# So was everyone living way beyond their means



## deadtiger

First post on here. Had dinner the other day with a few friends and we were just discussing the current financial situation where quite a few businesses in the local area have gone bust etc.

I have a decent job which pays a good wage well above the national average, am married with a young family and I really feel I haven't been affected at all by the Celtic Tiger nor the subsequent collapse. We pretty much carried on as normal, put away a few bob when possible and broke even most other months. We don't spend on luxuries like new cars, expensive holidays etc.

Looking around over the last few years, I've seen people with similar jobs buy the new cars, take a couple of foreign holidays a year etc. So, my question is.. were these people living way beyond their means? Are we doing something wrong in trying to live within our means and not take too many risks? What happens to these people now?

Sorry if this seems like a weird question, just something that's been bugging me recently..


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## Brendan Burgess

A lot of businesses go bust because the owners take out more money than the business was making. So if a business makes €80k and the owner takes a salary of €180k, then the company will go bust. I have seen this happen quite a lot and they blame the "taxman" for destroying their business. 

I know a few people whose spending is not really influenced by their income. They live on €50k a year say, and if they earn a net of €70k, they save €20k.

I know others who spend around 10% more than their income. If they get a bonus, they spend it. 

Those who have borrowed to buy new cars and who have now lost their jobs are suffering. Read the Money Makeover forum for some real live cases.

Well done on living within your means.

Brendan


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## deadtiger

Cheers Brendan,

I must take a look through the site to see some examples. The fact that you say well done for living within our means is what I'm talking about.. surely, that's normal? What I struggle to understand is what will happen those who I can only assume were living way beynond their means of which there appeared to be so many in recent years.


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## sam h

Unfortunately, it's not been unusual for many to have lived WAY beyond their means in the last few years.  We have always been fairly frugal, save where we could, bag bargains, shop carefully, pay off the mortgage as quickly as possible etc....likewise, we're not too affected by the downturn.  

Many people saw the raise in the value of their home as "additional cash" & used this equity to borrow for the holiday, house extension, designer wardrobe and, of course, the 08 jeep.  

We had a discussion last year about whether we are too conservative & should start to splash the cash abit more....get the new car each year & generally use the substanial equity to "enjoy" life abit more.  Decided enjoying our life was not about how much we could spend.  Glad we didn't!!

Funny thing is, it seems to be fashionable now to boast about the latest bargain got or money saved by shopping around.  We're finally fashionable


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## gearoid

Personally, I believed there was going to be a bust from some years back. I haven't spent extravagantly, run a 12 year old car, didn't buy a house,  and made sacrifices to save up for a deposit just in case there wasn't a crash. By 2006 I was scared I was wrong, so I upped the savings rate to ensure I wasn't completely left out of the housing market. Now, I'm in a very precarious position job wise as I am self-employed, but I can live for a number of years without working if totally necessary. 

My rationale/psychology was based around saving for a rainy day, and having sufficient funds to be able to leave a job if I hated it, and possibly to re-train. It was probably based on growing up in the 70's and 80's. I never bought the hype of the "celtic tiger" and was shocked by the bling and extravagance. I think a substantial number of people bought into consumerism in a big way. The President made this comment in the US, which I thought was correct though inappropriate for her to make, and I wouldn't be her greatest fan, but she did hit the nail on the head.

We blew the boom instead of investing the benefits wisely.


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## tiger

Yes, I think most were living beyond their means.  Unfortunately it wasn't just a small minority but possibly the majority, and not just in Ireland but most of the western world (UK & US at least).  The problem is now so big, I'm afraid that even those of us who were prudent (?!) will still suffer.
Totally agree we blew the boom, all we have left is a country of builders & property "investors" and a few large multi nationals propping everthing up.


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## Bob_tg

tiger said:


> Yes, I think most were living beyond their means. Unfortunately it wasn't just a small minority but possibly the majority, and not just in Ireland but most of the western world (UK & US at least).


 
Tiger - you are not alone in your opinion!! The New York Times agrees with you ().


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## Purple

Lots of people were, but not everyone.
I don't understand how anybody didn't see the crash coming; the sub-prime issue was there over a year ago, out cost base was much too high and we were at the top of a property boom... what did people expect?


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## Sherman

I think the fundamental problem that the _Irish State_ has been living beyond its means - leaving aside the very sad cases in the Money Makeover section, a majority of people are like the OP - hardworking people who didn't go mad over the last 15 years.  On the other hand, our State, with its access to the 'brightest and the best' economists and planners went utterly nuts over the last 15 years, like a sailor on shore leave or a City banker on bonus day.


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## Purple

Sherman said:


> I think the fundamental problem that the _Irish State_ has been living beyond its means - leaving aside the very sad cases in the Money Makeover section, a majority of people are like the OP - hardworking people who didn't go mad over the last 15 years.  On the other hand, our State, with its access to the 'brightest and the best' economists and planners went utterly nuts over the last 15 years, like a sailor on shore leave or a City banker on bonus day.


Very true but the people running the state were the vested interests (Builders and unions) so what did we expect.


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## Mouldy

Getting back to the OPs subject, I agree that many people were living beyond their means. The intresting thing is now that we know that the economy and businesses are in general is in trouble, the same pople are continuing to live in the same way.

I am no angel when it comes to saving but I suppose I've lived withing my means given that i have no consumer debt and save a little (but not a lot) every month. That doesn't mean I'm prospering though or saving enough for a rainy day. Maybe we should come up with a sensible list of things to do to be truly be living within our means?


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## Guest116

I am not sure many were. Anyone I know havn't been buying expensive new cars over the last 5 years. They all have houses and decent amounts of savings. 

Plenty of people at work on big salaries driving old cars and dont seem to be big spenders.

The thing I dont get is people spending 40-50k on a new car but are living in semi-detached houses - to me anyways I would rather save the money and eventually get a nice detached house on a big site.


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## AlbacoreA

aristotle25 said:


> I am not sure many were. Anyone I know havn't been buying expensive new cars over the last 5 years. They all have houses and decent amounts of savings.
> 
> Plenty of people at work on big salaries driving old cars and dont seem to be big spenders.
> 
> The thing I dont get is people spending 40-50k on a new car but are living in semi-detached houses - to me anyways I would rather save the money and eventually get a nice detached house on a big site.


 
Location location location. Some people are into cars, some into houses, property and yet others into money. 

