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Cost of living

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Original poster

How many of those really struggling would be OK if they had no debt?

44 replies

O2BNormal · 14/04/2012 18:06

My gran, who was really poor - worked in service from age 13 - always said "if you can't pay for it you can't afford it" and would never borrow anything from anyone. Everything was repaired until she had saved enough to replace it, with the best quality she could possibly afford.

Despite that she eventually managed to buy her own small house which was unheard of for people of her class at the time, through careful saving. (no mortgage, but obviously different housing market too) Obviously if she'd had debts the saving would have been that much harder.

Anyway my point is, that if we all took her view and only bought what we could really afford, had a different view of what we "needed", would we have been better protected from the downturn? It would mean a different way of life and less "fun" perhaps, but really how much fun is all this struggling?

I know there will be those whose debts are as a result of hardship, but doesn't that just mean that they borrowed to buy things they couldn't afford when times were good only to discover, as a result of hardship, that they couldn't afford the loans either? Really most consumer credit is just that and spent on holidays, clothes, electrical goods....although fully prepared to hear about the exceptions that prove the rule

OP posts:

Rosylee1976 · 14/04/2012 18:11

Really great question. Needs a bit of thought. I look forward to reading the replies.

BrettDomino · 14/04/2012 18:18

I wish i had done as your granny did. Got onto too much debt and what we did get with the money we borrowed really wasn't worth the pain it has caused.

thisisyesterday · 14/04/2012 18:24

i do agree to a certain extent. people these days do seem to have the view that they are somehow entitled to a giant tv, and an expensive car etc etc and are very willing to get into debt to have them, more so than in the past.

the big difference though is that your nan was in service, so presumably got her accomodation and food with her job? so although she wasn't earning much she could put most of her earnings into savings?

most people these days have to rent a place to live. that's a big chunk out of any income (plus all associated bills- council tax etc)

it IS harder to save these days I think, regardless of debt. also most people would have lived at home i think? until they got married, so their income up to then could easily be saved

TeWihara · 14/04/2012 18:25

We would certainly be better.

But the debt we go into was leftover from being students (I worked as well as getting loans but it wasn't enough) and a patch of unemployment where we had to pay rent/buy food for two months before we got any benefits.

So, in our case you would be totally wrong and there was nothing else to be done.

duchesse · 14/04/2012 18:29

We have no debt. We also have no savings, no buffer cash in case anything goes wrong. Our incomings only just meet our outgoings each month. We are not struggling exactly, yet, but it wouldn't take much.

We do have a house and fair few children. Maybe we could ebay the smallest, cutest one?

RandomMess · 14/04/2012 18:29

Apart from my student loan and mortgage we've never had debt. Saved up for everything - loft room, wedding, car, downstairs cloakroom, kitchen...

So we're not able to save as much now due to the economy but we've not had to tighten our belts yet either - we're not huge earners, never had holidays, no huge TV, very small house etc. Have never wanted the stress of a huge mortgage or debt tbh.

HJMP · 14/04/2012 18:56

I think it's normal to get/use debt as you have a student loan/overdraft and it just carries on :(

CogitoErgoSometimes · 14/04/2012 19:10

I remember about nine years ago talking to a financial adviser about re-mortgaging my house. He was all for me rowing in my other debts with the mortgage to take advantage of the attractive interest rates at the time. Having lived through at least 3 periods of economic downturn and knowing that crappy times are always just around the corner I didn't have any, fortunately. According to him at that time... 2003-ish... the typical household had £20,000 in loans, HP, credit cards etc that wasn't the mortgage. With five years of hard-sell easy credit still to go, I'm sure that number was a lot higher by the time of the 2007/8 crash.

Elk · 14/04/2012 19:19

We are not really struggling but it would be a lot easier if we were not paying off our credit cards.
I am now keeping a tight rein on our spending but it is a hard habit to break.

Original poster

O2BNormal · 14/04/2012 19:52

TeWihara, how much of what you spent those student loans on would my gran have decided she couldn't afford? I bet it wasn't all food and rent, or books. (been a student too )

OP posts:

TeWihara · 14/04/2012 19:57

Well my rent was £400 a month, so my loans went entirely on my rent. My wages covered food, money to go home, christmas presents, the odd book (but not many) and about one/two nights out a month. I used to go out with friends and pay £4 entry fee or whatever it was to the club and drink nothing but tap water.

Being a student is not the same for everyone.

TeWihara · 14/04/2012 20:02

And... it would have all been paid off long before now if the price of living hadn't been rocketing and expenses things didn't keep happening! It cost us 2k in deposits/renting a van etc to move house when DH lost his job and we had to move to get another one for example.

