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gruffydd

Brits Spend Spend Spend

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"Rising disposable income has led to higher expectations about the quality of life, and as a result we are increasingly trading up and spending more on better quality, premium products and services."

That'll be MEW then.....

F

Edited by Furby

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It seems to me that brits are either spending like crazy or struggling with huge amounts of debt (or both)

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Speaking for myself, my disposable income is increasing each year because my wages go up and my mortgage comes down. As time goes by I allow myself extra luxuries, and spend money that I have saved. I think the appropriate phrase is enjoying the fruits of my labour! I dont believe its just me!

When I read around this site it seems that many of us here are also savers, head over to MSE and you'll see 1.2m subscribers to the weekly money saving newsletter - thats a large proportion of the online households surely!

Yep, Ive seen spendaholics and I know dumb people exist. But actually many people are working and paying off debts, many people are working and saving.

Given that this site is a good cross section of priced out people etc, surely we'd expect a vast proportion to be riding their CCs into the sunset - but no I dont hear anyone saying that. I fear that some people will get their fingers burnt, I fear we will see an increasing poverty gap in the country. But I dont see the end of the world as we know it.

GL :)

Edited by Orbital

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I don't have any official figures, but a straw poll of my friends in the private sector would indicate that private sector payrises have been good this year, and well ahead of any of the official inflation stats. (As a very finger in the air value, I'd say maybe average 8%). Public sector pay is constrained this year, but I know already that NHS unions are gearing up to fight this, as are teachers.

Also as has been discussed on here a lot, many people are on fixed rate mortgages, extending out for years to come. A lot of them will be well positioned, with fixed mortgage costs, rising interest on their savings, and pay packets swelling faster than (official) inflation. For them, there's no reason to reign in spending. They'll be spending comfortably.

Edited by Levy process

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Speaking for myself, my disposable income is increasing each year because my wages go up and my mortgage comes down. As time goes by I allow myself extra luxuries, and spend money that I have saved. I think the appropriate phrase is enjoying the fruits of my labour! I dont believe its just me!

When I read around this site it seems that many of us here are also savers, head over to MSE and you'll see 1.2m subscribers to the weekly money saving newsletter - thats a large proportion of the online households surely!

Yep, Ive seen spendaholics and I know dumb people exist. But actually many people are working and paying off debts, many people are working and saving.

Given that this site is a good cross section of priced out people etc, surely we'd expect a vast proportion to be riding their CCs into the sunset - but no I dont hear anyone saying that. I fear that some people will get their fingers burnt, I fear we will see an increasing poverty gap in the country. But I dont see the end of the world as we know it.

GL :)

You are really in the minority of people who save. Friend of mine said something to me the other day, he said i was well off, i said how you work that out? Simple he said i know you save money each month "your the only person i know who does that"

Total UK personal debt

Total UK personal debt at the end of April 2007 stood at £1,325bn. The growth rate increased to 10.4% for the previous 12 months which equates to an increase of £114bn.

Total secured lending on homes at the end of April 2007 stood at £1,112bn. This has increased 11.4% in the last 12 months.

Total consumer credit lending to individuals in April 2007 was £213bn. This has increased 5.4% in the last 12 months.

Total lending in April 2007 grew by £9.4bn. Secured lending grew by £8.9bn in the month. Consumer credit lending grew by £0.5bn.

Average household debt in the UK is £8,816 (excluding mortgages) and £54,771 including mortgages.

Average owed by every UK adult is £28,189 (including mortgages). This grew by £165 last month.

Average outstanding mortgage for the 11.6m households who currently have mortgages is £95,871

Average interest paid by each household on their total debt is approximately £3,542 each year (this equates to 9% of take home pay).

Average consumer borrowing via credit cards, motor and retail finance deals, overdrafts and unsecured personal loans has risen to £4,537 per average UK adult at the end of April 2007.

Britain's personal debt is increasing by £1 million every 4 minutes.

Today in the UK:

* Consumers will borrow an additional £313m today

* The average household debt will increase by over £13 today

* 330 people today will be declared insolvent or bankrupt

* Bank and building societies will hand out £1bn in mortgages today

* Citizen Advice Bureaus will deal with 5,300 debt problems today

* The average car will cost £15 to run today

* The average home will cost £30 today to run

* Raising a child to the age of 21 will now set you back £23.50 daily

* The price of a typical house will increase by £46 today

* 24.3m transactions worth £1.3bn will be spent on plastic cards today

* £82m will be spent online today

* 1/3rd of all groceries we buy today will end up in the dustbin.

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Yep, Ive seen spendaholics and I know dumb people exist. But actually many people are working and paying off debts, many people are working and saving.

Given that this site is a good cross section of priced out people etc, surely we'd expect a vast proportion to be riding their CCs into the sunset - but no I dont hear anyone saying that. I fear that some people will get their fingers burnt, I fear we will see an increasing poverty gap in the country. But I dont see the end of the world as we know it.

I don't think that too many credit card spendthrifts will be posting to this site, somehow.

On the other hand, go to the MSE forums and see how many people there are up to their necks in CC debt and bank loans.

