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Aye, cos it's only unemployed people who are poor. What's the purpose of wonga if not to lend to poor people?
It lends to poorer people but it doesn't lend very much or for very long - its the lack of fair consumer credit options for people on low or irregular incomes that fuels companies like Wonga. Wonga exists because banks and building societies don't address poorer customers.
But a lot of what options there are for people on low incomes aren't really credit or loans. Places like Brighthouse are rent-to-buy. Very expensive ways to buy goods but not actually debt. You could buy a cheaper telly in Currys on interest free credit - but not if you're poor.
THE AVERAGE TOTAL DEBT PER HOUSEHOLD – INCLUDING MORTGAGES – WAS £56,750 IN APRIL. THE REVISED FIGURE FOR MARCH WAS £56,619.
and
PER ADULT IN THE UK THAT’S AN AVERAGE DEBT OF £30,340 IN APRIL– AROUND 113.6% OF AVERAGE EARNINGS. THIS IS SLIGHTLY UP FROM A REVISED £30,179 A MONTH EARLIER.
and
PER HOUSEHOLD, THAT’S AN AVERAGE CONSUMER CREDIT DEBT OF £7,349 IN APRIL, UP FROM A REVISED £7,309 IN MARCH– AND £543.70 EXTRA PER HOUSEHOLD OVER THE YEAR.
and
TOTAL CREDIT CARD DEBT IN MARCH 2017 WAS £68.08 BN. PER HOUSEHOLD THIS IS £2,521 – FOR A CREDIT CARD BEARING THE AVERAGE INTEREST, IT WOULD TAKE 25 YEARS AND 11 MONTHS TO REPAY IF YOU MADE ONLY THE MINIMUM REPAYMENT EACH MONTH.
Having only just got on the property ladder (at 42) thats a fairly chunky debt. No other debts or loans in my world currently.
What staggers me is some people's attitudes to their money/debt. Bloke at work admits to over £30k debts and still took his two kids to Disneyland, Flordia last autumn (in term time obvs= fine to pay). Hes always moaning about being skint (defo earns more than me) and reveals his mortgage is £300 a month. He's had it 10 years and it is interest only. His Mrs (part time haridresser) now wants a 4x4 'just cos' FFS 😯
that £30K ia only getting bigger
It lends to poorer people but it doesn't lend very much or for very long - its the lack of fair consumer credit options for people on low or irregular incomes that fuels companies like Wonga. Wonga exists because banks and building societies don't address poorer customers.But a lot of what options there are for people on low incomes aren't really credit or loans. Places like Brighthouse are rent-to-buy. Very expensive ways to buy goods but not actually debt. You could buy a cheaper telly in Currys on interest free credit - but not if you're poor.
That's half the problem, the places geared up to service the poor are taking on risk and as such charge them more as the default levels are higher. Thus the poor get poorer due to not having access to cheap finance.
As for the average debt of £13k, I can see how that'd be fairly easy to do but I can also see that it has the potential to be highly misleading. Does give rise to sensationalist headlines that help sell newspapers though.
My parents "set me up" by instilling a dislike of debt. Other than a mortgage I've pretty much lived by that. With the mortgage paid off, I'm now down to whatever my monthly credit card spend is and that gets cleared down to zero. Avoiding "keeping up with the Joneses" has been my major life achievement 🙂I am discovering that much of this kind of difference is often down to how much their background and parents has 'set them up', as much as their behaviours and efforts.
A large amount of bank business/profit is based on consumer debt, it's not really in their interests (sic) for it to go away.
Some years ago I got a sharesave scheme payout so went to pay off part of my mortgage. Transferred the money across and the bank employee looks at the details on screen and says: "Ooh! You've a large amount of free equity, do you want to take out a loan against that?" "No I effing don't! Why do you think I'm paying my mortgage off?"
I'm with you on "Keeping up with the Jones's" Colin
Why do people on these threads never understand that a car loan buys an asset? If you look at your personal balance sheet you have your £13k loan and (hopefully) a £13k asset against that loan... whats the problem?
Why do people on these threads never understand that a car loan buys an asset? If you look at your personal balance sheet you have your £13k loan and (hopefully) a £13k asset against that loan... whats the problem?
Because the moment you take ownership of said £13k car its value becomes £9.5k
perchypanther - Member
Does it include Brownie Points?
I've earned a shitload of them over the years but still unsure of how to actually redeem them.
I believe birthdays are traditional?
I had an email from my Credit Card today offering me a cash advance of anything up to my credit limit, no handling fee and 4.9% p a until my June 2022 statement date.
