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wsn03

Is Attitude To Debt Another Major Cause Of Hpi?

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We know all the obvious stokers of the HPI fire, but I'm wondering if something else is behind it - peoples acceptance of debt as an acceptable part of life.

My accountant and I were talking about the craze to lease cars, now everyone has a new flash motor. He said he has clients who leverage so much debt they literally cannot afford to eat properly, yet big flash house, big flash cars, skiing holidays...the lot.

You think its exaggerated until you hear someone you know, with a very flash motor, designer everything, moaning to her bloke about something that has gone up in price saying "but I haven't got £20 a month, I'm going to have to cancel it".

A chap I know who earns a fair wack - 70k debt on credit cards he told me - that doesn't stop all the holidays or endless spending in the shops. I'd die if I had his interest bill.

I'm starting to think its not just the availability of debt that has blown up house prices, but peoples willingness to take it on. So many people max out on every available bit of debt they can lay their hands on. When I bought my first house people were scared of debt - I had 4k on a credit card after paying for my wedding, and I was terrified, paid off as a priority. We've barely had any inflation since (apart from houses) so relatively its still a similar amount, but these days people would think nothing of that as a total debt.

Interested to know peoples thoughts.

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I made exactly the same point on here recently... I'm 41 and I'm amazed at how much the attitude towards debt has changed during my adult life, it's now a completely acceptable and routine way of living.

I can remember a time when any form of debt was considered something to be ashamed of and a sign that you are a feckless spendthrift or financially incompetent or just too lazy to work hard enough to afford the things you 'need'.

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We know all the obvious stokers of the HPI fire, but I'm wondering if something else is behind it - peoples acceptance of debt as an acceptable part of life.

My accountant and I were talking about the craze to lease cars, now everyone has a new flash motor. He said he has clients who leverage so much debt they literally cannot afford to eat properly, yet big flash house, big flash cars, skiing holidays...the lot.

You think its exaggerated until you hear someone you know, with a very flash motor, designer everything, moaning to her bloke about something that has gone up in price saying "but I haven't got £20 a month, I'm going to have to cancel it".

A chap I know who earns a fair wack - 70k debt on credit cards he told me - that doesn't stop all the holidays or endless spending in the shops. I'd die if I had his interest bill.

I'm starting to think its not just the availability of debt that has blown up house prices, but peoples willingness to take it on. So many people max out on every available bit of debt they can lay their hands on. When I bought my first house people were scared of debt - I had 4k on a credit card after paying for my wedding, and I was terrified, paid off as a priority. We've barely had any inflation since (apart from houses) so relatively its still a similar amount, but these days people would think nothing of that as a total debt.

Interested to know peoples thoughts.

This is exactly why the credit taps can't be turned off without creating an almighty crash in nearly everything. No one has any money! Everything is on credit masking the fact that no one can afford anything with current living costs/earnings ratios... atleast not at present levels of consumption and HOUSE PRICES.

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So based on this, how the f*** does this madness ever stop? If its acceptable to be in max'd out debt people will keep paying up to the max they can be lent.

So I presume it will take banks stopping lending to bring the whole frenzy to a halt?

The only light in the tunnel if that's the case is that there is a lot of exposure to the junk debt in China. If that screws the banks everything else will be brought down.

My attitude to debt has always been very negative. It was made worse during the credit crunch when I was forced into debt to fund a divorce...jeez, banks ringing me on weekends for a minimum payment on a credit card, endless texts, all sorts...I vowed never to borrow a penny from these f****ers ever again, not for a car, an extension, nothing.

I thought everyone had learned from that, but no, we're in record debt again apparently. Everyone I know has a leased car, except me. Once again I'm the one who earns substantially more than all my friends, but appears to have the lowest standard of living. The world has gone totally mad.

Edited by wsn03

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Agree 100%. I've seen it with my own children. Eldest was in uni just before tuition fees came in so finished uni with minimal credit card debt which she paid off. Second had tuition fees to pay but still low level and made it a priority to pay it when he got his first job. Third had full fees and hasn't had a career so is resigned to never paying it off but doesn't even think about it. It's normal life to him. He also had credit cards maxed out but has since learned the hard way they're not an easy fix.

I heard one of them say once it didn't matter as you can always go bankrupt!

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I made exactly the same point on here recently... I'm 41 and I'm amazed at how much the attitude towards debt has changed during my adult life, it's now a completely acceptable and routine way of living.

I can remember a time when any form of debt was considered something to be ashamed of and a sign that you are a feckless spendthrift or financially incompetent or just too lazy to work hard enough to afford the things you 'need'.

The Elite and the Masses. It has always been this way. I'm not sure people on this forum always get that. The Elite give the masses just enough to have a family and food to eat and then the cycle starts again. Please read The Lessons of History - smarter people than us have already told us how the systems always work. Democracy is a sham - but this is not news...Doh!

