Household debt in UK 'worse than at any time

[DarkHorseWaits-NoMore]

Debt is the new wealth ?. Think of cash as someone else's debt temporarily visualized (from the magic of bank credit).

[nnails]

2 hours ago, winkie said:

Could be an age thing......nobody need to impress?

Could be years ago were fortunate to own a car, any kind of car.....work, save then own a car... then start saving for the next car or the next thing, perhaps for deposit for a home or a holiday?

Now everything can be had on tick.......never judge a book by the cover.

Today we pay subscriptions, insurances or rent on monthly installments for so many things...... direct debits makes for a huge chunk of expenditure from a monthly income.......all the little sums add up.....all regular debits should be reviewed regularly......look after the pounds and the hundreds of pounds will look after themselves.?

Can't blame them for not saving when banks give you .5 petcent

[winkie]

4 minutes ago, nnails said:

Can't blame them for not saving when banks give you .5 petcent

Save in a Bank ha,ha ( a few pounds a month in the best rate not a bad habit to have)........saving is creating your own wealth by spending well.......when you are told by buying something you will save when spending more, you will not be saving.......you will be spending to spend again.....or it is cheap because it is interest free payable over three easy monthly payments.

Buy this to save on that is not saving it is spending twice.....there is at the moment excess and waste everywhere.

[GregBowman]

4 hours ago, neon tetra said:

I’m the same. People have been saying “cash is king” for the most part of the last decade, but events have made me doubt it.

Now there are signs that prudent people might finally be rewarded. Though in reality, you and I might have had upwards of 20k of interest witheld from us by the funding for lending policies over that period, and so it will be hard to think that we will come out on top...

Here’s hoping.

Not sure cash has ever been king - liquidity is king. Ensure your money is working and at least a year of living expenses easily accessible ( including access to credit card money if required whilst fixed term stuff matures)

 

[Dreamcasting]

2 hours ago, DarkHorseWaits-NoMore said:

Debt is the new wealth ?. Think of cash as someone else's debt temporarily visualized (from the magic of bank credit).

Which is why holding cash is dangerous. You're actually safer getting up to your eyeballs in debt than holding large amounts of cash. It's the way the system is designed and administered.

Might as well go on a debt binge for 10 years and have a really good lifestyle than save and hold cash. The debtor will have had a great lifestyle followed by two fingers. The saver will have had an average lifestyle at best with a big fat zero at the end through inflation.

[Dorkins]

2 hours ago, winkie said:

saving is creating your own wealth by spending well.......

No it isn't, saving is income not spent.

Edited July 29, 2018 by Dorkins

[winkie]

9 minutes ago, Dorkins said:

No it isn't, saving is income not spent.

It is both.......so can double your money by making it go twice as far or can be prepared to earn less but not being or feeling any worse off than someone who earns twice as much.?

[Dorkins]

1 hour ago, Dreamcasting said:

Which is why holding cash is dangerous. You're actually safer getting up to your eyeballs in debt than holding large amounts of cash. It's the way the system is designed and administered.

Might as well go on a debt binge for 10 years and have a really good lifestyle than save and hold cash. The debtor will have had a great lifestyle followed by two fingers. The saver will have had an average lifestyle at best with a big fat zero at the end through inflation.

If it's so obvious that this is the only way to win I assume this is what you're doing?

[Mossie]

1 hour ago, Dreamcasting said:

Which is why holding cash is dangerous. You're actually safer getting up to your eyeballs in debt than holding large amounts of cash. It's the way the system is designed and administered.

Might as well go on a debt binge for 10 years and have a really good lifestyle than save and hold cash. The debtor will have had a great lifestyle followed by two fingers. The saver will have had an average lifestyle at best with a big fat zero at the end through inflation.

If things change and such people's choices for life-of-debt-partying get tougher, I won't be joining in with excuses for their glum face difficulties.   

You think what you think, I will think what I think.  Although there are people who tell me people who make different choices and buy up loads of houses, are selfish, don't care about tomorrow and bang-the-credit-cards on debt, 'don't think'.  It's an ego thing, I think.  "Hey I 'can think' and I'm the best, and so these people choosing to do something else must not be responsible for their different choices and banks and media to blame or something."