Have to say though I see lots of people who seem to be able to spend like theres no tomorrow, and I can't see where the money comes from. Then again some people seem to be on large salaries for unremarkable jobs.


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## AlbacoreA

Purple said:


> Lots of people were, but not everyone.
> I don't understand how anybody didn't see the crash coming; the sub-prime issue was there over a year ago, out cost base was much too high and we were at the top of a property boom... what did people expect?


 
I dunno either. We've been talking about the credit bubble, for so long its actually became old news and people stopped talking about it a few years back. I think the crash was so long in comming that, people started to think it would never happen, or at least they'd make enough that they'd still come out ahead. 

That said even if your in a comfortable position it doesn't take much to turn it on its head. You get sick or injured, lose your job and unable to get another one, or get one paying far less than previously, or have to look after someone, and thus unable to work. Who is really secure from that?


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## GeneralZod

AlbacoreA said:


> I dunno either. We've been talking about the credit bubble, for so long its actually became old news and people stopped talking about it a few years back. I think the crash was so long in comming that, people started to think it would never happen, or at least they'd make enough that they'd still come out ahead.



When people such as David McWilliams and near the top Morgan Kelly pointed out  that we were in a bubble and a crash rather than a "soft-landing" was likely there was no shortage of vested interests shouting them down. If you predict a bust for long enough eventually you'll be right and so on. Even this website had/has a policy of not discussing property prices. A large number of  people didn't want to hear it.


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## deadtiger

The part I don't understand is how people were apparently living beyond their means and continue to do so. Are these people just excellent at budgeting and can break exactly even each month or is something else going on. I look around and I know of some people living on a limited income but who always seem to be able to afford to dine out etc. Maye it's a different mentality to my own in that some people don't need savings etc..


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## Raul

deadtiger said:


> The part I don't understand is how people were apparently living beyond their means and continue to do so. Are these people just excellent at budgeting and can break exactly even each month or is something else going on. I look around and I know of some people living on a limited income but who always seem to be able to afford to dine out etc. Maye it's a different mentality to my own in that some people don't need savings etc..


 
This is a very interesting thread. This particular comment holds true to people very close to me. They are in huge financial difficulty through several property ventures yet you would not know it to look at their lifestyle. I've got it straight from the horses mouth about the scary level of their debt yet foreign holidays are still the norm as is the pub scene every weekend with ridiculously lavish gifts for all the kids at Christmas.

I'm only 26 so I've experienced nothing like this before. During the 80s, I was too young to care about the recession then  I think the big difference now though is people are used to living a certain way and just don't want to lower their standard of living just because "some person on the news" tells them to.

Like other people, I've been saving for a while expecting a crash/soft landing and around 2006, I actually starting wondering was the Celtic Tiger going to defy history and actually keep booming. I considered buying a house in 2006 which would have left me deep in negative equity now but thankfully I didn't go through with it.

I feel very sorry for people who did go ahead with such purchases but it is time that people really stood up and made the tough decisions. There are too many people with their head in the sand even still and things will only get worse for them if they don't bite the bullet now!


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## D8Lady

I think that it was not the way beyond means but the small, frequent little bit beyond means and it all just added up. 

From Dicken's David Copperfield: 

“Annual income twenty pounds, annual expenditure nineteen pounds nineteen shillings and six pence, result happiness. Annual income twenty pounds, annual expenditure twenty pounds and six pence, result misery.”


There were those who just went nuts of course.


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## Raskolnikov

deadtiger said:


> Looking around over the last few years, I've seen people with similar jobs buy the new cars, take a couple of foreign holidays a year etc. So, my question is.. were these people living way beyond their means? Are we doing something wrong in trying to live within our means and not take too many risks? What happens to these people now?


I know lots of people my age (20's) who are struggling with debt. But they didn't take multiple foreign holidays, buy new cars, shop at BT. The mortgage alone is enough to crush these people.

On the other hand, the only people who I see taking the foreign holidays and buying the new cars are the 40+. I guess they've built up so much equity in their homes, they thought it was a great idea to release it.


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## extopia

Yes, but that's because many older people had enough equity in their houses to "release" a lot of it and still be in "profit".

But we have to remember that "equity release" is a euphemism for borrowing, and houses are not ATMs.


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## my2leftfeet

extopia said:


> Yes, but that's because many older people had enough equity in their houses to "release" a lot of it and still be in "profit".
> 
> But we have to remember that "equity release" is a euphemism for borrowing, and houses are not ATMs.


 
Well put Extopia


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## Purple

Many older people don't have mortgages and childminding costs and didn't have the mindset to go mad on cheap credit. If they can afford to spend money now then good for them!


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## Perplexed

Most of us in the older bracket never did go mad. Most peoples standard of living increased greatly in recent years  and some of these improvements have become standard now. In the 80's when my kids were small, foreign holidays were unheard of. We rented houses within Ireland for a week if we were lucky. Dining out was reserved for special occasions. Kids clothes were passed around in the family between various cousins and I never owned more than one buggy or car seat ! Youngsters didn't know the difference then because their friends lived the same way.
I've always lived within my means and now that children are reared manage to indulge my passion for travel a bit.
Thank you Purple for standing up for us. I haven't taken out an equity release but now that college is finished & kids are self supporting & my mortgage is a pittance I have that extra money for myself !


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## Elphaba

There is no doubt people are living way beyond their means. I paid a visit to Mabs last year and she laughed when I told her we were living off 2 credit cards. She said everyone (in debt) was doing it, and moved on swiftly to next question. Thankfully
we are sorting out our debts and I will save for whatever I want in the future.
I did go to New York last year on a holiday of a lifetime. If I had been sensible I would not have gone, but it was the best holiday ever, I dont regret it, it's a fantastic memory.


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## charliemacck

GeneralZod said:


> When people such as David McWilliams and near the top Morgan Kelly pointed out that we were in a bubble and a crash rather than a "soft-landing" was likely there was no shortage of vested interests shouting them down. If you predict a bust for long enough eventually you'll be right and so on. Even this website had/has a policy of not discussing property prices. A large number of people didn't want to hear it.


