Wednesday, May 31, 2006

Real life debt story

Dealing with my debt

BBC News website reader, Sayara Beg, 36, a freelance IT consultant from East London, emailed to tell her story of dealing with debt. I am heavily pregnant and in debt. My debts are not a result of going on spending sprees and exotic holidays. Instead, I and my husband have borrowed to finance our future. My husband Thomas owns a French restaurant in Holborn, London. To buy the restaurant, my husband and I had to re-mortgage the family home and my two small buy-to-let properties. Since when did bank managers assume the right to question when their customers decide to have a baby? After last July's London bombings, the restaurant suffered a considerable drop in custom.

Posted by skannan @ 09:56 AM (2 views)
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18 thoughts on “Real life debt story

  • “My debts are not a result of going on spending sprees and exotic holidays. Instead, I and my husband have borrowed to finance our future. ”

    Perhaps she hasnt gone on a spending spree in the context she means but she has still badly invested and been ill prepared for the situation she is now in. She planned to have a baby? Then surely she should have thought a bit more about what this might imply financially and job wise. Should we feel sorry for people like this?

    My girlfriend and I budget so that if one of us looses our job we can still cover the bills (only just mind, but I could easily work ad mcdonalds to cover the difference). Also, what stops me going out mortgaging myself up to the hilt and then crying when I start missing my payments, “I was just investing in my future”.

    “Payment Holiday”, I bet the banks loved that one. Perhaps she should try the Carlsberg bank.

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  • Landlords deserve no sympathy.

    Why not sell your Buy to let to someone who needs a home and then pay off the bank?

    Middle class stress, what a joke.

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  • Go easy Sebastian, the woman is 36 and this is probably her last chance to have another child. You may find yourself in that situation one day. Yes it was bad financial planning but even if she wasn’t pregnant her husband’s business is obviously not doing well.

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  • bidin'matime says:

    I have difficulty summing up my reaction in a few short sentences. Or even long ones. I feel at the same time both sick to my stomach, that this is now how people see the world of finance (and are proud to put their name and gawky face to it), and encouraged that the more publicity that this sort of situation attracts, the more the lenders will be forced to face up to the realities of life, with the desired impact on the housing market.

    Ironically, she could have claimed for unfair dismissal for being sacked over her pregnancy…

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  • mmm, what this generation needs is a good recession.

    I’m 31 and have never quite got this “borrow, borrow, borrow mindset”. I have never really settled anywhere so never really wanted to buy a home. During this time i have enjoyed myself immensly whilst clearing all of my study debts and still managing my money to the point that i have a decent chunk of money stashed in high interest accounts etc… I have never understood this generation’s debt mentality. I have watched while many people my age run up debts (mortgages and Credit cards) with no so much as a blink of an eye. Until recently i was convinced that my “old fashioned” attitdue to money was not working and that perhaps i should join the debt train and get me an overpriced house or two and an Audi TT. I had thought that perhaps times have changed and that massive debt was now the way forward, its just too easy to rack up multiple credt card debts, a couple of 100% mortgages to buy houses I wont even live in. My generation are under the illusion that to get ahead and to get rich you just borrow as much as you possible can, buy houses or shares and they will go up in value because thats what they do right? Well, over time that is what they have generally done for people in there late 20’s to late 30’s. But I am reassured that these people are in for a very hard lesson soon.

    I have a family home, 2 rental properties and a resteraunt and I am in financial strife. This lady just doesn’t seem to get it, if you run up unmanageble debt it is your problem….How many of these people are out there playing with money that is not theirs??

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  • Have been lurking on here for a long time, but I can’t prevent myself commenting about this diary.

    Agree wholeheartedly with what Sebastian, Geed and bidin’ have said:

    (1) People in their mid to late 30s have absolutely no excuse for for not realising that what goes up often comes down. Being one myself, I still remember what happened to interest rates in the late 80’s early 90’s (over 20% on some mortages in Australia) and what happened to the housing market in the UK.

    (2) 2 BTL properties bought at or near the top of the market – well this is someone who tried to leverage their capital to suck the marrow from others further down the economic scale – sad story but no sympathy.

    (3) If one is starting a family and there is the risk of one of the partnership not being able to cross finance the other, why oh why would you go into the restaurant business which is notorious for failed ventures? Take a more stable job instead of trying to get rich quick.

    (4) Geed:” How many of these people are out there playing with money that is not theirs???” More precisely, how many people are out there playing with the economy and hence MY money, MY job security, MY life.

    The only time I have borrowed money was at the end of a long education, to buy the cheapest reliable car I could afford, and paid it back as quickly as humanly possible (i.e. as quick as the bank would allow!) I’ve saved to get a deposit for a house; I left a career I loved to afford to save for a deposit, all the while people willing to borrow 110% BTL, self certified, interest only mortgages have been driving the housing market from the sublime to the ridiculous.

    And when inflation truly kicks in to compensate, it will not be just the profligate BTLers who will suffer, but financially “sensible” individuals whose after tax investments will not keep up.