The cash would be in my account in a day or two for me to spend on literally anything I want 🙂
Because the moment you take ownership of said £13k car its value becomes £9.5k
True, but you are still only really £3.5 down in that case and not £13k. Also as the car continues to drop so does the outstanding loan to a point in a few years where the car depreciation has flattened off a bit while the loan continues to go down ultimately ending up with an asset you own when loan paid off.
Clearly affected greatly by what car you have chosen.
A friend of mine recently showed off his new, shiny laptop. He is a "JAM" just about managing - the hardest working bloke I know, but not on a massive salary/little if anything at all left over at the end of the month.
He told me he is paying off the laptop over 3 years, my heart sank. He'll need a new one by the time he has finished paying for this one.
I was taught that the car/whatever that you have cash for is the one you can afford.
it occasionally gets mentioned on here, but [url= http://www.mrmoneymustache.com/ ]Mr Money Moustache[/url] sets it straight. The scales might fall from from your eyes.
Agree with the guy who thinks PCP on cars is going to be the next PPI.
I've been there, but I think car and finance companies are targeting the most vulnerable in society - those on the middle class treadmill.
I don't fall comfortably into either of the extreme camps on debt ("It's great - dive in" vs "I wouldn't buy a hair shirt without having gone without any clothes for 20 years").
I use debt. I make sure I pay as little for it - just opened a credit card at 0% with no fees, so any thing that goes on that during the house renovations will cost the bank money and me nothing.... One of our cars is on a PCP at 2.9% (and I understand I'm just financing the depreciation). I prefer to retain cash in the bank for any instant rainy day.
I loathe being in hock to anyone, but accept it (e.g. property ownership) is part of the societal treadmill ("keeping up with the Joneses" for the sanctimonious/hypocritical) we all find ourselves on.
Debt has become a fact of life - like fire, it's better to understand its uses and risks.
kerley - Member[i]Because the moment you take ownership of said £13k car its value becomes £9.5k[/i]
True, but you are still only really £3.5 down in that case and not £13k. Also as the car continues to drop so does the outstanding loan to a point in a few years where the car depreciation has flattened off a bit while the loan continues to go down ultimately ending up with an asset you own when loan paid off.
Clearly affected greatly by what car you have chosen.
Where has this interest free loan come from...?
The car doesn't cost £13k if you get a loan to pay for it.
HSBC will give you 3.3% for a 13k loan, which paid back over 4 years (£289/month) will cost you £811 in interest....
And that's a pretty low interest rate.
But, yes you do end up with an asset at the end of the loan; I imagine the value of which will vary wildly depending on what you bought, how much it's been used & how well it's been looked after.
A mate of mine bought a Megane Coupe recently. I think it was about £10k.
He originally bought in on a lease deal with a mileage limit, but
his Wife changed jobs & needed the car for work, so the annual mileage was gonna go up a lot. When he called Renault, they told him the didn't offer a repayment package for such a high mileage so they'd swap him onto a loan. He already had a bank loan for something else so couldn't go to his back for a 'cheap' loan.
He signed the docs, sent them off and it was when he got the documents through that he realised the interest rate on the loan was 13.2%!!!
We've currently got about 14 months to pay on our car loan - bank loan for our Ibiza that my Wife took out just after we got married.
Once that's paid off it'll be just the mortgage left.....
I regularly use my credit card, but mainly as a buffer while I move the money I am going to use to pay for whatever it is from the appropriate savings fund to my current account to transfer it.
For example, I keep a car maintenance fund (£200/month put aside to hopefully cover all costs apart from fuel for both cars). Any car related purchases get bought on the credit card, so I can then transfer the money across at my leisure from the car maintenance account.
Having debt has always given me the jitters....
With interest rates as low as they are I don't see the point in saving for something that I can have now.
- I could save £100 each month and buy an item for £1200 after a year
- I could pay £105 each month and have the item now. Is the additional 12 months use worth it for £5 more per month? Pretty much every time the answer is yes in my experience. You could also be dead in 11 months time!
By "Keeping up with the Jones's" I mean buying goods for the sake of buying them to maintain appearances. It doesn't matter if it's via a straight cash purchase or on credit. I buy stuff I [b]need[/b] rather than attempting to build a facade or just because X has it.
There's no way I could afford to buy a house without taking on debt (mortgage) but I'm not going to get a loan just to get a huge flat screen TV or similar.
My Mrs has experience of real debt due her ex, currently paying about 10% interest on a £30k second mortgage on her house but can't risk paying it off as ex still on deeds and mortgage so paying it off would be like handing him £15k in equity on a plate 😥
I buy stuff I need
The problem is that it isn't a clear line.