 
Absolutely. David McWilliams was just on RTE Radio 1, and you could hear the anger in his voice at the fact that vested interests, who continually denied there could be any truth in his opinion, now pretend the problems we are facing could never have been foreseen. They fall back on the pathetic argument that because McWllams and co never gave a precise date and time for the crash, that they were just crying wolf. An argument similarly to an obese man, continually warned he will have a heart attack if he continues his habits, deciding that the doctor is wrong because he can't tell him when the heart attack will happen. There are many people, some prominent on his forum, who owe us and especially the young people of Ireland, an abject apology for directly contributing to the hysteria of the bubble.


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## MrMan

charliemacck said:


> Absolutely. David McWilliams was just on RTE Radio 1, and you could hear the anger in his voice at the fact that vested interests, who continually denied there could be any truth in his opinion, now pretend the problems we are facing could never have been foreseen. They fall back on the pathetic argument that because McWllams and co never gave a precise date and time for the crash, that they were just crying wolf. An argument similarly to an obese man, continually warned he will have a heart attack if he continues his habits, deciding that the doctor is wrong because he can't tell him when the heart attack will happen. There are many people, some prominent on his forum, who owe us and especially the young people of Ireland, an abject apology for directly contributing to the hysteria of the bubble.




An apology for making decisions for you? Maybe its time we started to grow up and accept that we can make bad and good decisions all by ourselves and we tend to hear what we want to hear. Right now McWilliams and co are preaching to the converted, bust is the new boom we are now sheepishly agreeing with every downward forecast as we did we every upward one.


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## charliemacck

> An apology for making decisions for you?


 
An apology for banning voices you didn't want to hear would be a start.


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## aetius

Was McWilliams banned ? (I never noticed!)


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## Bronte

charliemacck said:


> There are many people, some prominent on his forum, who owe us and especially the young people of Ireland, an abject apology for directly contributing to the hysteria of the bubble.


  Not attacking you but could you point out how this website contributed to the bubble and how this affected you?


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## MrMan

charliemacck said:


> An apology for banning voices you didn't want to hear would be a start.



So you do blame others for decisions that you make yourself? House price discussion was banned which stopped both sides of the argument but looking at threads you would never think it with the constant talk of dropping values. Anyone new to the site that only took the views of anonymous posters would definitely not buy a house, but surely people don't simply follow the advice of one forum when making serious financial commitments.


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## gillarosa

I think it goes to how an individual feels about both Banking and Debt, a great number of people inherently have what may be described as a healthy scepticism toward financial institutions, while they appreciate the role Banks have in facilitating their day to day life and the fundementals such as getting a roof over your head by getting a mortgage, they would have baulked at responding to unsolicited loan offers, and didn't see the credit card limit as a goal to aim toward, there would be a recognition of what the ultimate cost of that purchase would be. 

Another contributing issue is there has been an unprecedented focus throught the various media on lifestyle product and expenditure over the past 15 years internationally which was begun by the voyeurism of Robin Leech's 'Lifestyle of the Rich and Famous' which spawned many many primetime programmes about homes, amazing holiday locations, designer goods, God forbid even fantastic and exotic food you have to slave over your beautiful kitchen to produce yourself!! So its not surprising that many people took advantage of cheap, easily available credit to 'achieve' what was available as a consumerable item but was marketeted as lifestyle.


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## Mpsox

To me, the last few years have been about attitude. Personnaly speaking, I've never had a car loan or borrowed for a holiday. If I didn't have the money I didn't go. I've never bought a new car and have nearly always been able to save a few bob a month. That's my attitude and perhaps reflects how I was brought up. I remember my father saying once that when he built a new house on the farm in 1971 he borrowed £3000 from the ACC (no other bank would lend to small farmers at the time) and used to lie awake at night wondering how he would ever pay it back. Like the OP, I lived within my means

I compare that attitude with some other people I know, they seem to think that new cars, foreign holidays and all the mod cons were an entitlement and a right. I'll take one of my staff for example, whose husband lost his job in September. She earns €60kpa, so they have sufficient to cover the mortgage etc. Yet despite only one salary coming in, they still upgraded their telly for Christmas using Argos credit, she paid €200 for a new pair of Ugs and I dread to think what she owes on cards etc. If she looses her job (which she might), she will struggle big time to pay any of it back. At least I know if I loose my job, my only debt is the mortgage

People were not necessarily living beyond their means in the good times. They borrowed and had the capacity to pay it back. Trouble was they never thought a rainy day would arrive and now that it has, more and more of them are going to get into significant difficulty.


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## Bronte

Mpsox said:


> Yet despite only one salary coming in, they still upgraded their telly for Christmas using Argos credit


  Please tell me that old TV is broken ?


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## Padraigb

MrMan said:


> So you do blame others for decisions that you make yourself? House price discussion was banned which stopped both sides of the argument but looking at threads you would never think it with the constant talk of dropping values. Anyone new to the site that only took the views of anonymous posters would definitely not buy a house, but *surely people don't simply follow the advice of one forum when making serious financial commitments*.



Being relatively new here, I am in no position to pass judgement on what happened here 6 or 12 months ago. But I want to respond to the portion of MrMan's post that I have bolded.

A big problem is that many people are relatively naive in managing their affairs, and one confident voice in a forum such as this might be all that they need to encourage them to go one way or the other in making a decision. For that reason, I think we all share a responsibility to express our opinions in a restrained and balanced way, especially on questions that might influence individuals' decisions on important matters.

Some people here emphasise individual responsibility and, to a considerable extent, I agree that they have a point. But we should never lose sight of the fact that many people do not have the expertise to make the best decisions, and can be misguided by the careless advisor or the unscrupulous seller of products or services. As a society, and as individuals, I think we should do what we can to help people out of difficult situations, and we should not be too hasty to pass judgement on them.


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## MrMan

Its not passing judgement really though its highlighting the need for people to realise that in order to make an informed decision they should look for a variety of opinions and search out the facts rather. Many people on this and every forum have strong views on various topics but that doesn't make their views right or wrong.


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## TLC

I know my family is better off than we were a few years ago. What really struck me throughout the "boom times" was the way nearly everyone thought it was like some kind of reat thing to be paying way over the odds for houses - what was that all about?  Auctioneers & banks encouraged this totally irresponsible spending - but people really only have themselves to blame.  I'm not being smug, it's just how I see it.  Hopefully, my job will still be there throughout the coming year - but I'm not sure about it.  However, I can adapt to the changing circumstances as I lived through the 80's when believe me it was tough going - mortgage rates 14%.  We should all get tougher with our public representatives - take no bull**** from them.  It is up to them to get the economy back on track, they can't just keep blaming the public sector pay - that is a cop out - they employed them in the first place did they not?  They should first look at their own pay/expenses - Beverley Quinn a case in point! They must also reform drastically the banking sector - they played a major part in this recession.  Changes are inevitable - but lets make sure they are the right ones.