I made the table below to illustrate the travelator debt problem that we moan about on here...its fairly obvious you need a larger population at younger ages to keep the ponzi scheme going. Once it collapse like it has for the below 35 age group you pile on debt until you get migrants to fill the gaps. The Elites use the young labour force to teach the migrants their values and customs to create a new work force who will breed again (migrants tend to be poorer and breed rapidly).

This isn't some conspiracy its fact (the elites are old monied families, who make money through capital not labour). This happened in the Aztec era, it happened in the Roman era, then the Middile Ages and Surfs and finally the the industrial era. You can't argue "they will fix it" - its just the way it is. Please adapt to this and use your wits to make something of yourself. You're either in the elite or your labour. We're animals penned in just like any flock. The choice for you and your childen is yours. Stop thinking the government is there for you, most people in power are in it for themselves...people just like hearing what they believe to be true. That will never change. The world isn't fair, let's get over it.

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It's mental it's like they follow the crowd

Among my friends i swear they think im a millionaire, normally getting remarks like he can afford it, he probably earns XYZ a day

But whats strange is that i dont drive a flashy car, i dont wear expensive designer clothes or splash out on holidays and days out and sometimes they earn the same as me if not more

I just have no debt

Bills are always paid
Car is paid for

Buy stuff as and when i need it

Always have money to go out and enjoy time with friends when we do and holidays which are rare but i can afford to

But my friends amaze me dont have a clue about whats going out and coming in, they spends money on expensive clothes but moan about having no petrol money or rent is due in 5 days

Want new cars on lease because apparently its better you get a new one every 3 years

They struggle to pay rent on time want a morgage because, hey house prices only rise but never bother to save for deposit

But again hey the government has this thing help to buy

I by no means am a finacial expert but understand when i dont need things and how to read small print and dont need flashy stuff to impress but when i hear friends talk about money i look like this

aMvT99w.gif

Oh also a good book i enjoyed was "the millionaire next door" which showed that most millionaires live normally

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Everyone I know has a leased car, except me. Once again I'm the one who earns substantially more than all my friends, but appears to have the lowest standard of living. The world has gone totally mad.

It is completely mad. I am the same. I sometimes wonder why I haven't joined the debt gravy train, because it seems to be without risk - as long as you can cover the monthly instalments, price is of no concern, live beyond your means. But surely it must blow up at some point?

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It is completely mad. I am the same. I sometimes wonder why I haven't joined the debt gravy train, because it seems to be without risk - as long as you can cover the monthly instalments, price is of no concern, live beyond your means. But surely it must blow up at some point?

You'd think so. I drive around in an old banger, my nice car (all paid for) lives in the garage...everyone thinks I'm nuts. I like driving around in a banger, everyone looks down on me from their posh cars that they've leased - it's a real eye opener. I live like my Dad did, have money but live well within my means.

I married an Indian (British) - now that is an eye opener. Words like credit card, debt, lavish spending...they'd have you sectioned. So how come Asian's still have the attitude of save hard, stick within your means, and the traditional British folk don't? What am I missing???

My ex was American, she loathed and despised me for not living it high, my current wife gets annoyed for the amount I fork out for the odd holiday - she's bl00dy brilliant with money, I spend less with her than I did on my own!!! Why is everyone else not like that, we were taught to be weren't we?

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It's mental it's like they follow the crowd

Among my friends i swear they think im a millionaire, normally getting remarks like he can afford it, he probably earns XYZ a day

But whats strange is that i dont drive a flashy car, i dont wear expensive designer clothes or splash out on holidays and days out and sometimes they earn the same as me if not more

I just have no debt

Bills are always paid

Car is paid for

Buy stuff as and when i need it

Always have money to go out and enjoy time with friends when we do and holidays which are rare but i can afford to

But my friends amaze me dont have a clue about whats going out and coming in, they spends money on expensive clothes but moan about having no petrol money or rent is due in 5 days

Want new cars on lease because apparently its better you get a new one every 3 years

They struggle to pay rent on time want a morgage because, hey house prices only rise but never bother to save for deposit

But again hey the government has this thing help to buy

I by no means am a finacial expert but understand when i dont need things and how to read small print and dont need flashy stuff to impress but when i hear friends talk about money i look like this

aMvT99w.gif

Oh also a good book i enjoyed was "the millionaire next door" which showed that most millionaires live normally

People look at you like you are mental when you tell them you don't know what your monthly car insurance is as you pay annually... same for home insurance, car tax etc. When to me its just normal...

Hopefully things will right themselves and the indebted will get their balls squeezed.