We didn't *need* to re-fence our garden or put some decking in but we really wanted to do something with what was beginning to fall down badly.
Conversely I didn't *need* a new telly although the one we have is pretty knackered.
We borrowed money for the garden but putting up with the telly.
Having only just got on the property ladder (at 42)
Ouch. We paid our mortgage off last year (me 44, t'other half still well the right side of 40) and have cash in the bank, as basic rate taxpayers living in south east. I was brought up to be really (probably overly) averse to debt and the mortgage was the only loan I'd ever had.
This thing about paying off a mortgage aged x, y or z though - is this a good marker? When I had more disposable income I frittered more on stuff I didn't need. The way I see it (occasionally, my view does differ from time to time) is that by reinvesting into my property I build more for my children's future *AND* they get to live in a nicer house with a bigger garden and in a nicer location. I could sell up tomorrow, buy a more modest house (in the same town) pay off my mortgage and have around £100k in the bank – but I can be sure I'd end up spending it on nicer holidays and more stuff I really didn't need.
I could sell up tomorrow, buy a more modest house (in the same town) pay off my mortgage and have around £100k in the bank – but I can be sure I'd end up spending it on nicer holidays and more stuff I really didn't need.
Your children would still get a modest house as inheritance which is enough isn't it?
Don't know what age your kids will be when you are likely to die but mine will probably be around 55 or more. I would have expected him to not be reliant on an inheritance when he is 55...
The way I see it (occasionally, my view does differ from time to time) is that by reinvesting into my property I build more for my children's future *AND* they get to live in a nicer house with a bigger garden and in a nicer location.
In blunt terms, you have to assume that the net growth (less costs) in the value of this asset is greater than you'd get against a smaller house + cash in the bank.
Current* environment of high asset prices and low interest rates means the former has been preferable. But, since I'm about to increase my small mortgage to do up my house, I can guarantee the whole lot will come crashing down..!
*Property prices are softening - see London high end as obvious change. Same is true of the classic car bubble and I suspect other assets will start to slide the same way.
By "Keeping up with the Jones's" I mean buying goods for the sake of buying them to maintain appearances. It doesn't matter if it's via a straight cash purchase or on credit. I buy stuff I need rather than attempting to build a facade or just because X has it.
I don't think anyone uses this rationale anymore. It's more "Mr Jones has a white Audi A6 with black wheels, therefore I [u]deserve [/u]one too".
Less about appearances and more about entitlement. A subtle distinction but one worth making I think.
In blunt terms, you have to assume that the net growth (less costs) in the value of this asset is greater than you'd get against a smaller house + cash in the bank.
There is that, but that doesn't account for the years growing up in a nicer house with more space inside and out - it isn't a simple calculation and we based our decision on many factors (although as I said myself earlier, my views do differ sometimes). More recently I have been considering buying somewhere smaller and then buying a small flat to let out on AirB&B/HomeAway etc (we live in Harrogate and it is a very popular holiday destination + conference venue).
I would have expected him to not be reliant on an inheritance when he is 55...
If not then their is the children's children. I guess I just want to feel like I have passed something on as I had passed to me (I only got a modest inheritance of around £80k but it came in very useful at the time to allow me to move up a step on the housing ladder myself).
Have skipped to the end here, but I'd love to have £13k debt! And I've got no savings. In the top 10% of earners apparently, shit car, no kids, not an extravagant lifestyle (1 holiday most years, bikes are 2010 and 11). I'm slightly over mortgaged after a divorce but I really struggle to sit at home not spending while life passes me by! Modern life innit. Half my debt is solar panels too, and most of the rest is consolidation of earlier stuff. I think public sector pay restraint has caught me out a bit, there was a time when I could borrow and then inflate my way out of it.....
km79 » I wonder how many households have zero debt. Cant be many these days.
Dunno, we're pretty close. A rolling tally on my CC some months (mrsmf refuses to get a credit card, wise move I think, she'd be bankrupt). Otherwise that's it. Cars (old!) bought for cash. We're still tight but that's what 2.4 kids do to you.
Having said that, the mortgage is more than large enough to my mind.
Apart from mortgage I am debt free and have been for most of my life. Not because of a particular aversion to debt but because I do not feel the need to buy loads of stuff I don't need. Modest savings tho - I plough all my extra money into the flat ( 10 000 in the last 18 months), Mrs TJ has some savings but I don't know how much.