[winkie]

1 hour ago, GregBowman said:

Not sure cash has ever been king - liquidity is king. Ensure your money is working and at least a year of living expenses easily accessible ( including access to credit card money if required whilst fixed term stuff matures)

 

Liquidity is important, cash flow......liquidity offers an escape an easier way out, freedom of choice, peace of mind and helps by saving money having to  pay for expensive money and expensive insurances....?

[GregBowman]

1 minute ago, Dorkins said:

If it's so obvious that this is the only way to win I assume this is what you're doing?

LOL I was going to post in reply to @winkie whilst filling up my ISA - gone safe all US stocks Boeing, Amazon, 3M etc. Thought with next year keep out of the UK until we all see whats  (Charles Stanley bit cheaper platform than Hargreaves Lansdown but Poop as in interface)

Total debt for ever is obviously not the way to win* long term but either is just saving IMHO because you miss out  on compounded growth or the advantages of leveraged returns in markets going up or the best leverage return of all starting your own business and stop working for the man.

There is a natural cycle. When your young  take more risks borrow more, mid life start to consolidate put savings into products other than you shares etc, later life keep finessing  the pot into lesser risk but still compounding returns.

Within this framework. Live  according to all the sensible stuff we talk about on here, 2nd hand cars, smart spending etc. Great books on how to do that : our very own @wish I could afford one Zero to financial independence, Your money or your life, The Millionaire next door

With an encompassing framework of:

Stop working for someone else as soon as you can

Marry Well

Look after your health

Pure savers seemed to of undershot life a little and big debts later in life isn't a pretty sight

* In the purest sense living a life you want to lead without financial pressure 

 

 

[GregBowman]

2 minutes ago, winkie said:

Liquidity is important, cash flow......liquidity offers an escape an easier way out, freedom of choice, peace of mind and helps by saving money having to  pay for expensive money and expensive insurances....?

Sort of between the two and defo cash on hand is a more comfortable feeling and you should have some of course but maybe a little too comfortable in many cases

[Mossie]

It seems to me the banks can withstand defaulters, and that's my focus.  I will still have a good credit-rating in that downturn default scenario.... 

My efforts won't be to try and make a case for others who have had 4 holidays a year, and nice cars and whatever else on the debt, but to make my savings go further, and pick up some bargains.

Quote

 

25 Sept 2017

The Bank of England has warned that British high street banks risk losing as much as £30bn from defaults on credit cards and personal loans credit were the economy to take a turn for the worst.

The Old Lady of Threadneedle Street cautioned that the UK's growing £200bn consumer debt pile threatens some to damage the capital positions of some of Britain's biggest banks should a sharp downturn in the economy take place.

....................Paul Hollingsworth, of Capital Economics, said that the extra £10bn capital requirement "is not especially large" compared to the £280bn of core capital already held by banks.

https://www.telegraph.co.uk/business/2017/09/25/bank-england-warns-pockets-risk-growing-200bn-consumer-debt/

I think the counter-cyclical capital buffer is now at 1% but could be wrong.

https://www.telegraph.co.uk/business/2017/09/25/bank-england-warns-pockets-risk-growing-200bn-consumer-debt/

 

 

[winkie]

They must of factored into the price of debt into the default statistics......debt has to be created to spend, not all debt is ever recovered........they need you more than you need them.?

[GregBowman]

12 minutes ago, Mossie said:

It seems to me the banks can withstand defaulters, and that's my focus.  I will still have a good credit-rating in that downturn default scenario.... 

My efforts won't be to try and make a case for others who have had 4 holidays a year, and nice cars and whatever else on the debt, but to make my savings go further, and pick up some bargains.

 

Agree with you the banks are loads stronger than before and debt is from all over the place PCP car deals aren't just financed if at all by UK banks

I also think debtors are in for a surprise. Stronger banks will call in debts quicker

[maverick73]

Blame your successive governments both Labour and Conservatives and chuck in the Central Bank... who've devised an economy driven by consumer spending, and measuring spending while stripping out components like oil, and house prices to make their policies look successful - Link

[Mossie]

1 hour ago, GregBowman said:

There is a natural cycle. When your young  take more risks borrow more, mid life start to consolidate put savings into products other than you shares etc, later life keep finessing  the pot into lesser risk but still compounding returns.