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## Padraigb

MrMan said:


> Its not passing judgement really though its highlighting the need for people to realise that in order to make an informed decision they should look for a variety of opinions and search out the facts rather. Many people on this and every forum have strong views on various topics but that doesn't make their views right or wrong.



I didn't mean to suggest that you were passing judgement on people who made bad decisions.

I was inviting people to remember that some people are not skilled in financial matters, and are also not skilled in filtering advice. If you express an opinion as if it were an uncontested fact, some people might believe that it is a fact. [A lot of people accepted that ever-rising property values was a fact.]


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## Don_08

I admit that I was - but was way ahead of the possy and lived totally beyond my means from 1996 to 2002. After graduation lived in the UK and easy credit was widely available and offered constantly. A young naive graduate after struggling through uni, and then working in the city of London thinking I had a huge salary - it was too tempting and I went mad. All I have to show for it is a damaged liver and photos from fancy holidays. Came back to Ireland in 2001 for a lower salary and still did not face up to the problem until repayments got too much. Was lucky in that I sat down with my friendly bank manager in 2002 and got one big loan ( €52k ) for 5 years and a strict budget. 

Had decent salary rises in the meantime and bought a house in early 2005 - again banks throwing huge offers at us, but lesson learnt and only took on a mortgage we could comfortably afford to pay off. Loan is now paid off and saving the €1k repayment plus another €1.5k a month. But those first 3 years of repayments were tough. 

It was just too easy to get credit during the boom - and I believe lots of people were tempted. The posters above seem to be the older generation - and lived through more sensble times so had a better attitude. But I do believe a lot of people in their 20s and 30s were living beyond their means - the question is how many have cottoned onto it and have reversed the problem. Time will tell I suppose.


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## Mpsox

Bronte said:


> Please tell me that old TV is broken ?


 
of course it wasn't, don't be silly!!!!!!!!


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## foghorn

MrMan said:


> So you do blame others for decisions that you make yourself?


 
I myself had enough self-confident to ignore the vested interests telling us that house prices would never drop and at most, we would experience a soft landing. 

But just as con-men use the justification that the only people that suffer from their exploits are idiots, so we see the vested interests now claims that it was the fault of the ordinary working people of this country. You know, despite the fact that an overwhelming proportion of the political establishment, business establishment and the media colluded in the myth that the property boom would never end badly. It's a pity that Al Gore has already used the title "An Inconvenient Truth", as that would be the perfect title for one on the Irish property bubble. 

Anyone who questioned the status quo was told by our previous Taoiseach to commit suicide, perhaps because in 2006, direct property tax revenues amounted to 17% of total tax revenues. This could exceed 30% when the indirect impact on income tax and VAT was included.

60% of the Irish Times advertising revenue came from property, hence the many page of property porn they published every week, with hardly any opposing voices. I'd had many letters published in the IT over the years, yet oddly not one of mine against the bubble was published.

The business editor of the Sunday Tribune was sacked for pointing out the hypocrisy of a property agent who was talking up the market while unable to sell his own house. 

But yes, you're right, MrMan; all these ordinary people were idiots to listen to the government, the media and bulls like you. They're getting everything they deserve, eh?


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## MrMan

> But just as con-men use the justification that the only people that suffer from their exploits are idiots, so we see the vested interests now claims that it was the fault of the ordinary working people of this country.


 
Hang on to your hysteria a moment and question why you think someone is at fault here? Why feel the need to blame anyone for a market crashing, did people give credit to 'vested interests' for the boom? My point all along is the blame game is fruitless and serves no point and that people do have to look at themselves and realise there own responsibilities. I can say that someone was foolish to purchase something that was overpriced but i don't condemn them for or feel happy that they are in distress. People now face huge debts from a multitude of differing borrowings not just houses, lets not forget the repayments on tvs etc were generally around 29%apr. 



> But yes, you're right, MrMan; all these ordinary people were idiots to listen to the government, the media and bulls like you. They're getting everything they deserve, eh?


 
Maybe thats why you letters weren't published because if they were anything like the above statement they would be considered misleading, sensationalist, and above all else complete nonsense. Try counting to ten before posting next time.


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## z104

I must say I lived beyond my means but do you know what, I had a great time, put myself through college ( no grant or financial help from family) saw half the world, bought a house, drive a new car. I have nice holidays. Life is good. Alot of memories and still young.

I have a pension and investment property that is making a profit so i'm not totally financially irrisponsible.

If I didn't borrow I wouldn't have a house or an investment property or a nice car or nice holiday or as many life memories and experiences. 

The main reason to have rainy day money is to cover you incase you lose your income. You can take out an insurance policy to cover this.

I'm not advocating getting so much into dept that you are totally stressed but there are some people here that consider debt a dirty word. It's not. Debt and borrowing has it's place as long as you can control it.


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## Dreamerb

Niallers said:


> Dept and borrowing has it's place as long as you can control it.


 
You're completely correct of course, but that "control" is the problem, isn't it? 

There seem to me to be many people who believe that if a bank or credit institution will offer them finance, they must be able to afford it - that the banks' willingness to provide a loan is in itself a guarantee that the loan is "affordable". And historically, that has not necessarily been an unreasonable assumption, especially in relation to mortgages where lending criteria erred if anything on the conservative side.

However, with the introduction of a lighter regulatory regime and in particular the loosening of mortgage lending criteria [from what? - about 2004 on?], a greater level of responsibility for the management of personal debt has effectively shifted from the banks to the customers - but largely unheralded, so people have not been made aware of and urged to assume that additional responsibility. How many times have any of us heard of people - friends, relations, even some of us - seeking mortgages on the criteria of the maximum amount they can get, without so much as a mention of the repayments? 

Of course, people who have got themselves into excessive levels of debt do themselves bear a substantial measure of responsibility - but it's not always as black and white as some would portray it, and I do think that aggressive competition in the supply of credit in a relatively low-regulation environment has often been to the detriment of the least financially informed [and sometimes arithmetically competent] customers. 

