AIBU to be totally confused (cost of living crisis)

[LittleBitHeiressLittleBitIris]

AIBU to not be able to understand/ grasp the scale of impending disaster that is building over the increased cost of living?

I genuinely don't see how millions of people with outgoings that are about to be actually higher than income is going to play out.

I'm not trying to be goady and obviously realise no-one has a crystal ball but am I missing something? Has this ever happened before in other recent times/ other cultures and what was the result. I can't even imagine what could happen.

I feel really clueless! Any ideas/ opinions/ further reading much appreciated 👍

I agree with pp who said that people will default on unsecured debt - arguably they should do this - or rather, take action quickly to get their repayments reduced to a token minimum).

They should certainly default on unsecured debt rather than mortgage/rent, council tax and utilities, no question there.

But I hope that before they do that they will - if they currently have them - cut back on streaming subscriptions, expensive new mobile contracts, nails, takeaways, new clothes etc etc. Things which are undoubtedly enjoyable and make life easier and more fun, but are not essential.

(For clarity: mobiles are close to essential now, but it can be your existing phone on £5 a month SIM only rather than a £40 contract for a new phone; clothes are essential, but can be worn for longer/bought second hand, you don’t need a new outfit every time you walk out the door)

I would look askance at someone who defaulted on a loan but was still doing all the lifestyle leisure stuff.

I imagine that people that have overstretched themselves with huge mortgages will struggle unless they have fixed the rate since interest rates going up and also everything else.

I think people don't always allow wiggle room for cost rises etc and then become unstuck but planning is a great idea!

There seems to be a lot of people who appear to need new everything and follow the trends etc so if any of that is borrowed may struggle.

Some I feel sorry for and others are just silly with finances.

"But I hope that before they do that they will - if they currently have them - cut back on streaming subscriptions, expensive new mobile contracts, nails, takeaways, new clothes etc etc. Things which are undoubtedly enjoyable and make life easier and more fun, but are not essential."

I agree with some of this. Priorities are strange for some. Mobiles are a priority now (although doesn't have to be top of the range). Lots of the other items could easily be cut to pay rent/mortgage and utilities.

@Lilac57

You're absolutely right , for most people growing your own is an expensive hobby.

I've had an allotment for about 7 years. Its only in the last 2 -3 that I've had real success - after spending a lot of money to sort it out.

I spent huge amounts of time there during lockdowns which has really paid off. Last year we were reasonably self sufficient in basic salad stuff (tomatoes and cucumber) for about 5 months, spuds and onions about the same amount of time. Peas and beans for about 3 -4 months.
We always do well with soft fruit - I still have raspberries in the freezer from last summer, and a years supply of jam.
We do well but we are a long way off self sufficient and across the year I still probably spend more on it than I save

"But I hope that before they do that they will - if they currently have them - cut back on streaming subscriptions, expensive new mobile contracts, nails, takeaways, new clothes etc etc. Things which are undoubtedly enjoyable and make life easier and more fun, but are not essential."

See also: Washing clothes/towels/bedding every 30 minutes.

I believe our problems are being exacerbated by the massive expenditure the government took on during covid lockdowns, mostly loans . Meaning we cannot now afford to borrow any more to support the economy. And now supply problems deliberately initiated by the Russians..fuel supply price increases influence the cost of everything. The bank of England's policy of increasing interest rates to encourage saving was spectacularly mistimed, it has increased housing costs at a time when very few can afford to save.

@Ariela

I'm not sure many people would have enough land to grow sufficient fruit and vegetables to take them through almost all the year with only a bit of spending on potatoes!

[quote Ariela]@alltheapples

We're not going to be too badly off because, over the years we've been in this house we've not had a new kitchen or new bathroom, or even any new furniture other than replacing a secondhand 3 piece suite we got 20 years previously, and a bed. We've gone abroad for a holiday once (and that was paid for us), and generally don't have holidays.
Instead, we've invested in quality thickness double glazing, loft insulation, thick heavily lined curtains all round (I made them), new more efficient boiler, replaced all lights with LED, outdoor lights are all ow PIR operated or solar, and solar panels (which so have have luckily paid out enough to cover all our energy bills + £2-400 per year. Our initial investment will therefore have paid off after about 14 years. Our energy costs are minimal.
We grow lots of our own veg and fruit. We freeze and bottle a lot, so we spend very little other than this time of year (potatoes have run out, no peas/beans left).
We are efficient with our vehicle use - we save up outings and complete them all on one trip (unlike one of our neighbours who WFH same as us, they go in and out all day, not for work I was nosey so I asked: they collect their breakfast coffee from Costa, and go again at least once or twice more per day), so a tank lasts 3 or 4 weeks.

We're going to be relatively affluent because of this. Not because we earn a fortune, we don't. Is this so very wrong of us to have made the right choices?[/quote]
What if coucil tax becomes £6000k?
Loaf of bread £10
Shoes £300
Insurance, silly money and the government insist on us paying it?

@fallfallfall

what did people do in the 20's; well simple meals, extra clothing and nothing new. homes were tiny and furniture sparce. people used their time making and selling. no tv, no "nail art", no phones in most homes, people added things to meat to stretch it out (oatmeal in ground beef, eggs and breadcrumbs). oil filled lamps for a couple hours after sunset and in bed by 8-9. awake with the sun. they used scraps of material to make rugs in the winter. but everyone was in the same situation (although some were very wealthy).

sounds grim and very boring. I think people accepted this at the time, as it was a lot better than what their parents/grandparents had. But for us, it will be very hard to go back to living like this after what we've gotten used to :(

The bank of England's policy of increasing interest rates to encourage saving was spectacularly mistimed, it has increased housing costs at a time when very few can afford to save.

