Look rich but very poor

[greyfoxy]

I live in a lovely house in a nice area, I wear nice clothes and I know people perceive me as being well off. The truth is I have absolutely no money. It's 2 weeks until pay day and I have £15 left. I will end up using credit cards to buy the essentials which is why I'm in this mess - my repayments are huge.

Anyone else relate to this?

Well done for not saying ‘this’!
It drives me mad when people do that!

I agree. When used correctly credit cards are great things. For example, you get protection if you’ve booked a holiday/flights/whatever and the company goes bust - you get your money back from the credit card provider. Sometimes you need one for hiring a car. We get points with ours that we can use for vouchers or airmiles so we put literally everything we can on it but make sure we pay it off in full every month. So we get the points plus the interest on our money staying in savings for a month and any protections. A win win for us. You have to be disciplined to do this though (something I wasn’t 20 years ago!)

Do you like journalling? My best therapist always told me that I was my own best therapist. You could write as though you're writing all your issues in a letter to that best therapist and see if any insights come up :)

As I said above these reasons do not apply in Ireland so it’s of no benefit to me

Even if you use a uk credit card?

You wouldn’t get a uk credit card if you live in Ireland it would be in pounds and we use euros.
In Ireland ,there is no difference in the protection provided in the form of chargeback on Debit or Credit Cards .
In the UK – the Consumer Credit Act (Section 75) specifies that credit card providers are jointly liable with the retailer for goods bought with a credit card.
Here in Ireland there is currently no consumer legislation similar to the UK’s “Section 75” .

Ok fair enough. But for those in uk a judicious use of a credit card can make sense

That’s true. DH has one and pays it off…uses it for rail tickets, larger purchases. Me, only a debit card. If I don’t have the cash, I don’t buy it. I also give myself 3 days of thinking before making a purchase over £500. 3/4 of the time I decide I don’t really need said item.

In the UK or not, using a credit card carefully can make financial sense. I never had a credit card until about 2 years ago. I’ve always been financially careful and scared of “debt”. Now I put all my day to day spending through my credit card and then have a direct debit that pays the full balance every month. That means that money sits in my savings account for an extra 1-2 months earning interest. On pay day, I leave enough in my current account to cover that month’s cc bill and a couple of other direct debits plus a small buffer and then transfer the rest of my money into savings straight away. If I had a big purchase on the card (like a holiday) I’d move money across from the savings just before the direct debit date. The extra interest isn’t going to be huge amounts, but it’s better than nothing. I also get a very small amount (0.25%) of cash back on all purchases on my cc.

I agree with you and pay mine off monthly by direct debit too, but the problems arise with those people who decide that the credit limit on the card is the equivalent of "their" money and is simply an addition to their income. I've known many people who effectively lived on their credit cards and overdrafts, they couldn't keep up their lifestyle without it. Often it simply creeps up and up until increases in the overdraft or credit limit stop and they have to start living on what they earn. This can be the start of serious debt problems for people with over-large mortgages or anyone who is unlucky enough to lose their job.

This is an interesting one. In the village I live in are lots of very wealthy boomers and silent generation who dress in rags and drive knackered old bangers because they don’t really care. I have seen this kind if competitive shit car syndrome in finance influencers boasting about how poor they look as they are emulating that generation. It’s has sort of become a modern wealth signifyer because people have realised that quite wealthy middle class people don’t tend to value cars and don’t get car finance. I am of course generalising here but I do think this is an interesting trend.

Agree and unfortunately this is my SIL. They don’t earn much but want to keep up with their friends with coffees on walks or meals out when they can barely pay the grocery bill. Then they go to my FIL asking him for money to clear their debt.

So sad that otherwise intelligent people can't see that outside appearances shouldn't matter.

I've known people with two high salaries who simply spent everything (and more) so obviously have no chance of paying off credit card debts. They take any capital that they can out of their house, and often they don't have much in the way of savings so no buffer if things go wrong.

Their only hope is a larger than expected bonus (though they'll probably have spent their bonus in anticipation of receiving it) or a cash lump sum when they eventually retire. Heaven help them if they have an interest only mortgage without much capital left in the property, they'll be forced to sell the house and downsize dramatically when they retire.

