To think a lot of people make poor spending choices and then blame everything else?

[ThatTidySnake]

A lot of people are making very poor choices about what they spend their money on, and then it becomes everyone else’s problem or fault when they end up in an overdraft, with credit card debt or unable to afford things like repairs, food or presents. I get that not everyone is in the same position and circumstances matter, but it does sometimes feel like personal responsibility gets overlooked.

AIBU?

I'm always really surprised at the amount of new or relatively new cars around. I earn a decent amount of money and perhaps it's just not my priority but it could never be worth the money to buy or finance a new car to me. I'd need an extremely large amount of disposable cash and no mortgage to consider spending that amount just to drive a nice car.

I think it’s a bit harsh as lots of people budget really keenly but wages are low and costs are high.
of courses we all know payday millionaires who constantly buy coffees, cornershop soft drinks and who never take a packed lunch to work. I used to work with one who constantly pleaded poverty when she’d burned through her money 10 days after we got paid. I think most people are really careful though and still struggle.

Well yes, car finance (lease) is probably the "best" way to buy a car if you want new every time and only to keep it for 3 years at most.

But you don't "NEED" a new car every three years and it's usually a lot cheaper to buy nearly new and keep for longer than 3 years.

So it's the best choice, but only for a particular choice and there are other choices available, like not having a new car so often!

Yet people are conned into thinking older cars are more unreliable, cost a fortune in expensive repairs, etc., which is untrue for most cases as long as the car is carefully driven and properly maintained!

So there is an element of deceit in the message given by the car finance industry, but equally, people don't need to be so gullible to be taken in by it.

I've got one client who has repeatedly been conned by the garage and still doesn't "get it" and can't believe he's been conned, several times! He bought a car on lease and half way through the garage contacted him saying he could have a new one for a lower monthly rate - what's not to like! Of course he took the deal. But it's now over a longer period, so some of the early redemption charges were rolled into the new lease. Rinse and repeat several times and his latest "good deal" is now over 5 years but he still doesn't realise he's been duped time and time again.

It's like the old Nat West "business development loans" which were fixed rate, fixed term. Bank managers were trained in conning business customers in that whenever they saw an overdraft being used excessively, they'd give the customer the option of a new loan to clear the overdraft, all sounded good, but the overdraft would build up again, so the manager would again offer a loan to clear it and the previous loan, but the early redemption fees would be rolled into the new loan, so instead of a 3 year term, it became 5 and then 7 years, all for a lower monthly repayment. It was just smoke and mirrors where the bank made more interest, more charges, more early redemption fees, but the customer simply never realised what was happening.

I mean, we literally live in a financial reality where repeatedly borrowing and repaying money (and of course its interest) will get you a better credit score- so I suppose could be seen as more financially prudent- than saving up and buying things outright.

Sensible people spend on credit and pay it off by the end of the month (avoiding any interest) to get a decent credit score though. Spending outside of your means is never a good idea.

There you go then.

'You have deep suspicions'.

We're all at liberty to research online at the click of a button and doing that is taking personal responsibility.

People have been doing this for centuries but without the brilliantly easy internet.

Problem is, the banks make all their profit on people defaulting though, don't they. So it's not in their interests to steer people into sensible choices, is it. And they have a lot of advertising money to reinforce that...

Yes, but you don't need to pay interest to build up the credit score. You can get credit cards and pay off in full each month which will build up your credit score just as well, likewise get interest free credit which does the same.

No, I don't think it is. People have different ideas of what life should be like and what they will accept.

My own example, One sibling - a series of unrelated random issues, meant they needed to borrow several thousand to support a teenage child, which I was happy to do. They paid me back with unasked for interest.

An in-law, flashy new car on PCP, holidays to the states, only works part time, needed a loan, lied about why.

Household 2 had a much higher income than household 1.

This is the thing. Information/advice etc has never been so easy to find as it is today, literally and the press of a button, yet it seems more than ever, people aren't researching things and not asking for advice, etc. It's counter intuitive that we have all the "tools" at our disposal yet seemingly ever increasing numbers of people are making poor decisions and getting into difficulties unnecessarily.

Well no, I just buy my cars outright.

But raise the topic on Mumsnet and the dominant view will be that getting a car on finance is the sensible, prudent thing to do.

I got £100k life insurance payout. I paid off the mortgage and spent the rest on things that needed doing to the house (doer upper) but the amount of people that thought it was insane that we didn’t treat ourselves to new cars and fancy holidays.
we know we are financially secure now, a fancy new car wouldn’t have done that. We now have the of being able to save up for the things we consider luxuries like new cars and holidays

I think with regards to things like car finance and upgrading mobile phones etc, a lot of people just want the best and they want it now.

Fine if they can afford it but if they can't, it's no-one else's fault that they chose to have them anyway.