And that's ultimately bad for everyone. It's bad for the banks, which have a higher level of underperforming or risky loans - not that the domestic mortgage credit area is the biggest problem at the moment, far from it, but the risk level has certainly risen very substantially; it's bad for the people who have taken on unwise levels of debt in a generally deteriorating economic environment; it's bad for the wider economy since people are retrenching their finances to service debt and thus seriously reducing the level of consumer activity; it's bad for society, the taxpayer, the new unemployed...


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## Simeon

No, I don't think that most people were spending beyond their means. By that I mean, anymore so than people who use their cards as a way of spending money which (at the time) they do not have. By and large, people are responsible. Buying a house is an investment ........ investments can go both ways, but in the long term these people will be OK if they can survive the downturn. We are all puppets to market vagaries. On the other hand, I met a woman just after Christmas ......... 90 years old, several houses in good locations, free of mortgage for up over 30 years, as tight as a DA and worried about the price of home heating oil. So a bit of balance is called for. Optimism rather than pessimism is good for the soul (and the markets!). The sun will rise again tomorrow, the day after and the day after ad infinitum. Please no astronomers (amateur or otherwise) nitpicking the last line - you know what it means!


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## tallpaul

Niallers said:


> I must say I lived beyond my means but do you know what, I had a great time, put myself through college ( no grant or financial help from family) saw half the world, bought a house, drive a new car. I have nice holidays. Life is good. Alot of memories and still young.
> 
> If I didn't borrow I wouldn't have a house or an investment property or a nice car or nice holiday or as many life memories and experiences.


 
Does this not just sum up what was wrong with Ireland during the Celitc Tiger years or what? The shallowness and materialism of modern Ireland encapsulated in two paragraphs... shudder...


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## truthseeker

Dreamerb said:


> There seem to me to be many people who believe that if a bank or credit institution will offer them finance, they must be able to afford it - that the banks' willingness to provide a loan is in itself a guarantee that the loan is "affordable".


 
I couldnt agree more with this statement. I personally know one guy who remortgaged his home to buy a very expensive 4x4 (absolutely no need for one, its used to drop kiddie off to creche ina surburban area) and there was no talking to him about how bad an idea it was. His argument was 'the bank wouldnt let me do it if it was a bad idea and I couldnt afford it'. He truly believed (and probably still does) that the bank was some sort of independant finanical advisor and once they said yes it meant it was all ok.


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## Simeon

Truthseeker, your friend ought to have been sectioned prior to this. Did is wife go along with this? However, if his job is secure etc. ......... he should still be sectioned!


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## truthseeker

Simeon said:


> Truthseeker, your friend ought to have been sectioned prior to this. Did is wife go along with this? However, if his job is secure etc. ......... he should still be sectioned!


 
His wife was happy to go along with it - she is happy for the neighbours to see they are 'doing well'.

His job (own company) is now looking like its going down the tubes.
The wife has a secure(ish) job.

The whole car thing was all about image. Every time I see him he passes comment on my car (are you still driving that piece of junk, wow im surprised that thing still goes....etc....etc....). The difference between us is that I bought my car outright for a few grand over 4 years ago and it only costs me fuel/tax/insurance/services to run and I dont care what the neighbours think of what i drive!!! To him its important to be seen to be doing well so he would prefer a crazy debt (remortgaging a home to buy a vehicle!!!!), whereas I would prefer to get from A to B as cheaply as possible and debt free.

To this day he cannot see why it was a bad idea.


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## Guest116

tallpaul said:


> Does this not just sum up what was wrong with Ireland during the Celitc Tiger years or what? The shallowness and materialism of modern Ireland encapsulated in two paragraphs... shudder...


 
No I dont think it does. He is only saying he has enjoyed life and hasn't got himself into much debt. Its not shallow to do well.


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## casiopea

tallpaul said:


> Does this not just sum up what was wrong with Ireland during the Celitc Tiger years or what? The shallowness and materialism of modern Ireland encapsulated in two paragraphs... shudder...



Hmm, dont agree.  The poster sounds like he knows he squanders some cash but that some was wisely spent (putting himself through college) and that he enjoyed himself.  He doesnt sound like he's blaming anyone for debt he may currently have.  

Whats that phrase....from George Best I think....."I spent a lot of money on booze, girls and fast cars. The rest I just squandered."


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## Simeon

Truthseeker, how come he didn't get the 4x4 on the company? Perhaps things were not as good as they seemed even then. I'm with you on the old car scenario. Have not splashed out big money on four wheels since my 20s. But I have promised Mrs Simeon that as soon as I retire we'll buy something more modern. Strictly cash only!


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## MrMan

tallpaul said:


> Does this not just sum up what was wrong with Ireland during the Celitc Tiger years or what? The shallowness and materialism of modern Ireland encapsulated in two paragraphs... shudder...


 
It seemed to sum up someone who was content with their lot and happy about the decisions they made and the experiences they enjoyed, I can't find fault with that. People can be materialistic but so what if it brings some form of happiness to them its a good thing, you will be a long time dead so if the opportunity of happiness arrives take it. 

I grew up enjoying holidays in a friends caravan and loved it but that was because my horizons were not broadened by what the world has to offer, so going on foreign holidays something I thank the celtic tiger for.


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## truthseeker

Simeon said:


> Truthseeker, how come he didn't get the 4x4 on the company? Perhaps things were not as good as they seemed even then. I'm with you on the old car scenario. Have not splashed out big money on four wheels since my 20s. But I have promised Mrs Simeon that as soon as I retire we'll buy something more modern. Strictly cash only!


 
Already has one company vehicle, other partner said no I think.

My motto has always been to buy a car for cash and drive it til its worthless. Only been through 2 so far (still on second one!)


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## Bronte

truthseeker said:


> and I dont care what the neighbours think of what i drive!!!


 
And sometimes it's better to be driving a banger rather than let the neighbours think you are doing well.  I remember one landlord who had many properties, he used to collect rent in the worst car imaginable so the tenants wouldn't give him any grief.  

When you tell stories about people remortgaging for a car I shudder, it sends shivers down my spine.  Maybe he can live in the car if he loses the house.  They do in America.


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## Askar

I recall reading an article on The Motley Fool website. It compared hypothetical individuals of same age and income and considered roughly 10 year scenario between 20 and 30. One individual starting acquiring debt at 20 for 'things' eg holidays, stereo etc. while other individual saved to buy. At 30, the saver had the same number of 'things' and more cash to buy more 'things' than the borrower - I think the moral of the hypothetical story was that % of income paid on interest repayments is a larger opportunity cost then you might think; and has a bigger impact on your ability to purchase going forward then you might think.