My general impression based on what I see around me is that very many people are living beyond their means. eg. I see people earning considerably less than myself driving around in flash cars and SUVs, and they've got a mortgage to pay too. Quite often they like to boast how they 'only' paid 200k for their (rather unremarkable) house, which might have cost half that a couple of years ago. By my reckoning, just keeping up the payments on the house and car must be pushing them close to spending all their income. Where they get the money for the multiple foreign holidays, expensive weekends away, huge tellys, flash clothes and socialising is beyond me.

Most people seem to be reassured by the notion that they have a load of equity in their house keeping them safe, but don't seem to grasp the concept that they have to sell it to actually release that equity. Borrowing against it just means you are in debt to someone else and too often they just run up the bills again anyway.

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For most of my life I thought that the only real wealth was cash in the bank and nothing else. Now I don't even think that any more. The only real wealth is what lays between our ears

Best,

L

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For most of my life I thought that the only real wealth was cash in the bank and nothing else. Now I don't even think that any more. The only real wealth is what lays between our ears

Best,

L

Spot on Luminist. There is intellectual wealth, emotional wealth, artistic wealth, spiritual wealth... each of these is at least as important as material wealth IMVHO

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My general impression based on what I see around me is that very many people are living beyond their means. eg. I see people earning considerably less than myself driving around in flash cars and SUVs, and they've got a mortgage to pay too. Quite often they like to boast how they 'only' paid 200k for their (rather unremarkable) house, which might have cost half that a couple of years ago. By my reckoning, just keeping up the payments on the house and car must be pushing them close to spending all their income. Where they get the money for the multiple foreign holidays, expensive weekends away, huge tellys, flash clothes and socialising is beyond me.

Most people seem to be reassured by the notion that they have a load of equity in their house keeping them safe, but don't seem to grasp the concept that they have to sell it to actually release that equity. Borrowing against it just means you are in debt to someone else and too often they just run up the bills again anyway.

But these people are (and will continue to) getting away with it I too know people who earn far less than me but spend fortunes on BMW's and luxury holidays in the Caribean, plasma TV's and the like. One of them bought a house a couple of years back (100% mortgage and IO of course - "as it is cheaper" - so no repayment plans) and she tried to MEW within a few months - and was annoyed the bank turned her down.

I on the other hand have a shi*e old Peugeot car, my holiday this summer is camping in Germany (first foreign holiday in two years) renting a flat with a friend, I have cash in the bank but it is doing me no good.

I know who is having more fun....

and who is the stupid one? - every day it is looking more and more like it is me.

Edited by lulu

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Want to know what the next next generation thinks? Story told me by friend's 8 year old daughter (Georgina) of conversation in her school playground:

Sophie: What should I do with the £10 I've just been given?

Georgina: You should save it.

Sophie: (shrugs shoulders, hands out, palms upwards, wide-eyed like-you're-so-dim look) Hello? When you've got money you spend it!

At least Georgina is sensible, saving her pocket money - for the days when houses cost 20 times average income and students owe £200k on leaving university. So which one is the sensible one now?

(typed while lulu was posting!)

Edited by munro

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I don't have any official figures, but a straw poll of my friends in the private sector would indicate that private sector payrises have been good this year, and well ahead of any of the official inflation stats. (As a very finger in the air value, I'd say maybe average 8%). Public sector pay is constrained this year, but I know already that NHS unions are gearing up to fight this, as are teachers.

I think university lecturers got a 3% rise per year (not 8%). That is a real payrise of -1.5% to -1.8% at present RPI numbers. Poor suckers. :(

Edited by Goldfinger

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(Luminist @ Jun 14 2007, 09:52 AM) *

For most of my life I thought that the only real wealth was cash in the bank and nothing else. Now I don't even think that any more. The only real wealth is what lays between our ears

Best,

L

Spot on Luminist. There is intellectual wealth, emotional wealth, artistic wealth, spiritual wealth... each of these is at least as important as material wealth IMVHO

Restores your faith in humanity when you discover there are in fact humans out there.

For my penn'orth, I would say that material wealth far less important than what's in our head. The human brain is the most complicated, amazing, most advanced and evolved thing on the planet - and people just use it for the pursuit of useless shiny things. What a waste.

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My general impression based on what I see around me is that very many people are living beyond their means. eg. I see people earning considerably less than myself driving around in flash cars and SUVs, and they've got a mortgage to pay too. Quite often they like to boast how they 'only' paid 200k for their (rather unremarkable) house, which might have cost half that a couple of years ago. By my reckoning, just keeping up the payments on the house and car must be pushing them close to spending all their income. Where they get the money for the multiple foreign holidays, expensive weekends away, huge tellys, flash clothes and socialising is beyond me.

There's no doubt a lot of people are living beyond their means. But I think a lot of other people have more money than it might appear. Loads of people have a 50-100K float from granny's flat when she died, or later from late parents. A lot of people in their mid 40s will have collected their inheritance. For a lot of people that means being able to clear the mortgage they took out years ago, or having a massive float for SUVs and foreign holidays. They might be on rather low incomes too, but when combined with the windfall, these people are well enough off to enjoy these lifestyles. In fact, I often think that the size of inheritance for the average person is maybe a bigger determinant in the lifestyle that one can afford than their salary. I know people who earn half what i earn, but live the same sort of consumer life, on the basis of having had an big windfall from a great aunt etc.

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