This thing about paying off a mortgage aged x, y or z though - is this a good marker?
we're in different circumstances and so have different priorities - no kids so our 3 bed semi is big enough for the 2 of us and not having to try to plan for someone else's future. And yes we spend on holidays because that's part of our balance of quality of life (my car was built and registered in the last millennia 😉
I remember how house prices boomed and then crashed in the 90s. I guess most on here aren't aware of it. The head of the Bank of England spoke publicly afterwards, to the effect that the B o E would not allow any similar event to occur in the future.
They didn't stop the Northern Rock & Halifax race to the bottom though.
I wonder if the B of E are carefully watching consumer debt.
[i]I wonder how many households have zero debt. Cant be many these days.[/i] - just a credit card that pays off every month, up to £100 normally.
I wonder how many households have zero debt. Cant be many these days
if you consider the number of households headed by pensioners, or those about to become pensioners, I suspect the number is quite high. Remember the total amount of money owed in the world is the same amount as the total amount lent (the numbers are probably skewed in the UK due to the trade deficit over recent years).
if you plan on leaving that big house to your kids or their kids, i hope you've got some way of paying for your care in later life....
When I talk to younger colleagues who I know earn less, low interest rates plus a sense of entitlement combine to make them see, want, buy with little thought beyond that.
Apparently I'm just being old and out of date for having no debt other than mortgage. But they seem to equate happiness with stuff, so I guess that's just the way things are for many people now.
I heard this figure this morning and was rather surprised - what are people using/wearing out that they haven't finished ( started ? ) paying for ?
In 2013 over 70% of new cars were on PCP. So cars for sure.
Anecdotally, I've heard of people buying bikes, holidays, cars and clothes on credit. I've even been there myself.
Most people I know seem to think of debt on credit cards they're NOT paying off as part of day to day life.
Less about appearances and more about entitlement. A subtle distinction but one worth making I think.
I know it's one of the words du jour, but I do think you have something there finbar - effectively it's moved from individual envy of the apparently successful neighbours to something more like an invisible burden.
When I talk to younger colleagues who I know earn less, low interest rates plus a sense of entitlement combine to make them see, want, buy with little thought beyond that.
And you have that pervasive pressure combined with amazing ease of fulfillment - 2 mins on your iPhone and that latest shiny object will be in your hands within a day, and increasingly faster than that.
Hmm. Humans are good at sleep walking into bad situations. Feels like we're doing it again, but this time giving our kids a greater addiction to consumerism than ever before....
I'd imagine I owe at least that...90% of which is on Student Loans.
If you want your kids to be financially secure you'd do better investing in their education than the house.
If you want your kids to be financially secure you'd do better investing in their education than the house.
If the house is in the right catchment area, he is!
I think it's a bit unfair to call out the younger generation for their sense of entitlement. Sure we were all exposed to advertising and marketing in our youth, but these days it goes way beyond that. When companies are bringing in psychologists to target individuals and exploit peoples emotions and deep rooted insecurities what chance have they got? I'd bet my life on it that the generation(s) before would have fell for the same traps if they existed and be in the same position.
Since I switched bank accounts 3 months ago I've built up about 2k of CC debt. But it's at 0% and I've balanced that with savings that are paying 5% for that period. My theory is I can earn the interest, wait until the interest free period is up and then bounce the debt for around 1% and continue if savings rates are better, or just pay it off. I am normally rubbish with money so there's probably a massive flaw to my plan!
Ironic user name then? ^^^
i ll be forever grateful to mrs tts she put me on the straight and narrow 16 years ago.. if you aint got the money dont splash the cash she said.. i d previously been 30k in on credit cards etc but havent owed anybody a penny for tha last 10 years or so.. lifes cheap when you live like this.. we are the only folks mortgage free on our street and also the only house without an audi/ merc/ range rover.. next door are currently spending 80k on an extension all borrowed money all top spec stuff.. etc. i ve just come in after spending all day digging the footings for our extension.. total spend so far £135.20. neighbours builder spent 3400 on his piling.. having exactly the same done by the same firm.. 2250. if you must spend spend as little as you have to.
By "Keeping up with the Jones's" I mean buying goods for the sake of buying them to maintain appearances. It doesn't matter if it's via a straight cash purchase or on credit. I buy stuff I need rather than attempting to build a facade or just because X has it.
I don't think anyone uses this rationale anymore. It's more "Mr Jones has a white Audi A6 with black wheels, therefore I deserve one too".Less about appearances and more about entitlement. A subtle distinction but one worth making I think.
I don't know anyone who uses either rationale - most people don't give a **** either way, appearance or entitlement - I think it's a classic reverse snobbery effect to think either of those rationale still exist.
I couldn't care less about why or how other people spend their money and I don't know anyone who do.