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## Towger

truthseeker said:


> My motto has always been to buy a car for cash and drive it til its worthless.


 
Tut tut, you should drive it until it cost more to keep it on the road than replace it 



> I remember one landlord who had many properties, he used to collect rent in the worst car imaginable so the tenants wouldn't give him any grief.


 
I think I know him! Was/is his house a wreck as well?


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## truthseeker

Towger said:


> Tut tut, you should drive it until it cost more to keep it on the road than replace it


 
Well I suppose that is what I meant.
My other motto is only pay cash for a car - no loans, hp etc.... (and only buy a small car)


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## krissovo

I have been living to my credit limit for the majority of my working life.  I have gone from being a private in the military earning a very little amount and struggling to support my family to my existing role as solution architect for a major global outsourcing business where I earn a decent salary and a very decent 15 to 20% annual bonus and even bigger bonuses for a successful sale (one or two a year).  The bottom line line is that come the end of the month I still have roughly the same amount of cash in the bank now as when I was supporting my young family as a junior soldier.

The only differences between then and now is that my credit limit has dictated the home I live in, the car I drive, the size of TV, the holidays I take, meals out etc etc....

Take my car, in 1990 I drove a renault 21 estate that was on its last legs.  I now replace my BMW 5 series every two years.  For holidays, in 1990 I used to camp for two weeks in the summer in west Cork or Kerry and I now visit Dubai or the Caribbean for 10 days every February as well as decent holiday in the summer in a nice location so no Malaga, Majorca or other tacky resort.  My home has gone from a one bed apartment where I slept with my soon to be wife (now ex) and our baby at the end of the bed to a swanky appartment in the city with my girlfriend and I am building my dream 4 bed home and a nice piece of land with all mod cons mostly funded by my credit limit.

I could go on but my point is you have to live life for the moment not for planning hording funds (pension, property, shares, hedge fund etc etc) for any number of senarios that may or may not happen and sit on cash that could dissapear with any number of events like a bank crash or bad exchange rate and so on. 

Live life and enjouy it!  You only get one shot at living so make the most of it!  If the worst happens so be it but be possitive and you will continue to live.

Take care everyone, I wish you all the best during this tough period but IMO its mostly media hype that it causing this downturn and causing mostly needless worry!


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## chrisboy

krissovo said:


> I have been living to my credit limit for the majority of my working life.  I have gone from being a private in the military earning a very little amount and struggling to support my family to my existing role as solution architect for a major global outsourcing business where I earn a decent salary and a very decent 15 to 20% annual bonus and even bigger bonuses for a successful sale (one or two a year).  The bottom line line is that come the end of the month I still have roughly the same amount of cash in the bank now as when I was supporting my young family as a junior soldier.
> 
> The only differences between then and now is that my credit limit has dictated the home I live in, the car I drive, the size of TV, the holidays I take, meals out etc etc....
> 
> Take my car, in 1990 I drove a renault 21 estate that was on its last legs.  I now replace my BMW 5 series every two years.  For holidays, in 1990 I used to camp for two weeks in the summer in west Cork or Kerry and I now visit Dubai or the Caribbean for 10 days every February as well as decent holiday in the summer in a nice location so no Malaga, Majorca or other tacky resort.  My home has gone from a one bed apartment where I slept with my soon to be wife (now ex) and our baby at the end of the bed to a swanky appartment in the city with my girlfriend and I am building my dream 4 bed home and a nice piece of land with all mod cons mostly funded by my credit limit.
> 
> I could go on but my point is you have to live life for the moment not for planning hording funds (pension, property, shares, hedge fund etc etc) for any number of senarios that may or may not happen and sit on cash that could dissapear with any number of events like a bank crash or bad exchange rate and so on.
> 
> Live life and enjouy it!  You only get one shot at living so make the most of it!  If the worst happens so be it but be possitive and you will continue to live.
> 
> Take care everyone, I wish you all the best during this tough period but IMO its mostly media hype that it causing this downturn and causing mostly needless worry!




I've exactly the same outgoings as you except i've a couple of "investment" properties too.. Problem is i only earn25k a year and cant really afford it!!


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## foghorn

krissovo said:


> For holidays, in 1990 I used to camp for two weeks in the summer in west Cork or Kerry and I now visit Dubai or the Caribbean for 10 days every February as well as decent holiday in the summer in a nice location so no Malaga, Majorca or other tacky resort.


 
I can think of nowhere tackier than Dubai; the only difference is, people who go there think it's classy.


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## krissovo

Yes but in a year or two the price of property will be back to two years ago and on paper you will be loaded again.

Sell them then and focus on looking after no1 (yes you!) in the present and not for you in 10 years time by trying to be greedy and making a killing.

Best of luck to you Sir and I hope you can pull through this tough time.  Oh and I hope you secured the credit with a tracker rate.


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## krissovo

foghorn said:


> I can think of nowhere tackier than Dubai; the only difference is, people who go there think it's classy.



I actually quite agree with you but I prefer the tackiness in Dubai than the shell suit mentality of Santa Ponsa


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## spfeno

chrisboy said:


> I've exactly the same outgoings as you except i've a couple of "investment" properties too.. Problem is i only earn25k a year and cant really afford it!!


 

Classic


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## Bronte

Towger said:


> I think I know him! Was/is his house a wreck as well?


 No he lived in a very clean normal house, similar to those he rented but he had a Merc as well but he dressed like a farmer.  I imagine nowadays he's living in a mansion.  I learn a lot from observing him.  It's amazing what goes on around you that most people don't see.


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## Bronte

krissovo said:


> I actually quite agree with you but I prefer the tackiness in Dubai than the shell suit mentality of Santa Ponsa


 
What does that mean?  I thought it was bikini's/skimpy in Spain and it's the Jilbab/dishdash (excuse my spelling) in Dubai.


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## charliemacck

MrMan said:


> Hang on to your hysteria a moment and question why you think someone is at fault here? Why feel the need to blame anyone for a market crashing, did people give credit to 'vested interests' for the boom? My point all along is the blame game is fruitless and serves no point and that people do have to look at themselves and realise there own responsibilities.


