The debt society

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The debt society

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jema
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Joined: 28 Oct 2004
Posts: 28235
Location: escaped from Swindon

Posted: Sun May 14, 06 6:18 pm Post subject: The debt society

Was talking to some friends recently, a couple with two well paid jobs, but where they are not servicing debt to the tune of paying ï¿½2000 a month, admitedly I think this is now actually a ten year programme of actually trying to pay off things. Though having said that I recall similar claims a few years back, and things evidentally did not get better

I would imagine off hand that ours and theirs income levels have been pretty similar for many years, but our taste for holidays, takeaways, clothes, cars, cds and spending in general is much less extravagent.

A consequence of this, is that by now we are practically much better off! as the "must have now" habit can't last forever and eventually all you are doing is pouring money into the banks profit margins.

What I struggle to comprehend is how people get up to have sort of level of repayment without their stress levels wrecking their lives?

sally_in_wales
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Joined: 06 Mar 2005
Posts: 20809
Location: sunny wales

Posted: Sun May 14, 06 6:23 pm Post subject:

I was similarly talking to someone about spending recently, and it turned out that they saw the 'available credit' on their credit cards as 'their money', and as a result constantly spent up to that limit on all the cards. With that philosophy its no wonder why they were up to their neck in debt, but not worried as long as they paid of enough each month to keep spending. The concept of the compounding interest seemed to go in one ear and out the other with this one

Penny Outskirts

Joined: 18 Sep 2005
Posts: 23385
Location: Planet, not on the....

Posted: Sun May 14, 06 6:27 pm Post subject:

It is strange how differently people react to debt. We've had to borrow quite a lot to get the business going - now it's fairly successful, but it will take a while to clear the debt. But the return from the business on capital we've had to borrow to keep us going, far far outweighs the interest paid on it. A lot of our family and friends ask us how we can sleep with the debt we have, but it truly doesn't bother us.

I think it might be different if we'd spent it on take-aways and holidays and such like - I would feel very guilty and embarrased if that was the case.

sally_in_wales
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Joined: 06 Mar 2005
Posts: 20809
Location: sunny wales

Posted: Sun May 14, 06 6:31 pm Post subject:
I think thats an excellent point Penny, its what the money is used for rather than the concept of borrowing/spending it that is important. All the money in the world is nothing if frittered away, but a calculated risk in the form of a debt can often be the only sensible route.

Penny Outskirts

Joined: 18 Sep 2005
Posts: 23385
Location: Planet, not on the....

Posted: Sun May 14, 06 6:33 pm Post subject:

sally_in_wales wrote:

I think thats an excellent point Penny, its what the money is used for rather than the concept of borrowing/spending it that is important. All the money in the world is nothing if frittered away, but a calculated risk in the form of a debt can often be the only sensible route.

Still hate paying the interest though

jema
Downsizer Moderator

Joined: 28 Oct 2004
Posts: 28235
Location: escaped from Swindon

Posted: Sun May 14, 06 6:51 pm Post subject:
Business borrowing is a different ball game. For example I am just looking at a deal that will reduce a business expense from about $33,000 to $18,000 over three years, but I need to find $9000 upfront. I don't need to be a rocket scientist to realise that if I needed to borrow to do this (luckily I don't) then it would still be a no brainer.

Mrs Fiddlesticks

Joined: 02 Nov 2004
Posts: 10460

Posted: Sun May 14, 06 7:24 pm Post subject:

I've just started giving my boys pocket money and its on the basis that its earnt not just given, so making beds, turning lights off as they leave rooms and not getting in to any trouble at school (eldest has a temper sometimes

) means money, any of the above not done or if it has to be constantly asked to get done then they don't get.

As I was discussing this with them, eldest's 1st question was could he borrow money from me i.e get credit. Answer mostly emphatically NO. He's 9, doesn't that tell you something about our society that he knows about that stuff. I want them to learn something about waiting, about saving and about deciding how to use the money they've got.

Bernie66

Joined: 14 Jan 2005
Posts: 13967
Location: Eastoft

Posted: Sun May 14, 06 7:52 pm Post subject:
I challenge my two to justify why they deserve money if its something out of the ordinary. Not so much earn it but appreciate it and know where its come from and what either myself or my wife has had to do to get it for them. Appreciation goes along way in my book.

thos

Joined: 08 Mar 2005
Posts: 1139
Location: Jauche, Duchy of Brabant (Bourgogne-ci) and Charolles, Duchy of Burgundy (Bourgogne-ï¿½a)

Posted: Mon May 15, 06 7:46 am Post subject:

Mrs Fiddlesticks wrote:

...

As I was discussing this with them, eldest's 1st question was could he borrow money from me i.e get credit. Answer mostly emphatically NO. He's 9, doesn't that tell you something about our society that he knows about that stuff. I want them to learn something about waiting, about saving and about deciding how to use the money they've got.

It might be educative to let him borrow against next week's money and charge him interest at credit card rates. Seeing his pocket money disappear into debt-servicing may provide a good lesson, when the absolute amount of the money is small.

Bernie66

Joined: 14 Jan 2005
Posts: 13967
Location: Eastoft

Posted: Tue May 16, 06 7:56 pm Post subject:

thos wrote:

Mrs Fiddlesticks wrote:

That is almost evil, but i Like it.

Mrs Fiddlesticks

Joined: 02 Nov 2004
Posts: 10460

Posted: Wed May 17, 06 8:47 am Post subject:

Bernie66 wrote:

thos wrote:

Mrs Fiddlesticks wrote:

I'm just not sure my maths skills are up to it! But I am considering it...

That is almost evil, but i Like it.

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