What does the credit crunch mean to you?

[chelsygirl]

I#m watching what we spend as we are skint, having to really tighten up

what about you all?

Cannot get a mortgage - not even for a shared ownership place. Cannot afford to privately rent(now a single parent).
So living with parents and facing the fact that I am going to have to declare myself homeless.

Still as a HV (albeit part time) at least I will understand the process and thereby help some of my families through it.

I dont' really do crafty things, more pictures which wouldn't sell on ebay. It's my own fault I just don't really know how to do the selling bit and am good at procrastinating.

It's a vicious circle though - I can only get a job if i have a car and can drive. I can only learn to drive and have a car if I have a job.

but what i don't get is why is this happening, i know that th northn rock thing hasn't helped and fuel is becoming rarer iykwim
im not great at explaining what i mean.
but we all seem so much worse off then a year or so ago.

boco ikwym.
its like you need a helping hand to get you a car and learn to drive then you can be off.

it would appear that energy companies have deliberatly kept the prices low for us consumers for a couple of years,and now have to put them up to cover their director's massive bonuses.i'm sure i'm not the only one who has swapped energy suppliers 2/3 times, each time going for a lower d/d,then finding that i owe them 200/300 quid

although,boco,driving's so expensive now - parking,petrol,tax,repairs,insurance - is it worth it?depends on yr local transport.ours is mostly crap,so i drive.or walk

good point tlk, wonder how much it costs to run a car these days?

there is no public transport in many areas, or only twice a day, so if you work shifts or even 9-5 but have a longer commute you can't make the bus times.

also, it can be very expensive in some areas.

we went to one place recently and noticed a LOT of pubs. after being there, i thought, 'i get it! if i had to live here, i'd be a drunk.'

I live in a small village with no transport links to the main cities / towns - which are all 25 miles ish away. Stupid area to live for work really.

Driving lessons just went up from £40 for a 2 hour lesson to £50!

lol why not open a pub then.
id be drinking all the profits and eatting allday as it would be a foodie pub

I use the train quite a bit if i;m going into the city with DS - it's £3.50 return cheaper than driving and more fun for DS, a bus would be double that easy as to go half the distance return on the bus it's the same price.

other places it's not so easy to catch the train to as the stations are out of town and quite a walk.

I do prefer the train to the bus thou.

I honestly don't think that fuel/petrol/food etc prices will come back down - at least not by much - maybe a little. the problem seems to be all over at the mo thou it's not jsut us that's feeling it. and as I say -according to mum she says it will get worse first - last time was 9 months ish apparently it was really bad, so i'm thinking hopefully about 18 months and we should be on track again - or is that optimistic?

Lovelysongbird - there are a number of factors all unfortunately happening at the same time.

The 'credit crunch' itself is down to a whole bunch of mortgage lenders 'investing' in sub-prime mortgages, ie funding the mortgages of people who were always going to struggle to re-pay them. When these people have defaulted on their mortgages the banks have lost money which is why Northern Rock and a whole bunch of US mortgage providers and gone under. This has meant that banks essentially just don't have as much money to lend to people (and other banks who need it to fund people's mortgages) and they also want to charge a higher interest rate which is why people are struggling to get mortgages and having to pay more for them.

At the same time oil prices have exploded meaning that petrol, diesel and most goods we buy in shops have increased in price. Why oil prices have gone mad is hotly debated - it's either down to dwindling reserves or investors speculating on the price to try and make money, or a combination of the two.

The wholesale gas and electricity prices (ie the price energy companies buy it at to supply it to us) are related to the price of oil and so are increasing too.

Food has become more expensive, partly because of increasing oil prices but also down to a number of bad harvests and due to less food being produced because land is being diverted to producing ethanol as an alternative to oil.

Because of these factors companies are also struggling, just as everybody else, and their way of cutting costs is to make people redundant.

The 'credit crunch' itself looks set to continue probably until 2010 when it may become easier for people to get mortgages again.

Inflation (ie rising prices) may well calm down if oil prices continue to fall and also as people have less money to spend this encourages producers to keep prices low to encourage us to keep spending. However, this is very much a long term thing and we can expect to see rising prices for the forseeable future.

This is my take on it anyway - I'm only an layperson so may be wrong!