 
You manage to contradict yourself within a single sentence - congratulations. Of course, you're indulging in the blame game too. It's just that, instead of putting blame on the vested interests - the media that pumped out property porn while barely managing any analysis of the property bubble, the economists with the various institutions who weren't brave enough to stand up against their employers, the government who didn't dare to anything that would interest with all the lovely property-related tax they were getting - you'd rather blame ordinary people who placed their trust in these institutions.



> People now face huge debts from a multitude of differing borrowings not just houses, lets not forget the repayments on tvs etc were generally around 29%apr.


 
Erm, the absolutely worst that can happen to a person who can't afford to make payments on their TV is that they get the TV repossessed. Hardly as life-shattering as having their house taken away from them.




> Maybe thats why you letters weren't published because if they were anything like the above statement they would be considered misleading, sensationalist, and above all else complete nonsense. Try counting to ten before posting next time.


 
Well, if you must know, it was a letter in response to a page-length adverts taken out by the vested interests in the Irish Times recently. I'll allow you and other to decide if it's misleading, sensationalist, or nonsense:

==============

As an erstwhile first-time buyer, I note that in a full-page advert in the Irish Times today, Marian Finnegan, Chief Economist of the Sherry FitzGerald Group, referred to a 30% drop in the price of second-hand Dublin residential properties as merely a "correction".

If this is a "correction", could Ms. Finnegan please tell us by what percentage house prices would have to drop before she considers it a property crash? 

=============

Of course, having reading some of your past articles here, you are of the opinion that there is a media conspiracy to be bearish. I'll leave it up to others to decide if that is nonsense.


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## MrMan

> You manage to contradict yourself within a single sentence - congratulations. Of course, you're indulging in the blame game too. It's just that, instead of putting blame on the vested interests - the media that pumped out property porn while barely managing any analysis of the property bubble, the economists with the various institutions who weren't brave enough to stand up against their employers, the government who didn't dare to anything that would interest with all the lovely property-related tax they were getting - you'd rather blame ordinary people who placed their trust in these institutions.


I guess it depends on how you wish to read a post, if by insinuating I'm blaming home buyers for their predicament then again you are wrong. By stating that people need to realise their own responsiblities means exactly that, they bought a house to live in and the value will go up and down and the cost of repayments will do the same, that is the case now and before. You are starting to sound like an opposition politician defending the ordinary man while all your doing is patronising.



> Erm, the absolutely worst that can happen to a person who can't afford to make payments on their TV is that they get the TV repossessed. Hardly as life-shattering as having their house taken away from them.


 
Thr point i was making here is that people got into a trend of easy borrowing and this can be seen in the money makeovers by the level of credit card debt. It is these high interest borrowings on top of mortgages that are crucifying some people. Property VI's can't be blamed for all the debt that people are facing and again who is it that makes the decision to take it on?



> Well, if you must know, it was a letter in response to a page-length adverts taken out by the vested interests in the Irish Times recently. I'll allow you and other to decide if it's misleading, sensationalist, or nonsense:


 
It was well written unlike your previous post.



> Of course, having reading some of your past articles here, you are of the opinion that there is a media conspiracy to be bearish. I'll leave it up to others to decide if that is nonsense.


 
I don't remember mentioning the word conspiracy and we are in the middle of tough times, i don't have a definitive outlook on any market and I do accept counter arguments when they make sense.


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## The Pines

krissovo said:


> Yes but in a year or two the price of property will be back to two years ago and on paper you will be loaded again.


 
You think that Irish property prices will reach mid-2006 levels again in a year or two???

Most people think they have at least another year or two of _falling prices_, I'd like to know your rationale behind that comment.


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## foghorn

The Pines said:


> You think that Irish property prices will reach mid-2006 levels again in a year or two???
> 
> Most people think they have at least another year or two of _falling prices_, I'd like to know your rationale behind that comment.


 
Even more bizarre when you consider that, if prices have dropped 30%, they will have to rise 42% - 20% over 2 years (check the maths, folks) - to get back to their original figure. 

If there is anyone who thinks that house prices are going to rise 20% a year in the current climate, when at the peak of the Celtic Tiger it was at most 8%, I have a bridge in Brooklyn I hope they will buy.


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## Padraigb

foghorn said:


> ...I have a bridge in Brooklyn I hope they will buy.



Have you reduced the asking price?

Do you do home deliveries?


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## foghorn

Padraigb said:


> Have you reduced the asking price?


 
Of course not. Instead, I've hired Liz O'Kane to do it up for me.


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## cancan

krissovo said:


> I have been living to my credit limit for the majority of my working life. I have gone from being a private in the military earning a very little amount and struggling to support my family to my existing role as solution architect for a major global outsourcing business where I earn a decent salary and a very decent 15 to 20% annual bonus and even bigger bonuses for a successful sale (one or two a year). The bottom line line is that come the end of the month I still have roughly the same amount of cash in the bank now as when I was supporting my young family as a junior soldier.
> 
> The only differences between then and now is that my credit limit has dictated the home I live in, the car I drive, the size of TV, the holidays I take, meals out etc etc....
> 
> Take my car, in 1990 I drove a renault 21 estate that was on its last legs. I now replace my BMW 5 series every two years. For holidays, in 1990 I used to camp for two weeks in the summer in west Cork or Kerry and I now visit Dubai or the Caribbean for 10 days every February as well as decent holiday in the summer in a nice location so no Malaga, Majorca or other tacky resort. My home has gone from a one bed apartment where I slept with my soon to be wife (now ex) and our baby at the end of the bed to a swanky appartment in the city with my girlfriend and I am building my dream 4 bed home and a nice piece of land with all mod cons mostly funded by my credit limit.
> 
> I could go on but my point is you have to live life for the moment not for planning hording funds (pension, property, shares, hedge fund etc etc) for any number of senarios that may or may not happen and sit on cash that could dissapear with any number of events like a bank crash or bad exchange rate and so on.
> 
> Live life and enjouy it! You only get one shot at living so make the most of it! If the worst happens so be it but be possitive and you will continue to live.
> 
> Take care everyone, I wish you all the best during this tough period but IMO its mostly media hype that it causing this downturn and causing mostly needless worry!


 
I am assuming this a pi^^take?

Worryingly, it appears not to be. Poster boy for the tiger? Gordon Gekko's irish cousin, or walter mitty...



> _I now replace my BMW 5 series every two years_


*V’s*


> I have not had the pleasure of the 5 series but I had a similar 3…


 


> _I now visit Dubai or the Caribbean for 10 days every February.............but I prefer the tackiness in Dubai _


*V’s*


> Did this for 6 months and could not stand Dubai any longer.