CogitoErgoSometimes · 14/04/2012 20:05

Hindsight is a luxury, of course. People got caught up in the 'things can only get better', 'end to boom and bust', 'Ocean Finance' messages that were out there and that was the culture of the time. We're all young and irresponsible until the shit hits the financial fan.... I was nearly bankrupted by the early 90's economic crisis but pulled through by the skin of my teeth. People struggling today were probably still in school in 1991... how were they supposed to understand what recession looks like up close?

I think what is definitely true is that credit has become a lot less popular. Personal debt is being paid down, savings are on the rise, people are looking at big loans or mortgages and asking 'what if'... job loss, interest rate rises, etc. Guarantee that, 20 years from now, boards like this will have people saying 'we got caught out with easy credit' because memories are short and they won't have listened to their grannies..

TeWihara · 14/04/2012 20:09

Yes, I think that's true Cogito.

I certainly didn't think everytime I went out as a student I will still be paying interest on this in 6 years time. I thought I would have a good job by now and be lolling around on the beach all summer! It doesn't help that everyone batters you over the head with the student debt is good debt message.

Original poster

O2BNormal · 14/04/2012 20:19

I know TeWihra, but my point is that my Gran (not me) would have said those trips home, nights out and many of the things you have since considered "price of living" were things she couldn't afford. Things have changed of course, but I can't help thinking she was right.

OP posts:

TeWihara · 14/04/2012 20:26

It's not fair to blame people for getting into debt over things that are considered a part of regular living now though.

Your Gran probably wouldn't've considered heating essential for example, but now we know that thousands of people die of fuel poverty in the UK every year. Heating is not a luxury.

CogitoErgoSometimes · 14/04/2012 20:29

Student debt is at least cheap :) In the days of no tuition fees I knew plenty that ran up whopping great overdrafts at full market prices. Banks didn't care how much you were earning or not earning then... it was pay up or else.

TeWihara · 14/04/2012 20:30

Or even just a few years ago broadband was considered a luxury, now we know it's cheaper to have it than not because of the hefty discounts available shopping online... dial-up isn't the cheaper option anymore either.

Original poster

O2BNormal · 14/04/2012 20:32

I'm not blaming anyone, I'm just wondering if there's a better way than the mess we've managed to get ourselves in atm.

OP posts:

TeWihara · 14/04/2012 20:34

I get a bit annoyed at this threads because I find it a bit pompous to assume that everyone who gets into debt does it for 5* holidays and designer shoes that they could never realistically afford, when I think a lot of people either are in a position to pay it off when they first start getting into debt (but aren't later on!) or feel they have no choice.

At any rate it's hard, and they're struggling, I don't think they need to be told off as well.

TeWihara · 14/04/2012 20:35

x-post.

Well I vote more jobs that pay well!

Ephiny · 14/04/2012 20:39

Well I do have a mortgage and student loan, which are pretty big debts, so can't claim to be debt-free by any means. But I never get into any other type of debt, and tend to take the old-fashioned attitude that if I can't afford it I don't buy it. Also I have always tried to save a reasonable amount so I have the savings to fall back on if the unexpected happens.

I know sometimes people get into difficult situations where they feel they have no choice but to take out a loan, which then of course causes further problems when they can't pay it off. But I can't understand getting in debt for something like a holiday or a wedding or luxury goods, absolutely not worth it IMO.

oreocrumbs · 14/04/2012 20:44

I think that it is/was the availability of credit that got a lot of people into debt. DFS you can have a £1000+ sofa for £10 a month, argos etc would throw a buy now pay next year card at you, so when people were starting out all of these things that used to take years to get to were available, and it became the norm. People were not moving out of home with aunty mary's old toaster and a charity shop sofa they had a house full of luxury. I can't think of anyone I know who has gone into a new house without new furniture etc.

I also think that my generation (I'm 28) by and large were not brought up to know the poverty of the previous generations (I know many still did and do, I'm just generalising), and so were not always brought up to make do and mend, were were brought up in a disposable lifestyle.

I think that giving teenagers/low earners access to credit cards was leathal! When I was 17/18 I remember my friend - who worked 2 nights as a barmaid while we were in college had a £1000 limit credit card, and if she didn't have enough money for a night out or a box of fags etc she would pay for my petrol on her credit card and I gave her the cash! . Before she knew it she was in £1000 debt with nothing to show for it and in a right pickle.

Fine untill the shit hits the fan but then you are left with years of repayments you can't afford.

oreocrumbs · 14/04/2012 20:46

I'm refering to people who are getting into debt by choice, not necessity - just to make that clear

TeWihara · 14/04/2012 20:50

I do now someone who got out a 15k loan when they were twenty and spent it on nothing really! Still not paid off totally nearly 10 years later though they are very careful with money now...

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