That wasn’t why they increased the interest rate, it was because inflation was rising. It wasn’t the last either, I can see several rate increases coming.

If I had to go back to the childhood I remember from the 70's long term, I think I'd just rather not be here! Freezing cold, never enough to eat, never anything to look forward to. Just surviving. But I guess that is how it will be for so many people.

I'm doing every bit of overtime I can get my hands on. Then stashing the money, as it is "extra". But obviously not everyone is in that position, or has the opportunity, to do that.

I think what makes me most angry is the NI rise (especially as I'm a contractor so have to pay both my NI and the employer contribution). That is something that at the very least could be postponed for a year or two. That, on top of everything else, is just too much for many people.

Pil have an allotment but they are retired and have family willing to help with heavier stuff like digging, they are still not self sufficient for fruit and veg although they do get a fair bit of produce, the allotment costs about £120 a year to rent. Then add composters or buying compost, seeds and bulbs, gardening equipment and some kind of shed/ building and that's too much for most of us to start.
Friends have an allotment not far away, its £150 a year rent, they have no building but wheelbarrow everything to and from, needs the same as pil plus wheelbarrow. They have gluts of veg (that I benefit from as well as others) but still they are not self sufficient.

Canning, jarring, freezing all require equipment that costs money to buy or run and space to keep it.

I've always grown stuff in my garden, but 15 tubs of potatoes gained me a small sack full.
I'm better with courgettes and squash and tomatoes and spinach but after a summer and autumn eating them I cant face any more.

Plus the potential of bugs eating whatever you grow or floods where it all lost, big outlay for maybe not much food. Unsustainable for a lot of people.

If I had to go back to the childhood I remember from the 70's long term, I think I'd just rather not be here! Freezing cold, never enough to eat, never anything to look forward to. Just surviving

That wasn’t the norm. My son was born in 1975. We didn’t freeze and we always had enough to eat. And we didn’t have two ha pennies to rub together.

The bank of England's policy of increasing interest rates to encourage saving was spectacularly mistimed, it has increased housing costs at a time when very few can afford to save

That was done because of inflation rising, but if rates were anything like the historical average of 3-4% I'd agree
However they're not, and after years of near-zero rates pushing house prices up still further, there's only one way they were going to go

I think being cold in the 1970s was common, but nit having enough to eat wasnt.

what did people do in the 20's; well simple meals, extra clothing and nothing new. homes were tiny and furniture sparce. people used their time making and selling. no tv, no "nail art", no phones in most homes, people added things to meat to stretch it out (oatmeal in ground beef, eggs and breadcrumbs). oil filled lamps for a couple hours after sunset and in bed by 8-9. awake with the sun. they used scraps of material to make rugs in the winter. but everyone was in the same situation (although some were very wealthy).

sounds grim and very boring. I think people accepted this at the time, as it was a lot better than what their parents/grandparents had. But for us, it will be very hard to go back to living like this after what we've gotten used to

Also (sorry if this point has already been made) living like this was,only possible because women weren't working. So they had time to shop around for cheap food, spend ages cooking cheap cuts of meat, making and mending clothes etc. Is someone on a zero hours contract going to want to work on their rag rug after they get home at 7pm? Are they bollocks.

Poorer women were working.

I think people don't always allow wiggle room for cost rises etc and then become unstuck but planning is a great idea!

This is true, but on mortgages it's been said that loans are now "stress tested" for affordability if rates go up

I didn't know about that (and with too many lenders I'm not entirely convinced), but if it's correct it should hopefully be some help at least

@alltheapples

Poorer women were working.

Too true they were.

There used to be legislation about mortgages that meant people could not borrow more than a certain percentage of their income.

@Blossomtoes

If I had to go back to the childhood I remember from the 70's long term, I think I'd just rather not be here! Freezing cold, never enough to eat, never anything to look forward to. Just surviving

That wasn’t the norm. My son was born in 1975. We didn’t freeze and we always had enough to eat. And we didn’t have two ha pennies to rub together.

I had a son in 1975 as well. I was often cold, no double glazing, no central heating, high gas and electric bills. No phone, no car, a week in a caravan that a family member owned for holidays. I don't want to go back there.

@DressingPafe

If I had to go back to the childhood I remember from the 70's long term, I think I'd just rather not be here! Freezing cold, never enough to eat, never anything to look forward to. Just surviving. But I guess that is how it will be for so many people.

I'm doing every bit of overtime I can get my hands on. Then stashing the money, as it is "extra". But obviously not everyone is in that position, or has the opportunity, to do that.

I think what makes me most angry is the NI rise (especially as I'm a contractor so have to pay both my NI and the employer contribution). That is something that at the very least could be postponed for a year or two. That, on top of everything else, is just too much for many people.

You aren't a contractor - you are an employee with no employment rights.

I don’t want to go back there either @ancientgran but let’s not pretend it was worse than it actually was. I don’t know anyone who didn’t have enough to eat - which is more than can be said for now. Foodbanks didn’t exist then.

What if coucil tax becomes £6000k?
Loaf of bread £10
Shoes £300
Insurance, silly money and the government insist on us paying it?
Some shoes are already £300.
Not sure what your point is

I still have lots of single glazing. It doesn't make you colder, it just makes the bills a bit higher. The coldest room in my house has all double glazing, but big windows which makes it colder during the winter.