 


> _I have been living to my credit limit_


*v's*


> I ripped up my credit card last year


 


> _I could go on but my point is you have to live life for the moment not for planning hording funds (pension, property, shares, hedge fund etc etc)_


*V’s*


> The stock market is worth investing in but there are short term investments and long term…I have invested €23k in a similar scheme….._About 3 months ago I bought £20k of Yellgroup shares_


 


> its mostly media hype that it causing this downturn and causing mostly needless worry!


*V's*


> *when do you think the credit crunch will end* ........ _but I fear for Ireland that it could be nearer 2020_


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## colm5

charliemacck said:


> Absolutely. David McWilliams was just on RTE Radio 1, and you could hear the anger in his voice at the fact that vested interests, who continually denied there could be any truth in his opinion, now pretend the problems we are facing could never have been foreseen. They fall back on the pathetic argument that because McWllams and co never gave a precise date and time for the crash, that they were just crying wolf. An argument similarly to an obese man, continually warned he will have a heart attack if he continues his habits, deciding that the doctor is wrong because he can't tell him when the heart attack will happen. There are many people, some prominent on his forum, who owe us and especially the young people of Ireland, an abject apology for directly contributing to the hysteria of the bubble.


 

This is spot on..The people who called it and are still calling it are been targeted as crying wolf and lucky. Morgan Kelly was laughed at (and is still being laughed at..) but he is bearing fruit and I have no doubt he will continue too..


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## csirl

> solution architect for a major global outsourcing business


 
This sounds like one of those bs jobs that only exist during boom times


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## Conan

Certain economists now seem to be trying to outdo each other is predicting how bad its going to get. Just as other economists overinflated the upside when things were going well, it now seems to be a competition as to who can predict the greatest downturn (David McWilliams, Morgan Kelly, Goerge Glee etc). 
However I think we should be careful that certain economists in glasshouses dont end up making things even worse in their rush to say "I told you so". 
It certainly is the case that the actions of a few (at least) have contributed to or exacerbated the Celtic Collapse. If they (e.g. Anglo) cannot be prosecuted for fraud/misleading investors etc, then their actions have certainly damaged the State so perhaps we can consider a case for treason. 
Certain economists say that we cannot talk ourselves out of a recession but yet accuse others of talking ourselves into a false boom. Perhaps in the rush to garner headlines we could all adopt a somewhat more patriotic stance. We may not be able to talk ourselves out of a recession but equally can we stop the headlong effort to talk ourselves into a depression.  
If Morgan Kelly and Joe Higgins have their way we will become the European equivalent of Cuba. Oh how they think their time has come. If we have to have Marx, I vote for Groucho.


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## Eblanoid

csirl said:


> This sounds like one of those bs jobs that only exist during boom times



Pah, solutions architects are so passé!  It's the architectural solvers who earn the big bucks now!


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## charliemacck

Conan said:


> However I think we should be careful that certain economists in glasshouses dont end up making things even worse in their rush to say "I told you so".


 
Ah right. Yet another person who think we talked ourselves into a recession. 



> Certain economists say that we cannot talk ourselves out of a recession but yet accuse others of talking ourselves into a false boom. Perhaps in the rush to garner headlines we could all adopt a somewhat more patriotic stance.


 
Maybe Bertie had the right idea, and all critics of the government should commit suicide.



> If Morgan Kelly and Joe Higgins have their way we will become the European equivalent of Cuba.


 
Because of course, anyone who predicted the demise of the property bubble must have been a communist. 

God, if this ****e the best that the bulls can come up with?


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## MrMan

> Ah right. Yet another person who think we talked ourselves into a recession.


 
Well apparently we were talked into a bubble so why not the reverse?


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## skatter

I had a conversation abot ten years ago with an accountant friend who works for the central bank...coming from Canada I explained to him that the 'American way' was to start young and build a credit rating using credit cards (given out at University!!)...making monthly payments of the minimum payment plus a bit but not paying off the whole as to get a good credit rating you need also to allow the credit provider to make money through interest...He explained that in Ireland you need to pay off the card each month to attain the good rating....It would seem to me that there was a radical change in the Irish psychi with regard to credit management. Did we start thinking the American way? I believe that many people thought that releasing (expected) capital on property would cross the t's and dot the i's....the thinking was that the boom wouldn't end and that money was cheap (low interest) and equity would prevail over any overspend....I know of a family with a combined income of 60k who bought a house in 1987 for 67k and have a mortgage today of 450k...their home was valued at 1.2 million two years ago but it wouldnt sell today. They grew their mortgage borrowing on 'equity' and have lived well in the past ten years with new cars, kids in private school and two vacations per year...now they are in trouble because a 450k mortgage with a 60k income is crushing...BUT the banks did let them get this far and although they were irresponsible the banks should not have allowed them such freedom with 'supposed' equity.


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## CJPC

As someone who bought at pretty close to the peak of the property bubble (Sept 06), I can now say I was living beyond my means.

Wasn't long into my first job then and thankfully still working away, so the mortgage is being paid, but it's fairly hefty to say the least. And I just got a pay cut.

The real killer is seeing what I could get for the same money now and, as well all know now, the are prices are going to keep tumbling down for a while. I won't darken daft's door for a while.. too painful!

I don't blame banks or auctioneers etc for what I did. I spent a while kicking myself, but have given up now, what's the point, just going to do my best with the situation as it stands.

My gripe is with the revisionists (and there's quite a few on here too) who think everyone in my position, while I'll admit I made a personal mistake, was some crazy, property obsessed maniac pushing this country over a cliff edge.

It's amazing (in hindsight) how many people reckon they saw it coming! Fair play to David McWilliams and a few other economists/commentators, they were right, took the flak from the cheerleaders (who outnumbered them about 1000 to 1 at a conservative estimate) and stuck to their guns.

But a lot of those same cheerleaders who have belatedly joined a now massive chorus are wrecking my head claiming that it was all so obvious, it was crazy, what were you doing?!! etc ad infinitum

Yes, the severity of the situation should be laid bare, but these particular idiots still can't see it, have nothing constructive to say whatsoever and have just hopped onto the other bandwagon.

Leaving that aside, the big trick for me and many others now will be coping with the old (massive mortgage) in the 'new economic reality'.


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