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Everyone is ******ing miserable too, although they pretend the debt doesn't effect them you can see they are miserable. Rage too lots of random rage as everyone is stressed to Fk.

The solution though seems to be to buy more stuff!

I find the less stuff i have the happier I am, when I tell people this they think I am mental.

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People look at you like you are mental when you tell them you don't know what your monthly car insurance is as you pay annually... same for home insurance, car tax etc. When to me its just normal...

Hopefully things will right themselves and the indebted will get their balls squeezed.

Sadly I fear it will be just the opposite... the cautious ones with savings and pensions will be targeted, whilst the heavily indebted will be let off with some form of debt forgiveness.

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Sadly I fear it will be just the opposite... the cautious ones with savings and pensions will be targeted, whilst the heavily indebted will be let off with some form of debt forgiveness.

This is what I am slowly beginning to suspect - bail in the savers, forgive the debtors. Any reason why not?

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People look at you like you are mental when you tell them you don't know what your monthly car insurance is as you pay annually... same for home insurance, car tax etc. When to me its just normal...

Hopefully things will right themselves and the indebted will get their balls squeezed.

Similarly, many people at work can't believe that I don't really give a flying fig about when the monthly wages get paid in. Most are eagerly anticipating the day for about a week beforehand as they have many debts to service - whopping mortgage, PCP or PCH on car, minimum payments on credit cards, monthly payments for insurance etc. If there's any kind of delay, they go mental.

When RBS had all those computer issues a few years ago, I thought some of them were going to melt down - people were taking time off work to queue at bank branches for a couple of hundred quid 'loans' that the bank were giving out. I just used money I had stashed away in my house for emergencies such as bank crashes to meet day to day living expenses. Everything else was paid up. I could have lived for a few months like that before I hit difficulties.

Don't hold your breath waiting for the indebted to face the consequences - the most expedient path will be to shake down anyone with savings/a surplus of income, to keep the system going and make sure those running the banks don't lose their shirts.

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'Debt is the slavery of the free' - Publilius Syrius.

I don't write that lightly. It's absolutely true that debt is a form of modern slavery.

First, there was traditional agrarian slavery, in various forms, up until the 1860s in developed countries.

Then came industrialised proletarian wage slavery and indentured servitude.

Finally, we got 'freedom' through universal suffrage, welfare states etc but slavery was re-instituted, ever so stealthily, in the form of consumer debt. In fact it's so subtle that most people don't realise it.

Modern PC Britain likes to weep and wail over the black slaves, despite the British Empire emancipating them in 1838, yet the average modern British office worker or social justice warrior undergraduate would laugh if you told him he is just as much in hock to his masters as they were. At least those who have eyes to see, can still opt out of the system.

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Sadly I fear it will be just the opposite... the cautious ones with savings and pensions will be targeted, whilst the heavily indebted will be let off with some form of debt forgiveness.

It's been that way for years now, savers are the minority. I'm beginning to think this screwed up system will never mend.

Tiny thread of hope, in Canada house loans are only allowed to be 2.5 x income as far as I know, rules brought in by the government a while ago. Result = stable economy in control.

Cameron was getting advice from the Canadians when he was vying to become PM - wonder wtf happened then???

Edited by wsn03

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It's been that way for years now, savers are the minority. I'm beginning to think this screwed up system will never mend.

Tiny thread of hope, in Canada house loans are only allowed to be 2.5 x income as far as I know, rules brought in by the government a while ago. Result = stable economy in control.

Cameron was getting advice from the Canadians when he was vying to become PM - wonder wtf happened then???

You sure about that? I thought Canada's housing bubble was as bad as ours!!

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You sure about that? I thought Canada's housing bubble was as bad as ours!!

No I'm not sure, I just know that it was all ok a few years ago, hence Cameron was taking advice from them. We're screwed, the world is completely screwed.

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You sure about that? I thought Canada's housing bubble was as bad as ours!!

From what I can find they seem to focus on affordability based on calculations of a % of your disposable income rather than multiples of your totals.....quite strict rules. Unlike our banks who lend whatever they have the balls to lend.

Typical statement:

Calculating Total Debt Service (TDS)

This enables you to estimate the maximum debt load you can carry each month. It should not exceed 40% of your gross monthly household income.

However with headlines like this below it seems you are completely right!!!

"5 Signs Canada's Housing Markets Are Out Of Control" - Huffington Post, Nov 2015

http://www.huffingtonpost.ca/2015/11/03/canada-housing-market_n_8461888.html

Edited by wsn03

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It's called the 'democratisation of credit'- the argument being that access to debt is a kind of 'human right' that should be available to all.

In this world view debt has been recast as a form of liberty- so it's no longer work that will set you free, it's debt.

A more Orwellian inversion of reality is hard to imagine.

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