Is Being Debt Free Something To Aspire To?

[warwickbloke]

Regardless, it's still money spent in excess of money bought in.

What about debt in anticipation of money brought in, isn't that investment?

You still have a perfectly correct statement there, but there is a difference between the 'Begs' of the world (god that thread has had an impact) who are 'forced' (ha) to MEW in order for false status, & those who have been in a position to be forced to borrow in order to overcome difficult times, illness etc.

Regardless of the origin of the funds, it needs to be available.

I guess this could be classed as bad debt but sometimes it has to be.

[Time to raise the rents.]

What about debt in anticipation of money brought in, isn't that investment?

You still have a perfectly correct statement there, but there is a difference between the 'Begs' of the world (god that thread has had an impact) who are 'forced' (ha) to MEW in order for false status, & those who have been in a position to be forced to borrow in order to overcome difficult times, illness etc.

Regardless of the origin of the funds, it needs to be available.

I guess this could be classed as bad debt but sometimes it has to be.

Borrowing when ill or whatever is just a slippery slope to disaster.

I don't know what you mean by Begs' & the thread you speak of. Maybe I missed that one. IMO borrowing to display your status is the same as wearing your pockets inside out. People can see them, but they're empty if you know what I mean.

[warwickbloke]

Borrowing when ill or whatever is just a slippery slope to disaster.

I don't know what you mean by Begs' & the thread you speak of. Maybe I missed that one. IMO borrowing to display your status is the same as wearing your pockets inside out. People can see them, but they're empty if you know what I mean.

'Begs ' was the daft bint who MEWed 2 BTLs & her house to finance a failing restaurant which failed but it weren't her fault then the nasty banks wanted their money repaying even though she got pregnant. The Cads!!

Slippery slope or not, low income households sometimes have no option but to borrow in extreme cases.

This used to be covered by 'uncle' as he was fondly known, actually the local pawnbroker.

There are a great many examples where through no fault of their own debt is necessary, neither good nor bad, just absolutely necessary.

The problem then with limited income is being able to earn enough to pay it & save to prevent re-occurence.

This is becoming increasingly more difficult with even the option of extra work not being made available due to EU rulings on maximum number of hours allowed to be worked.

I knew a guy recently on short time refused a part time job stacking shelves in a supermarket due to this ruling.

Not all low income families are dossers but often they are put in a position where they throw in the towel & might as well be.

I guess it's a testament to English spirit that anybody earning less than £15000 bothers to work at all.

I am not condoning debt but I do understand the difference between Wayne needing alloys, & a family man who cannot pay bills at the moment due to illness, but will be able to make it up when he recovers.

Not all homeowners are loaded, many of them sweat daily hoping the roof doesn't leak or the heating system fails etc. as they have no means to afford it if they do.

They have taken a gamble on things improving as they have traditionally done for homeowners in the past, & past history is all they have to base their decision on. They look around the doss council estate then see the new build private houses with the flash cars & no joyriders at night & want better for their families, & if debt is the only way to get there they will risk it.

A high % of the population would never be able to save & buy a house outright, debt is the only option, or surrender to communism & state housing!

Soap boxing it a bit here, sorry.

[Time to raise the rents.]

I accept that there are some genuine cases where people run out of money. But IMO the solution isn't filling in CC application forms, it's job application forms that need filling in. People not earning enough to satisfy their desires can do things to climb the salary ladder rather than the debt ladder.

And what I would love to see personally is people taking a more pro-active approach to their own future. A family man/woman should never have to worry where the next meal will come from for their family, they should have planned much further ahead than that.

IMO it is a crime that our schools don't teach personal financial management as it really is a basic subject and a basic understanding is needed for a person to be able to even begin to manage their own futures.

[Guest Alright Jack]

I think housing HAS been a good hedge against inflation for a long time... but that is about to reverse.

What we now have is low wage inflation, but with high inflaiton of everything else (except the tat you seem so set on not buying).

If this continues it will REDUCE the amount of money that people are able to spend on houses in future. This might be a long drawn out trend and housing might never again see the values they reached in 2004.

Of course this will also apply to rents. The less money people have after taxes and food/fuel the less they are able/willing to spend on housing (either buying or renting). If the government does continue its current economic fiasco then housing (Renting or owning) will not look a good bet for long long time.

You point out that wages are not going up much right now (I think they are, but they are talked down for the same reason the CPI is talked down) Even if we accept your case, what reasons do you have for believing it will remain low?

Milk hasn't gone up yet, neither has flour etc... but there is reason to suspect that it is coming! I think wage bargaining will heat up also along with the rest, after all, no one will work if it is truly unprofitable. No, we don't have labour unions anymore in such force but individuals will just slowly start giving up work or fail to re-enter the work force after any period of unemployment and continue to draw benefits.

The only way companies will get the people they need will be by offereing more £. no other way to do it. Blaming unions is a mistake - look back at FORD in the seventies, they fought the government wage restraints tooth and nail and even paid out multiple FINES for breaking wage restraints. FORD needed people and government nonsense was not going to stand in the way.

I really would analyse the extent to which you believe house prices will correct (if at all) in nominal terms and think about investment in the mean time. One thing is for sure, £££s will turn into ppp. We have been here before.

[warwickbloke]

I accept that there are some genuine cases where people run out of money. But IMO the solution isn't filling in CC application forms, it's job application forms that need filling in. People not earning enough to satisfy their desires can do things to climb the salary ladder rather than the debt ladder.

