Help see why/how people struggle financially

[MymumandI]

I have nc'd for this

My mum and I were having a discussion about debt and it led to a small debate. One of us thinks that people get into debt through frivolous spending (not buying Chanel or anything, but maybe going on holiday when you can't afford it). The other thinks some people get into debt because they can't afford the essentials (e.g. rent and childcare) .

I know this is cheeky , but is there anyone who can help settle this? I'm not looking for a bun fight, but more of people saying why they are in debt/struggling.

I will explain in more detail about what we both think later. Eant the OP to be neutral (ish).

But then there are another dozen legitimate reasons why people get in to debt as well as the two mentioned in the OP

Not one single sensible and healthy adult wakes up on a Tuesday morning and thinks "fuck it, I want to live in debt, I love a bailiff visit"

The area that I live in, in Liverpool, the people who are getting into debt, are doing so because even when they are working, they don't have enough to have a 'buffer' of savings, for essential furniture/appliances.

When I worked in a Welfare Rights advice place, people would get their Benefits sanctioned, or be found to have an over-payment and that would mean that they'd often have to take out high cost credit/loans, to make up for the cut in income.

Many people have been hit badly by the cuts in in-work and unemployed benefits.

All of the research into debt shows that those who regularly live outside their means are in the minority.

Some people consider manageable credit to be different from debt.

maddening I know there are other reasons- that is why we have started the thread.

Because wages are low and housing costs are high, and the last 30 years have seen a huge transfer of money from the poor to the rich.
HTH.

OP your mum isn't going to change her mind
I know it's annoying - my parents don't understand the problems people are facing either and think my extreme frugality is weird
The only time they came close to understanding was when I told them my mortgage figure
I'm not in debt, just saying I think that some people are never going to see what they don't want to see (and quite likely don't care about).

lolly smug? I genuinely don't know which part of my OP sounds smug

Oh and for those wondering, I have Nc'd because I am on this with my mum (her first time on Mumsnet).

Again thanks to those replying. We are reading -and discussing- them !

The only debt I have is due to my divorce, now 9 years ago. Long story short, I had a huge credit facility with my bank which we borrowed from for business purposes. Ex walked, left me with huge debt in my name. I am proud to say that I have never missed a payment, even in the depths of despair and my bank have just lent me double that amount to do some essential maintenance work on my house. So latest debt is due to previous owner's poor maintenance and the very old age of the house.

The part where you and your mum sit around discussing how the feckless poor ended up this way. That's an incredibly smug activity.

Also, housing and childcare can be ridiculously expensive in places other than the South East. It's like some people think your house is affordable by virtue of being outside the M25. Bath, Edinburgh and Salisbury are in the top 10 most expensive cities.

Well I think it's lovely that you and your mum have a thread together .

Hopefully it's informative for you both.

I know two people who were left in debt by partners who left and left them carrying it and others who loaned their savings to family/friends then then when they were in difficulty themselves couldn't get the money back.

Sometimes the only thing people do wrong is trusting someone that doesn't deserve to be trusted.

Twenty Hmm and you just assume we are not poor ? Do poor people not discuss things?

Throughthick bonding time

Can I ask roughly how old your mum is, where she lives and what she does for a living?

Sorry, message above directed at OP I got excited and clicked too soon.

It doesn't read like you are discussing situations you have experienced, no.

Obsidian She is in the 40-50 range. She actually lives in the South East!, but bought many years ago ( I think this may be a factor in the differing views) and she's not comfortable saying what she does, sorry.

I could be your mum, age & location wise.
My first mortgage was sub 50k. Rent v mortgage was about the same. My deposit was under 6k. I saved that whilst renting for 200pcm which was a big room in a nice shared house.
I now live in a big house. We had a guy labouring on a job for us recently. He pays several hundred a month more in rent for a terraced 2 bed than we pay on our mortgage. it was embarrassing.
You'd need 25k deposit to buy my first house on a 90% mortgage and you'd need to save that on a much higher rent. It's far harder.