£50 for a driving lesson!!!!!it was only £7.50 when I learnt...back in (cough cough) 1979.....

daisy - I was under the impression the oil is there but the big wigs in the firms who pump it out (not sure on the technical terms) are holding on to it and keeping it in a shorter supply than they could do - more money i guess??

not sure if thats right thou so will stand corrected if not.

we're dependent on the russians for some type of fuel - is it gas, now ours is running low?and that pipe runs across europe, so i believe

wow daisy thankyou very much for that, i get it now.
so its like aload of bad stuff happening at the same time.
to think families are losing their homes is so sad.
time to tighten the belt a tad i feel.

davidtennantsmistress - I don't know, to be honest. There has been some debate about how much oil is actually left - some important bloke has said in the past few months that he reckons there is far more than the oil companies say there is, all down to the way that it's calculated apparently. Obviously it's in the oil companies' interest to make out that there's only a bit left! And there have been problems with oil refining.

However, lots of economists say that the spike in oil prices can't simply be explained by supply and demand - oil prices have doubled in the past 12 months, yet demand certainly hasn't.

Another issue is that in times of economic hardship governments have typically tried to lessen some of the impact by lowering taxes to try and get people spending again (this is what has been happening in the US where people have been getting tax rebates) However, our government, in their wisdom, spent masses during the boom years and now there's nothing left - so they can't cut taxes and in fact need money pretty badly which may be why they're bringing in 'eco-taxes' such as the increase in road tax and refusing to cut fuel duty to try and lower petrol prices.

that's my thoughts, daisy - but then again I do wonder that if it's a case - it's been suggested/leaked etc that the supply is low/running out. then the price goes up, iycwim.

I can't see a barrel of oil reducing too much in price - it certinaly won't come back down to where it was 12 months ago I don't think. dad seems to think we'll be at $200 per barrel by the time the year is out - not sure myself but it's not looking good, and of course that has a knock on effect for other things.

it's snow ball as you say - one cog slows and the rest follow suit as it were.

Well, I think $200 a barrel by the end of the year is a bit pessimistic - it's trading at about $122 at the moment and has been sliding for the past few weeks..

I find the whole subject absolutely fascinating to be honest (wish I'd done economics at university) - there's much more going on than in my posts, massively complex situation and nobody knows exactly why it's all happening. All the different factors at play are feeding into each other, impossible to disentangle them all really.

Horrible for people feeling the effects of it though

As well as supply issues there is increased demand as growing nations e.g. China mean more food required and also they are becoming richer and requiring different types of food - becoming more westernised. There appear to be a range of factors all coming to a head at the same time. It is a world issue and not just the UK.

What does it mean to me?

It means I have to set myself a budget for food/groceries each week of £80 whereas I'd normally spend well over £100. If we don't spend £80 I save the difference.

It means I walk everywhere cos I can't afford to run the car.

It means I have bought hot water bottles, blankets, throws, warm dressing gowns, fleece PJ's etc etc for the kids this Winter to keep them warm so I don't have to put the central heating on cos we can't afford the rise in cost of utility bills.

It means I have to cut my credit cards up.

It means we're going to have this Summer at home and not do days out or go away.

It means we live off Tesco Value products and they are absolutely fine. In fact the kids haven't even noticed the difference...

Yes we're skint. But we've got a home, DH is in work, kids are happy and we're all healthy.

Oh..and the tumble drier is out in the shed cos we can't afford to run that anymore...but I'm keeping fit going up and down the garden hanging it all out instead!

The FT is doing a big piece on commodities tomorrow - Daisy, DTM you might find it interesting?

My understanding is that reserves have dropped for lots of reasons I don't really understand but that oil producing countries have agreed to produce more again, plus better technology means that they should be able to get more oil from places it was hard to get to before (deep at sea etc). So in theory, price should stabilise/drop a bit again over next 12 - 18 months.

oh are they that's interesting, I'll get that then on my way out for dad - he likes getting the FT on a sunday(i think he gets it) to have a look and check it all.

he's my usual go to point for 'laymans' terms lol. have to say chap this am on the telly (GMTV) form BG was annoying me somewhat - they've increased prices by 35% and all he was saying was make your house more energy efficient and we'll test your house and tell you what to do - not to mention he understood our concerns - as the MD of a huge company like that who prob (i'm assuming) gets a 6 figure bonus each year - how can he understand what it's like for Joe blogs on the street who's struggling and dreads the increases?

What it's meant for us has been a change of plan. We were leaving all debt on 0% quietly getting paid off and were intending on stockpiling cash instead of paying off debt.

Now credit is limited we're paying off all debt instead and won't be able to save anything until we've done so. So instead of having £xk in the bank we've been using it to reduce our debt, which should all be completely gone by the end of November, phew.