Interesting Debt Thingy.

I want to know where all the money has gone. What does the United Kingdom have to show for all this?

I'm moving the debate to a personal basis. When I closed the former practice at the end of Sept 2010, I had guaranteed the practice overdraft. My former partner had no £ - so it all fell on me. Paying lazy and ungrateful staff, mainly. I won't say how much it was but it bloody hurt, and I narrowly avoided being made bankrupt.

A hard lesson.

I have vowed: I will never be in debt again.

[maviczap]

Yep good point Ed, where's all our oil money?

[G]

Its a good personnal policy Ed. The only debt we have now is the mortgage which we could pay off in 15 years if we wanted to and the monthly repayments are relatively small in comparison to disposable left each month.

The problem will always be people want stuff NOW, and get finance and the debt circle goes on and on.

If I don't have it in cash, I don't buy it.

Absolutely nothing wrong with having credit to get something now rather than wait years to get something.

It's all about living inside your means, if you borrow money for a new bike or car etc, just make sure you can afford it, it's pretty simple really.

I don't have consistent income being self employed so saving a large regular amount is difficult, in fact the last time couple of years its been difficult to save anything as works been very inconsistent.

I see credit in black and white, I think if I have credit to buy something then I have an asset, so if I hit on hard times I have something to sell.

I never borrow for holidays as you're paying for something you have had already so have a debt but have no asset to show for it.

Agree with Phil, especially on the holiday bit. Borrowing for a holiday is just silly, if you can afford the regular repayments afterwards, then you could afford to have saved a regular amount to have paid for it beforehand. If you can't afford a holiday, you don't go.

[G]

I apply that principal to most things tbh, if you havn't got the money, you can't have it. That goes for all toys and anything non essential. I save for everything, and don't even pay insurance monthly as it's a form of credit.

Ironically the government also likes to preach this, the countries bank balance says otherwise though.

@Phil, getting credit on a inconsistant income is even more risky! If you don't get work you can't pay your debt... If lots of people get in that situation, the debt provider then cant pay their debt and thats how we get into a world financial crisis. And the vicious circle continous.

Originally Posted by G

@Phil, getting credit on a inconsistant income is even more risky! If you don't get work you can't pay your debt... If lots of people get in that situation, the debt provider then cant pay their debt and thats how we get into a world financial crisis. And the vicious circle continous.

Phil is looking at it in the same way as a business looks at cashflow. Lets assume Phil buys a motorbike on credit. So long as Phil has sufficient cash reserve to pay the monthly repayments in months when his income is down, then he makes more than enough money to top up that cash reserve on months when the income is up, then the debt still gets repaid every month. If he's forecasting an extended period of no income which is going to deplete his cash reserves, he sells the bike and pays off the finance.

I regularly take finance on things if there is a 0% deal be had, even though I have the cash in the bank. It's improves my cash reserve for free, and I make interest on that cash reserve.

I'm also currently looking at offset mortgages in order that I can pay for EVERYTHING on a credit card, then pay off the card the day before I get paid (and within the 45 day interest free period), reduces the mortgage balance I'm paying interest on by several grand a month. Then instead of having my cash reserves sitting in a savings account it's also reducing my mortgage balance until I need it for something. It would mean every time I buy anything (including holidays), it's essentially borrowed against my house. There would be no such thing as saving up for something and paying cash. The biggest expense most people have is their repayment mortgage, and the biggest chunk of that monthly payment for most people our age is interest. Anything you can do to reduce that interest cost, makes you richer, and will help you pay off your mortgage sooner.

At the end of the day nobody else can say if somebody elses finances can sustain a borrowing, or whether they should or shouldn't be borrowing it. So long as the debt gets paid every month, where's the problem? The problem only occurs when people don't manage their finances properly, and allow themselves into a position where they can't afford to pay the debt. If your way of doing that is not to borrow, then that's fair enough and very responsible and commendable, but that doesn't mean everybody else should do the same.

[G]

I wasn't suggesting how anyone should or shouldn't buy things, just how my principles work.

My 5 year fixed has just finished this month and we have dropped onto a 2.49% rate as standard which tracks the BoE base rate. These offset mortgages do look interesting though, although only if we don't have another recession and loose another 10%+ off house values obviously. We're going to buy another house after Christmas and are considering renting out the one we are in at the moment so will have to see what our options are.

[Mr Speirs]

Going to add another on topic debate in the mix.

Years ago I was watching something that Jeremy Clarkson was presenting and he was interviewing a German student and asks him what is the future for Germany.

The students reponse was that he hoped that the new European Union paved a way for the german politians to have a big influence over Europe and that maybe one day control it.

Jeremy bewildered response was 'You're going to do it again aren't you?'

This video reminded me of that programme:

Link:
http://www.youtube.com/watch?v=bdob6...ature=youtu.be

[G]

Good speech... Lots of placing the blame, passing the buck... But no solution offered. I come across those types a lot, they serve no purpose.