I think a lot of it is expectation. As in people expect to be able to do/have things as a right, like foreign holidays, show house homes, new cars etc. Except that their income just doesn't support those expectations.

Its always been the way, at least in the last 40+ years anyway.

That's certainly true. But nobody needs a brand new car or latest gadgets - it boils down to personal choices at the end of the day if you choose to live outside your means and use credit for non-essentials.

Another problem is that anyone on Universal Credit (an awful lot of people) is actively dissuaded from saving. And arguably people on benefits are the cohort most in need of getting into the saving habit!

I will need a new van at some point. It seems vans that are .new and reliable enough are coming in at £6-7000. The upper saving limit - beyond which you will be penalised- for UC is £6000. So that would wipe out all my savings, leaving nothing for an emergency.

You can see why the people on the lowest of incomes resort to bad financial decisions like getting a car on finance, can't you?

I remember a thread about UC savings not long ago where several people believed that those on UC shouldn't be allowed to have any savings at all and if they did, they should lose their UC.

I know...But financial chaos and destitution would end up costing the state more.

Being able to save a decent amount without penalty would surely enable people to get their lives back on track.

If you're able to save £7k I wonder why you'd need UC? There may be a very obvious answer but I don't know much about it so am genuinely curious.

A lot of people I know who earn quite a bit above minimum wage would either struggle or take a long time to save that amount.

I think alongside personal responsibility you can’t ignore the fact that people have the conspicuous consumption of others flaunted at them constantly, in a way that never used to happen pre social media.

It used to be that you might buy an interiors magazine for example. It may seem aspirational, but the people in the articles would also seem very distant, far removed from normal life. When you put the magazine down, that was it.

Now the equivalent might be that every time you open Instagram there is the temptation to disappear down the rabbit hole, the endless scroll of beautiful interiors - tens, hundreds, thousands of people all showing off their homes and their lives until it seems that this is the norm, and your own rather ordinary surroundings are the exception! Those posts will also try to draw you into other glittering worlds full of expensive clothing, holiday destinations, anything you can think of, and all of it so visible!

People will see these again and again, day after day, at times when they are feeling confident and happy with life, and at times when they are feeling vulnerable and full of self doubt.

Against that backdrop, that constant stream of messaging to convince you that life can always be wonderful and beautiful and full of so many great “things” if only you could buy them, it really doesn’t surprise me to see that have a negative impact.

Capitalism itself is driven forwards on the constant need to convince you that what you have now isn’t enough, that there is something out there that will make you happier. Social Media has provided a gateway for that message to be driven home into your brain at every hour of the day, and often late into the night.

It only takes small shifts in behaviour for that to become a real problem over time. It’s like managing our weight and health. Yes it is a personal responsibility, but it is also relevant that previous generations didn’t have to exercise responsibility surrounded by endless choice and temptation all aimed at persuading them to just relax, treat themselves, live a little!

Exactly.

I’m always surprised when I hear that some people use credit to go on holiday instead of saving first, or more generally spend money they will only receive at the end of the month.

I agree. Vaping is a personal choice. Don’t tell me you’re poor if you vape. Or smoke. drink etc.

I’ve never been poor but years ago I went without treats to get through my PhD programme. No meals out, practically nothing on clothes etc. I trimmed my own hair for months. Shoes were re-soled and heeled not replaced. Our first furniture was practically all second hand. Buying new carpets because the old ones are a horrible pattern or new furniture because you’ve had enough of granny’s sofa was just not an option. Friends of ours who weren’t prepared to accept that and bought lots of stuff on credit ended up in financial dire straits. Folks need to learn to tell themselves that they can’t afford something and wait until they can. We and DS’s GF’s parents both showed them photos of our houses when we first got them as a reminder not to get seduced by ones they can’t afford. The danger is that young people in particular want what their parents have currently got, forgetting that that has taken thirty years to build.

But they may not be able to saving anything without UC? And how long has it taken to save £7k - could have been years, or an inheritance, etc? You can't have a "zero" savings rule so there has to be a line drawn somewhere, and I'd say £7k is too low, as the other poster said, it doesn't even buy you a decent van that you may need to start a business etc.

I think the changes made in the 80s re credit have turned out to be very damaging. There was a time when you had to save a deposit to "put down" before you could buy anything on HP - it avoided the "instant gratification" and forced people to save a bit for the big things they needed credit for such as cars etc. I have a maybe flawed memory of it being something like 25%

I agree.

What I think could help is ending the complete over celebration of events. Let's have hen and stag nights not £750 or more weekends away, end the nonsense called 'big' or 'milestone' birthdays, and consign school proms and baby showers to history.

The observation about deposits for items not credit cards would be difficult to achieve, much as I get the point about saving.