that I p***ed up the wall when I was 19 (tuition fees were still paid when I went to uni, so I did actually spend most of it on ciggies and booze). What I'm trying to say is, I think it was my student debt that actually put me off from getting into even more debt by giving me a shock, when I was still relatively wet behind the ears. As my brother didn't have this early wake up call, he's gradually gotten used to it and now borrowing is a way of life for him.

I don't know... I think the original post does have some merit. When I see just how some students are living nowadays, it beggars belief. The days of beans on toast and scabby old worn jumpers are of the past (and perhaps the future aswell)

I was born in 75, and most of my peers are still carrying substantial debts - including the ones who didn't go to university. It affected them too as there was an element of "keeping up with the students"

Bottom line is, the sums just do not add up for our generation. Considering their pre-existing debts, how can they realistically expect to pay them off, save for retirement, buy a home, raise children and send them to university aswell? Not happening... all this talk of us being high-flying mega-earners is just so far off the truth it is ridiculous. Something has to break, I have no brook with this talk of us being a lost generation, the costs of having a vast swathe of the population economically sidelined would bring down the whole bloody lot! The balance will re-assert itself eventually, we just have to be patient and careful

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I don't know... I think the original post does have some merit. When I see just how some students are living nowadays, it beggars belief. The days of beans on toast and scabby old worn jumpers are of the past (and perhaps the future aswell)

I was born in 75, and most of my peers are still carrying substantial debts - including the ones who didn't go to university. It affected them too as there was an element of "keeping up with the students"

Bottom line is, the sums just do not add up for our generation. Considering their pre-existing debts, how can they realistically expect to pay them off, save for retirement, buy a home, raise children and send them to university aswell? Not happening... all this talk of us being high-flying mega-earners is just so far off the truth it is ridiculous. Something has to break, I have no brook with this talk of us being a lost generation, the costs of having a vast swathe of the population economically sidelined would bring down the whole bloody lot! The balance will re-assert itself eventually, we just have to be patient and careful

Hi Fancy Pants,

I must admit after reading my post back I thought, a twenty something leaving Uni will be fuming at me claiming to get worried about £3000 worth of debt, when their debts would be much worse. I think you make some good points about what a twenty/thirtysomething has to pay for these days and it is enough to make you throw in the towel and go wild on the plastic. If 10 or 15 years ago, I had known I'd be earning what I earn now, I probably would have imagined owning a big house and being able to afford fancy holidays (without debt). The reality is very different.

However, I remember when my Mum first realised that she would have to sort herself out pension wise, she was (sadly) in her late 30's (about 15/20 years ago), divorced and working as a nurse in a private home. To say she was paniced is an understatement. I suppose we are at least aware early enough to do something about it.

LG

Edited by laughing_goat

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When I was a kid (and I'm still in my twenties now) I'm sure that everything I subconsciously learnt about debt indicated that it was a negative concept. From parents, tv, books, films, everything that surrounds us gave me the impression that being in debt was a shameful situation.

I think that culture started to change when I went to university 10 years ago. One of the first things most students had to do was borrow several thousand pounds from the Student Loans Company just to pay for a meagre living (i.e. subsistence plus a few nights of getting p*ssed on the cheap per week). And most students I knew also had a part-time job to help, and worked summers. Of course, the reason we had to borrow was the reduction and eventual abolition of student grants.

For me, and I'm sure many others, that first brush with debt was a formative experience. It was like a gentle introduction (by the government, oddly) to the ways of debt. The office that issued the loans was run by some old ladies and gents drafted in for the annual process. Respectable old folks, who would otherwise have been at the bowling club. The loans were offered at inflation rates, so there was no question of usury or being ripped off by some evil money lender. You just had to pay back what you borrowed in real terms, which seemed reasonable.

Since then, that generation has become conditioned to subsist on debt, resulting in the massive credit bubble we now live in.

I think in a short time this trend will be reversed. The truth about debt is slowly emerging. The old wisdom is coming to the fore again, and future generations will look back at the past 10 years as an abject lesson in the evils of debt. This generation will warn their children of the dangers and the shame of indebtedness and hopefully help them to avoid it.

I found your post insightful as it happens.

The other guys are right in that the mentality towards debt is very much a recuring pattern. Where I think we have diverted, and you point out, is that at least in times past the borrowers were from the working population with at least a vague understanding of finance and some experience of budgetting and hence a sense of 'the value of money'.

This time, young, vulnerable and very impressionable people are obliged to take out incredible sums of money (up to 30k!) before they even have the chance to appreciate just how much money it is. This borrowing is done against an over-optimistic expetation of their future that, quite honestly, from observation on the ground, is not justifiable in my opinion.

I think you are right to worry that this debt bubble is more chronic because of this early addiction phenomenon.

Life is getting harder and I am aware of the energy problems that we are facing. It is unsound to continue our perenial assumption of the future being brighter than the past.

Good post.

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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