And what I would love to see personally is people taking a more pro-active approach to their own future. A family man/woman should never have to worry where the next meal will come from for their family, they should have planned much further ahead than that.

IMO it is a crime that our schools don't teach personal financial management as it really is a basic subject and a basic understanding is needed for a person to be able to even begin to manage their own futures.

Can't all be bosses, some are born to push brooms. C'est la vie.

Can't have 2 jobs either.

Far from teaching financial management I feel for all these poor saps who are attending uni & paying for the priveledge of gaining a degree in nowt then starting real life so much in hock they often will never recover, another example of folk taking a gamble on debt being the way to rise above themselves, actively encouraged by this government.

If everybody waited till it was financially viable to breed there would be no kids, bar a tootle of interbred hooray henrys. Planning further ahead is interupted by the biological clock.

Thus government financed families, funded by nanny state, being re-voted into power for fear of losing the income benefit.

The bother being there are income limits & any degrees of betterment are greeted with loss of benefit, so there's no point is there?

Except the false gloss of borrowing.

1984.

[AteMoose]

because of the way money works, and supply increases YOY i agree with TTRTR, being debt free is bad when looking at investments. Good debt is good, bad debt is er bad ;p Cut down on spending, but look for investments, and if your sure of an investment take a gamble and gear it ;p

Edited June 5, 2006 by moosetea

[warwickbloke]

You point out that wages are not going up much right now (I think they are, but they are talked down for the same reason the CPI is talked down) Even if we accept your case, what reasons do you have for believing it will remain low?

Milk hasn't gone up yet, neither has flour etc... but there is reason to suspect that it is coming! I think wage bargaining will heat up also along with the rest, after all, no one will work if it is truly unprofitable. No, we don't have labour unions anymore in such force but individuals will just slowly start giving up work or fail to re-enter the work force after any period of unemployment and continue to draw benefits.

The only way companies will get the people they need will be by offereing more £. no other way to do it. Blaming unions is a mistake - look back at FORD in the seventies, they fought the government wage restraints tooth and nail and even paid out multiple FINES for breaking wage restraints. FORD needed people and government nonsense was not going to stand in the way.

I really would analyse the extent to which you believe house prices will correct (if at all) in nominal terms and think about investment in the mean time. One thing is for sure, £££s will turn into ppp. We have been here before.

If wages are as you say then rises in milk & flour are sure to follow.

Companies are taking on cheap immigrant labour to fill the gaps.

Ford had the financial clout to do this, many companies do not

Housing must at least flatline when the wave of sharing house buying & part buy/part rent is over.

IMO any crash will be when those borrowed to the hilt NEED to sell to cover debts.

If as suggested on other threads government may step in to help & take on ownership in return for rent there may be no crash at all? This may not happen as there are independant companies already offering this service unless they are not independant but government financed. (conspiracy theory)

[Levy process]

I accept that there are some genuine cases where people run out of money. But IMO the solution isn't filling in CC application forms, it's job application forms that need filling in. People not earning enough to satisfy their desires can do things to climb the salary ladder rather than the debt ladder.

And what I would love to see personally is people taking a more pro-active approach to their own future. A family man/woman should never have to worry where the next meal will come from for their family, they should have planned much further ahead than that.

IMO it is a crime that our schools don't teach personal financial management as it really is a basic subject and a basic understanding is needed for a person to be able to even begin to manage their own futures.

I agree with a lot of that. The bit I think you are missing is that there may simply not be a "salary ladder" soon, as the far East and India push wages down. Because of this, the key thing I think people like you are missing is that in the future, as salaries drop, or at least fail to rise as fast as in the past, houses will be worth less than people are expecting in the future. Because they are borrowing now against a particular view of the future (i.e. one in which they can climb a salary ladder), they are getting the calculus wrong, and coming out with a value that will never be realised. In short, they're paying too much for what it will be worth in the future, on the basis of the last days of the over inflated western world before the onslaught of cheap labour in the eastern world.

[warwickbloke]

I agree with a lot of that. The bit I think you are missing is that there may simply not be a "salary ladder" soon, as the far East and India push wages down. Because of this, the key thing I think people like you are missing is that in the future, as salaries drop, or at least fail to rise as fast as in the past, houses will be worth less than people are expecting in the future. Because they are borrowing now against a particular view of the future (i.e. one in which they can climb a salary ladder), they are getting the calculus wrong, and coming out with a value that will never be realised. In short, they're paying too much for what it will be worth in the future, on the basis of the last days of the over inflated western world before the onslaught of cheap labour in the eastern world.

It's only temporary, soon we'll be the cheap labour again then all the work will come back to us.

The pendulum do swing.

Also British workmanship far surpasses any other countries efforts, this is a known fact conveniently ignored by some manufacturers for the quick buck.

They'll soon be bleating a path back to our doors as they lose sales through shoddy goods trading on past reputation.

[Time to raise the rents.]

because of the way money works, and supply increases YOY i agree with TTRTR, being debt free is bad when looking at investments. Good debt is good, bad debt is er bad ;p Cut down on spending, but look for investments, and if your sure of an investment take a gamble and gear it ;p

Recognising that to take on no risk is a risk in itself is also very important IMO.

[Guest The_Oldie]

............If you believe prices will go up, buy. If you believe they'll go down, don't buy.......

For once I am in complete agreement with TTRTR .