How natural is it at the moment?  QE.  HTB.  BTL with 5 million houses and Gen Rent, and these prices.  It's just the system, as it is, does not afford the same kind of entry points for the young as many had in previous decades.

I would take the risk to borrow, if it wasn't £350,000 - £400,000 for a crappy house, although some people do buy, as is their choice.

Have a look at what young can do.  Say a 29 year old couple, with 2 under three-year-olds, both working with £70K coming in.    

They have policy-makers (hello Broadbent and his most recent speech) and similar ones across the world (Bernanke, and his 'Courage To Act') wanting to be adored for stopping the economy adjusting, and telling us house prices no big problem  

We've had a decade, followed by another decade of BTL buying up 5 million homes, and a lot of HPI.   We have EAs telling how there isn't much stock on the market.

I'm with you to keep plugging away, and seek to save, but it's also their choice if they have a holiday/spend as well as just save.  And hard-earned savings, well I can understand if some don't feel so comfortable putting it in stockmarket, when they are saving to buy a home one day.  Precious savings after what's left over from paying rent.   There was an article in DM or similar the other week, with some guy saying why should he suffer 1% on savings when he can get something like 4% yield from Lloyds Bank, and seems sure thing at 68p.   Well Lloyds Bank did drop since then, touching 60p, and fluctuating 60p-62p since.  

[slawek]

The household squeeze started in 2016 so it is most likely to be Brexit related, higher living costs caused by falling pound.  

https://www.ons.gov.uk/economy/nationalaccounts/uksectoraccounts/articles/makingendsmeetarehouseholdslivingbeyondtheirmeans/2018-07-26

 

Edited July 29, 2018 by slawek

[GregBowman]

1 hour ago, Mossie said:

How natural is it at the moment?  QE.  HTB.  BTL with 5 million houses and Gen Rent, and these prices.  It's just the system, as it is, does not afford the same kind of entry points for the young as many had in previous decades.

I would take the risk to borrow, if it wasn't £350,000 - £400,000 for a crappy house, although some people do buy, as is their choice.

Have a look at what young can do.  Say a 29 year old couple, with 2 under three-year-olds, both working with £70K coming in.    

They have policy-makers (hello Broadbent and his most recent speech) and similar ones across the world (Bernanke, and his 'Courage To Act') wanting to be adored for stopping the economy adjusting, and telling us house prices no big problem  

We've had a decade, followed by another decade of BTL buying up 5 million homes, and a lot of HPI.   We have EAs telling how there isn't much stock on the market.

I'm with you to keep plugging away, and seek to save, but it's also their choice if they have a holiday/spend as well as just save.  And hard-earned savings, well I can understand if some don't feel so comfortable putting it in stockmarket, when they are saving to buy a home one day.  Precious savings after what's left over from paying rent.   There was an article in DM or similar the other week, with some guy saying why should he suffer 1% on savings when he can get something like 4% yield from Lloyds Bank, and seems sure thing at 68p.   Well Lloyds Bank did drop since then, touching 60p, and fluctuating 60p-62p since.  

Not sure I said plugging away. It starts with how you configure your life. I didn't make myself clear either apologies. When I say borrow I actually mean everything except a house, to invest in shares, start your own business, retrain for more lucrative careers, initiate immigration and so forth. I agree with you buying your property should not be a life time gamble but...if those earnings were double then that house for me anyway would be within an acceptable risk spectrum

Not sure where you are looking but I could point you towards houses that are far from crappy in South Hertfordshire and ideal homes for the young family you describe 2/3 beds terraced or semi detached near good schools. This being one

https://www.rightmove.co.uk/property-for-sale/property-74370083.html

There are loads more in Hertfordshire.  Quick access to London and low crime good neighbourhoods. They are still obscenely expensive compared to 10 -15 years ago but if you have a deposit at the age of our mythical young  couple get out of the rent trap now.I  lived in a house like that till I was 37 with the family. If they don't have enough deposit get some 0% credit cards and get busy at car boot sales or building a third income.

I don't believe in plugging away in a flawed system and your mythical couple are in two the rental sector and it appears normal PAYE jobs both deeply flawed systems for the individual and built to extract money from you

The house market isn't natural today but when was anything natural ? 

[Dreamcasting]

4 hours ago, Dorkins said:

If it's so obvious that this is the only way to win I assume this is what you're doing?