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  • Well said Geed. I would actually hit harder. This womans attitude is a joke. Why do people work for themeseleves? Because by doing so they stand to make more money, but there is an increased risk. So for them to try and start three businesses at the same time (Restaurant, IT Consultancy and Property) then choose to have a baby (i.e. choose not to work), what planet are they on? Close the businesses and starting working for a living – curb the greed.

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  • Retiredbanker says:

    When I was a bank manager, I always very reluctant to lend money for the acquisition of restaurants/ public houses,
    and with good reason for the failure rate of such business ventures is extremely high. A responsible lender should
    always try to point out the inherent pitfalls and deter people from unwise borrowing, even if it means losing business.
    Sadly in todays “performance related bonus” and “target driven” financial world, this is no longer the case. Failure
    to achieve sales targets can lead to a drastic drop in salary, and even to disciplinary action in some organisations.
    I would always recommend a repayment mortgage if most suitable for my customers’ needs, rather than a more
    profitable to the bank endowment policy linked mortgage. I also refused point blank to try and talk people into
    leaving an occupational-pension scheme, which action I considered to be highly unethical.
    This caused some friction between myself and my superiors, and certainly did not help the advancement of my
    career.
    In the end this did not matter anyway as branches of the bank were turned into ” money shops”, and managers
    made redundant or retired early. Fortunately having just turned 50 I received a quite substantial pay-off, and an
    immediate unreduced pension. This was the first time in my life that I had the luck to be in the right place at the
    right time, and my wife also had good fortune to retire from the Civil Service on a full pension just one year later.
    I have now been retired for more than 12 years and life is wonderful!

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  • Surfgatinho says:

    “My debts are not a result of going on spending sprees and exotic holidays”

    No, of course not – only the stupid and irresponsible would get in that kind of debt. This is middle class debt.

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  • Waiting For The Crash says:

    you guys have said it all……

    but where oh where is the COMMON SENSE in the country!!!! This stuff is obvious to any sane person. You borrow … you pay … or you go bust with miserable consequences.
    I too am 31 and have been saving for years.

    Bring on the HPC and let these people who have shafted house prices pay the price!

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  • I’d like to point out to this young proffessional lady that SYMPHATHY comes between SHIT and SYPHILIS in the dictionary, so you have run up high debts from being greedy well tough shit popeye live with it.

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  • She is owning 3 properties while we have none. I find it very hard to be sympathetic. After all, this is exactly why the house price has gone crazy.

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  • talking rot says:

    I found I couldn’t finish reading the article – it was too annoying. Bindin’, Geed, and D’oh have summed it up.

    This woman is a greed-driven PLANK – had things gone well she’d be boring us with her “financial astuteness”. She has put herself into a difficult situation and now can’t sleep. I wonder if she has sold her BTLs to pay off some of her debts.

    Thing is, there will be NO house price crash until people in this woman’s situation are forced to sell their home at a lower price then market “norm”. Is this happening to a significant minority of indebted people. No, not yet. I live in hope.

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  • >>but where oh where is the COMMON SENSE in the country!!!!

    There is none! Under Gordon Brown housing has become the new currency and life is all just a big game of monopoly with money that is earned through honest endeavour being regarded as little more than pocket money to supplement the real income made through MEW.

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  • Talkin rot – I think you’re being naive. Consider the Barclaycard bad debt alone. The massive increases in IVAs and bankruptcies. So many people are so much in debt that, like the greed-driven PLANK, they ARE being forced to sell. And every time someone gets an IVA or bankruptcy, they will be unable to borrow/buy a property again for a while. The numbers of IVA/bankruptcy are not insignificant. The number of forced sellers is rising, the number of puchasers reducing. This is akin to being punched in the face at the same time as having your feet kicked out from under you, and it tends to lead to a very hard landing.

    Even superficially, it is plain that the number of stories of greed-driven planks is increasing, and the number of “Aren’t I clever, I bought lots of BTL properties and now I’m a paper gazillionaire” stories is rapidly reducing.

    I take it as evidence that those individuals that predicted significant price falls by the end of this year are looking to be spot on.

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  • The Ditherer says:

    This story makse for sorry reading. If it is typical then it is symptomatic of a generation that has lost its way, and we have a great deal to worry about. Quite how we’ve got to the point whereby many folks have come to view debt as a sign of financial strength beats me. In a rising market gearing is a wonderful thing but unless you build a wide ‘margin of safety’ into your finances you can easily find, as this lady and her husband,have done, that the dividing line between smartness and silliness is a fine one.

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  • This chick is delusional, she has a warped sense of reality, responsibility and obligation. She should be embarassed that she PLANNED the pregnancy. The concept of risk has been lost in the world today.

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  • I have to agree with all the comments made here, if she thinks she has problems now how will she feel if interest rates go up 2 or 3 % with 2 BTLs she may not be able to sell, did she think of all the possibilities?

    When did the world change from working and saving to just borrowing ( no strike that one i think we all know – TONY ! ) ? What an arrogant attitude that the BTLs are not greed or risky thats just ” Natural investment in her families future ” .Knowing the costs involved with children i think the bank manager had a very valid comment, another UK habit over the past 15 years seems to be “lets have children” and think about it ( and them ) later.

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