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

[O2BNormal]

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

"I'm just wondering if there's a better way than the mess we've managed to get ourselves in"

I think we're already getting to the better way. Some people are still heavily reliant on credit but the statistics suggest that far more are paying off debts as fast as they can and are reluctant to take on more. Ostentatious behaviour is totally out of fashion, designer brands are 'naff' and conspicuous consumption is a thing of the past. When newspapers are running 'isn't it awful' stories about the goody-bags handed out to guests at award ceremonies you know the tide has turned. The packed lunch is back. Savings are back. Relatively well-off people are bragging about how much they save shopping at Aldi. Waste (especially food) is unacceptable and a generation is rediscovering the art of the leftover. To misquote Gordon Gekko... 'thrift is good'

As I said before... anyone living through this will never be as casual about money again. However, their children will make exactly the same mistakes a few years down the track. The harsh forties/fifties produced the profligate sixties. The bankrupt, striking seventies produced eighties kids spending like 'Loadsamoney'. Those people get caught out in the high interest, negative equity debacle of the early nineties and pull in their horns. The next lot go mad on credit for the Millennium years. Here we are now all chastened and thrifty since 2008. By about 2020 it'll be another upturn and another boom...

yes, Cogi - isn't capitalism based in the access to credit, and it's misuse? As Marx indicated best of all (though not the first to) capitalism relies on boom and bust ( and a few helpful wars along the way). Capital investors wouldn't be liking the OPs gran's habit at all,as there is no profit to be made whatsoever.

Quite, Pan. And as I said on another thread, in a capitalist society there will always be people at the bottom of the pyramid. A modern capitalist economy (ie not an unregulated one like many 3rd world economies) is a tempered economy that mitigates the effects of capitalism on those least advantaged by it.

I learnt a very hard lesson in thw 80's whilst living with my then partner, whose business failed leaving him with £25k of debt secured partly on our home. I paid the mortgage and all our living expenses whilst he repaid his creditors. It took 5 yrs of us being skint in our 20's, even though we both had good jobs. It was pretty scary and we very nearly lost our house when mortgage rates went up to 14%

Since then, apart from a house, I have never bought anything I couldnt pay for outright.

Very true cognito, especially about conspicious consumption being out of fashion. I have run up and paid off cc debt 3 times, when on maternity leave, and when dh wasn't working. Its no big deal IMO.

@Pan I don't think capitalism benefits at all from the misuse of credit. Responsible use of credit enables growth, but bad debt & bankruptcy cripples commerce.... viz the 2007/2008 crisis triggered in part by massive home-loan defaults in the USA.

@Adversecamber... I disagree about luxury goods. My own granny, a millworker born in1907 to a working class family, still had the receipt for the piano she purchased in her twenties.... equivalent to £2000 today. :)

Depends what we all mean by "capitalism". "Capitalists" benefit from misuse of credit and other financial instruments. Think George Soros and forex.

I do think it makes a big difference.

I've not long paid off my student debt, and it's made a huge difference to my monthly disposable income. Not yet debt free, but much closer to it, so less money going out on interest.

Really though, I'd like to see a bit more practical finances taught in schools. Things like converting APR to meaningful price of debts, looking at interest rates for savings/ISA rules and even more so how to understand your payslip/tax code/NI and how to apply for help if needed. Add in some basic life skills like making a budget meal for a family of 4 and you might make "general studies" useful!

YY oreo. I had a credit card when I was 18 and maxxed it out and only paid the minimum payment for years. Luckily it didn't seem appropriate to have more than one card at that time...

Mortgage rates were 15% during some of that time and I had a £20,000 mortgage. I wish I could remember what the repayments were but I was earning between £10,000 and £12,000 a year but still remember struggling financially. Don't know what I was spending my money on really.

After DS was born I couldn't go back to work due to illness and was on benefit. Fortunately I had no debt at that time and I suppose I "grew out of it". I have never had another card or bought anything on HP so if my circumstances did change again I am better prepared for it.

A friend of mine is still trying to managed debt payments from an IFA or whatever set up when he was working. I've told him that paying £50 per month while on Jobseekers Allowance is unreasonable, to get it re-assessed but he won't. He can't eat some days.

I've finally got to a no credit position and it is amazing. I have run up debts both thru necessity and stupid overspending. I spent around 15 years living beyond my means to a greater or lesser extent. Three years ago our budget looked so awful we had to stop. I have had to adopt an approach like your gran and I like it. I think we are lucky we didn't lose our house or go under, and debt was entirely the root cause. I consider some of my student debt to be a frivolous expense too tbh!

"I'd like to see a bit more practical finances taught in schools"

I don't disagree with this but I think that, even if they understand the nuts and bolts of the way debt works 100%, the bigger issue around credit cards etc. is a more basic one of 'temptation' and personal responsibility.

Our monthly earnings are less than our monthly outgoings and have been for ages. We have tightened our belts, changed suppliers etc but we still need some form of credit every month to meet odd expenses (car tax, MOT etc)
Once you get into it - student loan, overdraft etc, it's nearly impossible to get out of. I cannot remember the last time I did a big shop, the cupboards are always empty. But, we still pay the rent so at least we have a roof over our heads

I think one thing that has changed is the cost of housing overall and the size of house deemed suitable for family living. It would have been seen as normal to be very cramped, now we don't consider that acceptable. But housing has also got comparatively more expensive so that's a major pressure on a budget.

When we were ultra skint, I looked at ways for us to rent a studio/1 bed just to get costs down. It felt very strange to do that, yet 60+ years ago would have been more normal. Doing that would knock masses off our budget (DH got a job so not needed in the end).

I think I benefitted from having parents who were children in WW2. I always had to justify the cost of anything - in terms of cost per use - and for a larger purchase expectation was verified with a tally chart! Dinged in my head with a mallet. Dad gave me whatever the amount of the government grant was for university, and anything left over I could keep. God knows how, but I used to have money left over at the end of the year. Probably because I looked at drink as something that wasn't worth paying for. (Deeply boring I know - but I couldn't have looked Dad in the face and said I had used his hard earned money to get drunk.) I didn't have a student loan - I've never had a credit card - should get round to it for internet shopping I suppose.

DH didn't have a cot, he was in a drawer (70s). Photos of my parents house 30 years ago were very spartan. Things were different, and expectations were different. You built up a home bit by bit. I think we have all been oversold what we should "have" - people understandably I suppose get caught up in the madness of keeping up with the Joneses, and then into debt. Companies don't care, because they make money selling the debt on. It's hard for people like my parents who made do, to understand a younger generation that has to "have" things now.

I can afford furniture, but buy from auction houses, because it is so much cheaper. And I cannot for the life of me understand why people go to DFS or wherever, when there are perfectly good wardrobes to be had for £20 - £100.........OMG I sound about 70 and I'm in my 30s!

I'd be £100 a month better off without my loan payment - and we are really, really broke. But it only has another 11 months or so to run, so I'm happy. I took out the loan so I could afford the first few months rent + deposit on a house, when I decided to leave nasty abusive XP. Best (and only) debt I've ever been in. I hate borrowing money generally, though.

nope, unfortunately not. Not much debt here, just ridiculous mortgage, 3 kids and 1 wage with no benefits. Not sure where we went wrong really. As many others have stated on other threads, we were fine when we had the kids but a couple of things went wrong and bam - living hand to mouth.

I'm quite well off but my parents are 'really struggling'.

My DM is a full time carer to my DB who has Downs Syndrome, mobility problems and visual impairment, DF was made redundant. They never had any debt, except for their (very low/ affordable) mortgage. Sorry they don't fit into your stereotype OP.