No, because I have no credit history (never borrowed anything), nobody would want to lend money to me. I'm too far gone to start this scheme at my juncture in life and my house is fully bought. I bought into the market when everything was sane and fairly priced, and I have managed to live a reasonable lifestyle under such fairer times of the past.

BUT, if I was 25 years younger with no house, assets and a dim future, then oh hell yeah, i'd be all over my suggestion.

[Mossie]

2 hours ago, GregBowman said:

Not sure I said plugging away. It starts with how you configure your life. I didn't make myself clear either apologies. When I say borrow I actually mean everything except a house, to invest in shares, start your own business, retrain for more lucrative careers, initiate immigration and so forth. I agree with you buying your property should not be a life time gamble but...if those earnings were double then that house for me anyway would be within an acceptable risk spectrum

Not sure where you are looking but I could point you towards houses that are far from crappy in South Hertfordshire and ideal homes for the young family you describe 2/3 beds terraced or semi detached near good schools. This being one https://www.rightmove.co.uk/property-for-sale/property-74370083.html

There are loads more in Hertfordshire.  Quick access to London and low crime good neighbourhoods. They are still obscenely expensive compared to 10 -15 years ago but if you have a deposit at the age of our mythical young  couple get out of the rent trap now.I  lived in a house like that till I was 37 with the family. If they don't have enough deposit get some 0% credit cards and get busy at car boot sales or building a third income.

I don't believe in plugging away in a flawed system and your mythical couple are in two the rental sector and it appears normal PAYE jobs both deeply flawed systems for the individual and built to extract money from you

The house market isn't natural today but when was anything natural ? 

Agree with a lot of that, but they are already professionals.  They've done 'everything right' apart from what you like about self-employment against being an employee, and I can understand a lot of your thinking.   Although one has gone part-time, to be a mother to her children, so their income has dropped down to £70K.   They are some of the most intelligent hard-working people I know.   They both have had years of up at 6:30am to prepare for work, work all day in mind-boggling work, and home at 7pm.  

"If those earnings were double" - it's a nonsense that they should work-harder, car-boot-sale trade, to seek to get into position for not much of a house.  It's the house prices that are the problem, along with BTL, and not that people not working hard enough.  They have already scraped to save some deposit as BTLers bought up more homes, and HTB came along.

£391,000 asking price for that house.

It's got two listings active by looks of things.  https://www.rightmove.co.uk/property-for-sale/property-72877454.html

I think it's likely to be this one; sold for £200,000 in 2011.   

I am not having a go at the house itself, and note you also lived in such a house until 37.   House itself would be okay for my family at the right price, and lots of similar homes around here at the £300K -£400K asking price level.   Just these prices!   For such homes.  Let others pay that to get out of the 'rental trap' if they want, or are able to, maybe with some BOMAD, or as you suggest with 'credit-cards' (???????) but their choice.  I wait for BTLer squeeze/HPC.

[longgone]

7 hours ago, GregBowman said:

LOL I was going to post in reply to @winkie whilst filling up my ISA - gone safe all US stocks Boeing, Amazon, 3M etc. Thought with next year keep out of the UK until we all see whats  (Charles Stanley bit cheaper platform than Hargreaves Lansdown but Poop as in interface)

Total debt for ever is obviously not the way to win* long term but either is just saving IMHO because you miss out  on compounded growth or the advantages of leveraged returns in markets going up or the best leverage return of all starting your own business and stop working for the man.

There is a natural cycle. When your young  take more risks borrow more, mid life start to consolidate put savings into products other than you shares etc, later life keep finessing  the pot into lesser risk but still compounding returns.

Within this framework. Live  according to all the sensible stuff we talk about on here, 2nd hand cars, smart spending etc. Great books on how to do that : our very own @wish I could afford one Zero to financial independence, Your money or your life, The Millionaire next door

With an encompassing framework of:

Stop working for someone else as soon as you can

Marry Well

Look after your health

Pure savers seemed to of undershot life a little and big debts later in life isn't a pretty sight

* In the purest sense living a life you want to lead without financial pressure 

 

 

what business would you say was the easiest to start with the least risk reward ratio ?

Trying to sell on ebay is near enough impossible now, people are just not buying.

i have a 5 figure some that has been earning diddle squat near on 10 years i need to make it pay some how. 