Being single or a single parent is often difficult financially, add in low wages, a disability, no family support and odd bits of bad luck - unexpected expenses for car repair, leaking roof, boiler failure
Well that's where my debts come from anyway - oh and supporting 2 DC through university and helping others who have even less than me

FFS people get into debt or not for loads of reasons.

We chose to take a biggish mortgage on grad salaries - assuming we would succeed - so we cut our coat and did succeed (we weren't betting on the moon here, just that we would make normal progression, but if we hadn't?).

You don't know the ins and outs of anyone's finances unless they share it with you or your their accountant. Period.

I can give you the following examples from friends / family who I know well enough:

• He earned loads, but got into debt due to hypomanic spending.
• He earned an average wage but wanted 'nice things'. Bought a load of stuff on tick (think Brighthouse, but this was earlier), then lost income & was a family member so came begging at the door. (Yes, council house, large screen etc.)
• Her partner died and nothing sorted due to young age and assuming it would never happen. No lack of funds in general, but the income was his and it took a while to get sorted.
• She wanted a 'TOWIE' lifestyle but with designer clothes. She chose a (lovely, supportive) guy with a blue collar job who was doing pretty well, but not Louboutin territory. Her income didn't make up the difference but she spent anyway. (I avoid - currently she still comes out but seems to forget her wallet often).

I could probably think of a lot more. But while I would raise my eyebrows at a few (and indeed suggested a family member ought not to lend to Mr Brighthouse), plenty I know are there through circumstance that could not be predicted. We are trying to get to a point where either could run the house comfortably on their salary (as it stands, either could run it, but to vastly different levels of comfort). We also completely understand that many couples don't have this luxury and might get into debt. Hell we might get into debt beyond mortgage - job security isn't what it was 20 years ago...

People seem to consider debt a 'bad thing' yet most people buying a house are placing themselves in debt to the bank for thousands of pounds, have a credit card balance and are making car payments. None of these debts are a problem until you default on the repayments. There is a culture of debt, we are constantly being bombarded with credit offers, in the post over the phone and online. The reason people are in debt is that we live in a western liberal democracy with a capitalist system which depends on a large proportion of the population being in debt.

We are tiny cogs keeping the creaking economy motoring along. Spend a few weeks on the phones at your local CAB and debt issues are a massive proportion of the calls received. People who took on manageable debt, suddenly made redundant, divorced, ill or simply robbing peter to pay paul. Some make bad decisions, others are saddled with debts from a feckless partner or child. Debt is too complex to make a nice black and white debate. There is no one issue to blame other than capitalism of course!

Through work I once heard tell of a woman with massive debts and who ended up homeless - her husband had taken out a huge loan without her knowledge, bought an ocean-going yacht, left his wife and kids and buggered off in it, never to be seen again.

There are as many ways of getting into debt as there are people.

Fair enough :o)
I read an article which said Generation X is divided between those who got on the property ladder in time and those who will probably never own their own property.
Found it fucking depressing but I think it illustrates that there's has been such an acceleration in housing prices that many people have been left behind. Couple that with the fact that the rising number of graduates means there's in many cases little financial advantage to getting a degree, the rise of zero hours contracts and colossal student debts, which she would have had no personal experience of. I think the widespread acceptance of student debt, promoted by the government, has inevitably softened people's attitudes towards borrowing money, whereas in previous generations it would have been seen as scandalous.
You're always going to have people who are crap with money and waste it on stuff but I think what's different now is that the conditions are such that even people who are responsible and thrifty are struggling. Sorry, that turned into an essay but I was interested to read your posts as I think there's a real resurgence of Victorian attitudes towards the "deserving" poor and wastrels.
I am half expecting someone to propose a modern-day workhouse, funded through some public-private scam scheme

What was the right time to get on the property ladder, out of interest? I am barely gen X but getting in early has certainly helped me.