I speak as somebody who doesn't use car finance, but used to buy a good car and then run it for twenty years, DH did the same. If it's properly serviced it will still be going well (and probably look OK). We'd never have driven a Volvo or a BMW!
It isn't that we want to look poor, but that there is nothing wrong with the car and we don't have anything to prove by buying a new one when we don't need to. Incidentally we probably wouldn't buy a new car but an ex-demo or a car that is not more than three years old.

My DH is a boomer and loves cars, but more for how they work well than for how they look or as status symbols. I'm a bit younger and just want a car that I can rely on.

I'm not sure it's a trend as such, just people doing what feels right to them and not buying into consumerism when it doesn't interest them.

To me a car is a tool that I need because it saves me time compared with public transport and gives me access to my main interest, which is hiking in the countryside, visiting the beach etc. I drive a car that suits my needs and it won't occur to me to change it until it starts to become old and worn out because shopping for cars is a boring chore only done when absolutely necessary. Likewise changing furniture and decorating the house for the sake of it.

My current car is a 5 YO city car that I've had for 3 years and won't change for another 5-10 years, it cost £8k which is the most expensive car I've ever had but will work out inexpensive over time (I've done years of shit cars that broke down and left me stranded/stuck on public transport because it was all I could afford) so it's worth it to me.

But if I didn't have that money saved, I wouldn't have spent that much on a car and I probably mainly had money saved because I spend little or nothing day to day on the things that a lot of people spend a lot of money on - many people fritter hundreds of pounds a month on not very much, meaning they never have any money, because they've spent it. Even a couple of hundreds of pounds a month is thousands a year or tens of thousands a decade, just on pointless shit in a lot of cases (we are not talking about the people who's income doesn't cover the basics, but the middle majority, who have some disposable income but not enough so they never have to think about what they're spending).

Anyone who equates wealth with possessions would probably decide I was poor because I don't really have any overt displays of wealth, don't spend money on appearances and don't show off about holidays on social media. Yet it's quite the opposite, meaning I can afford to work part time, because I just don't spend a lot of money. Remember Fight Club - 'we work jobs we hate, to buy things we don’t need, to impress people we don’t like'. Some people prefer to do the opposite to that. Spend less on stuff, don't worry about what other people do/think and you have the freedom to work less/retire earlier.

This is us. I’m on a good salary now but for years I wasn’t but we always prioritised two things, holidays and paying off the mortgage. Probably in that order. We have used interest free credit cards and always paid them off so we are earning interest on savings and we also have premium bonds. No car loans or mortgage means as you say our monthly salary is not being depleted.

we are also lucky in that neither of us bothers about fancy cars or the latest tech and I’m not bothered about jewellery and we had a cheap wedding as they are things that can get you into debt before you even start. That’s not a value judgement on anyone who does those things it’s just a rationale for where we are. I’ve the cash now to buy myself some nice jewellery and I really do try but I’m just not bothered!

we’ve no family money, both sets of parents gave us £2k when we got married which we were horrified by and didn’t want to accept as it seemed so grabby. But that’s it.

Ooh that’s a mistake.

Well I’ve lasted 40 years without, how is it a mistake?

I think this is wise. DH and I saved, and we are well off now and I retired early. DH only works because he really likes his job. DH just bought a BYD electric (base model) as our car was 11 years old and a diesel. I don't have a credit card...DH does but paid them off every month. We also were married at the registry office and caravanned for our honeymoon in the UK. We bought a fixer upper and fixed it up, paid off the mortgage and it is worth double what we paid over a decade ago.

To each their own, but not owing anybody and having plenty for retirement for me means sound sleeps at night.

The interest rate on credit cards is so high that it does not make sense to keep a running balance.

This. And later on when they are fully spent up and need care, the humble taxpayer who has been more sensible over the years will end up footing the bill for them to live for free in a care home. I don't know how anybody can sleep at night living like that.

@PigletJohn interest rate is irrelevant to those who clear by DD every month.
I've just had my annual statement in on mine and we spent over £31k on ours last year which includes all monthly spends on top of our bills, a couple of holidays, furniture etc. Basically everything we paid for.
Interest was £0 for the whole year as balance cleared every month in full
We do it for the points

A lot of people have that problem nowadays... But then again with rents being so high it's pretty much impossible to live comfortably on one income... In 1980 the average salary was £6000 and the average house was £22000! Imagine being able to save for a house in a few years time, not a mortgage deposit but an actual fkin house!

It can be safer to buy things using credit cards.
Used sensibly they’re great.

(But if you owe money on them, not so great. That’s the danger.)