[GregBowman]

16 hours ago, Mossie said:

Agree with a lot of that, but they are already professionals.  They've done 'everything right' apart from what you like about self-employment against being an employee, and I can understand a lot of your thinking.   Although one has gone part-time, to be a mother to her children, so their income has dropped down to £70K.   They are some of the most intelligent hard-working people I know.   They both have had years of up at 6:30am to prepare for work, work all day in mind-boggling work, and home at 7pm.  

"If those earnings were double" - it's a nonsense that they should work-harder, car-boot-sale trade, to seek to get into position for not much of a house.  It's the house prices that are the problem, along with BTL, and not that people not working hard enough.  They have already scraped to save some deposit as BTLers bought up more homes, and HTB came along.

£391,000 asking price for that house.

It's got two listings active by looks of things.  https://www.rightmove.co.uk/property-for-sale/property-72877454.html

I think it's likely to be this one; sold for £200,000 in 2011.   

I am not having a go at the house itself, and note you also lived in such a house until 37.   House itself would be okay for my family at the right price, and lots of similar homes around here at the £300K -£400K asking price level.   Just these prices!   For such homes.  Let others pay that to get out of the 'rental trap' if they want, or are able to, maybe with some BOMAD, or as you suggest with 'credit-cards' (???????) but their choice.  I wait for BTLer squeeze/HPC.

I agree with everything apart from the done everything 'right' there is no right or wrong - the system not just houses was for the benefit of the elite when I joined the workforce just not as well executed technology and the financial Gerry mandering of late has accelerated that.

When I say earn I more I don't mean work harder - there is a shortage of good people in most professions find someone who values you

It is harder now and anyone of my generation who doesn't believe that hasn't got a heart IMHO

[GregBowman]

16 hours ago, longgone said:

what business would you say was the easiest to start with the least risk reward ratio ?

Trying to sell on ebay is near enough impossible now, people are just not buying.

i have a 5 figure some that has been earning diddle squat near on 10 years i need to make it pay some how. 

I can only speak for myself but any form of moving goods or retail full stop fills me with fear in that eventually will always be a commodity so in no particular order

It sounds simple but become an expert in something and sell your services. Currently in demand GDPR certified practitioners (3 week course) Project management all varieties but relocation always in demand, Not sure on your Tech skills but if you have run a business plenty of work in low end IT support most one band are muppets and not very good business people.  Good mobile food service - I know three people who have gone into this and are doing well and started on the kitchen table as it were - my personal idea is there must be room for healthy food service - rotisserie  chicken and salad nothing else. Hog roasts doing well at mo

Affluent areas create a Green Thumb look alike shortage of reliable light stuff gardeners.

I wouldn't overlook a franchise there are some good ones. 

For me every time it is the expert route - high return, low overheads - just invest in sales skills and image as well

 

 

[longgone]

5 hours ago, GregBowman said:

I can only speak for myself but any form of moving goods or retail full stop fills me with fear in that eventually will always be a commodity so in no particular order

It sounds simple but become an expert in something and sell your services. Currently in demand GDPR certified practitioners (3 week course) Project management all varieties but relocation always in demand, Not sure on your Tech skills but if you have run a business plenty of work in low end IT support most one band are muppets and not very good business people.  Good mobile food service - I know three people who have gone into this and are doing well and started on the kitchen table as it were - my personal idea is there must be room for healthy food service - rotisserie  chicken and salad nothing else. Hog roasts doing well at mo

Affluent areas create a Green Thumb look alike shortage of reliable light stuff gardeners.

I wouldn't overlook a franchise there are some good ones. 

For me every time it is the expert route - high return, low overheads - just invest in sales skills and image as well

 

 

any kind of retail bar internet based is going to be pretty risky in this day and age once premises/rent is factored in.   i did consider the specialist route but any IT skills i had are non existent now really, i was a systems/server engineer in data centres so i would be starting from scratch.

quite like the food van there is a guy near me with a full stone oven in the back cooking pizzas for £10 a pop seems quite busy. I guess 30-40 pizzas a day would produce a decent income only of course if the dough is right 00 flour and real yeast pre proven with semolina flour and a reduced pizza sauce. 

people are far more interested in what they are eating now but it`s generally only the affluent with enough income  to go full organic meat and veg.