People and debt

Do ya know who annoys me the most on this topic.....

That bl**dy Matt Cooper on Today FM.

He seems to think the people of this country were entirely blameless for their situations... that it was all the big bad bankers... that 100% and interest only mortgages were "miss sold" and therefore the holders should be able to walk away from them... that pre-approved credit was an immoral method of ensnaring the poor borrowers into even more debt... that the property developers and bankers are all evil shepherds corrupting the easily lead flock of plebs........

The guy is an idiot.

In the one breath he talks of Ireland being a knowledge economy and a center for educational excellence and in the next he portrays the country as a bunch of mislead naives and innocents....

You can't have it both ways....

Orka is right however, it wasn't everyone who lost the run of themselves. Some borrowed well within their means, weren't swayed by avarice and actually paid heed to the wider economic environment... but we all had it good. This was a low tax nation with widespread employment and low interest rates and we all enjoyed the benefits of that. Even if you only borrowed within your means (I was offered over 100k more than I asked for by a broker who suggested some 'fudged' earnings figures) you still enjoyed those borrowings at a low rate of interest.

I am fully of the opinion that if you borrowed it, you owe it, and if you can't afford it, tough luck... you shouldn't have been so bloody stupid!!!

I've always believed that a mans character is there regardless of his wealth, so if he has no money and is generally regarded as a pig, when he makes his money and becomes wealthy he is still a pig just a rich one.

So there were people who got all uppity about buying investments and releasing equity etc and some did/do look down on those that don't take risks for cash rewards and on those that rent and obviously some posters here took the brunt of that attitude from the type of people they encountered personally and professionally.

Yet the role reversal shows the same character trait from some posters i.e Now they want to portray their ex friends/peers as idiots and 'rub their noses in it'. They want to bask in their superior intellect and the fact that they showed sense and control to stay on a steady path well within their means.

Either way it's not nice to dwell on how others operate and it's just a fact of life that we all take a different slant on things and none of us are always right.

I do agree with a certain attitude being taken against credit card debt and hearing people moaning about debt when they are living a certain lifestyle on credit union loans and credit cards does irritate me.

I don't fully agree with this attitude though towards people who bought in 2005/2006 and took out big mortgages. I think it's easy to look at the situation in hindsight, and especially as an older person, and say Ann or Barry was a fool to have taken out such a mortgage for whatever property. But as an older person you lived through the eighties recession.

I am in the second half of my twenties and a good number of friends bought property in 2006 and now are in negative equity. They felt it was within their means to do so, property prices were rising, they wanted to get a foot on the ladder, their incomes were good, taxes were low and they could afford the repayments and the banks told them they could afford a repayment of x on a salary of y. They saved for furniture, there was no credit card debt and they weren't trying to live a certain lifestyle.

They are in negative equite now. I'm not but I see it as, there but for the grace of god I would also be in negative equity. We started looking for a house in 2006, we didn't find somewhere suitable, we then heeded advice to wait. But I, as an educated person, who does not have any other debt and saves every week, could very easily be in a house with huge negative equity now. And I think it's very easy to judge those that did buy in 2006. It is a different story with investment properties, I lose sympathy for those. But I do have sympathy for those people in their 20s and 30s who decided to settle down and buy a home in 05/06, have now lost jobs or are on reduced income and are finding in t hard to meet mortgage repayments.

MrMan said:

Yet the role reversal shows the same character trait from some posters i.e Now they want to portray their ex friends/peers as idiots and 'rub their noses in it'. They want to bask in their superior intellect and the fact that they showed sense and control to stay on a steady path well within their means.

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Oh I really hope you don't think I spend my time bleating how clever I am in people's faces, that's not it at all The couple I was referring to were particularly nasty, humiliating and laughing at us, and ultimately snubbing us.

The only time I ever act a little smug ( sorry I know it's not a good trait but I can't help myself!) is when people are moaning about their large debts and how they shouldn't have to pay it back etc...It's lovely to be able to say "oh it's great not having thousands of euro of debt hanging over us"

Interestingly, when we went on holiday to New York last year we had some of the same people making sneery comments at us along the lines of "no recession for you I see" despite the fact we hadn't been away for 4 years and had saved hard to pay for the trip.

Can't win either way.

great wisdom in the line, attributed to Warren Buffet if I'm not misstaken:

"When people get greedy be fearful, and when people get fearful be greedy".

So the first part would keep you something wasnt right with the boom, and I've no doubt but that those with wads of spare cash or cojones of steel will make a killing at the moment.

Also enthralling is to review the academic overview of a bubble - I came across it a few years back studying for QFA's - just as things were turning bad. Basically it so precisely described the property bubble it was uncanny and begged the question who more economic commentators couldnt forsee the crash. Slow start, more participate, herd mentality develops, "hubris" - feeling that its a cert & you cant lose, smart guys exit, the bulk left holding the baby.

I agree with most posters but i think the hardest pill for people to swallow is the fact that there are people in this country who owe millions and are not being held accountable. Why shouldn't everyone have to take responsibility for their mistakes debts or otherwise? I think this is why people who only have a few thousand worth of debts get bitter and angry about their relatively small debts.

I'm most angry at developers, banks, anglo in particular, i'm not angry at the people of this country who bought and spent to enjoy their lives. Some did this in more excessive terms than others.

Double post, apologies

pixiebean22 said:

I agree with most posters but i think the hardest pill for people to swallow is the fact that there are people in this country who owe millions and are not being held accountable.

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But we can't live our lives according to what certain people are or aren't getting away with, we each have to do what's right with no excuses.

It's disgraceful if people are getting away with murder but we don't solve this by using it as some excuse to weasel out of our own responsibilities.

Every time some measure is taken by government to save €50m some smart ass from the opposition brings up the fact that this was spent on some rubbish like e-voting. Yeah, we know that we have wasted hunderds of millions in all kinds of half assed ways, but that has zilch to do with how we now save €50m.

We're looking to save €3bn and the best the opposition can do is to dwell up past wastage without a single constructive idea for the here and now. Same principle for someone struggling with bills, if you used the service expect to pay for it and leave aside unrelated arguments about Seanie Fitz not paying his loans.

Betsy Og said:

great wisdom in the line, attributed to Warren Buffet if I'm not misstaken:

"When people get greedy be fearful, and when people get fearful be greedy".

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"I can calculate the motions of heavenly bodies, but not the madness of people"

attributed to a very famous English physicist in or around the period of the South Sea Bubble during the early 18th century.

The more things change, the more they stay the same!

I think there are 2 separate arguments here.

1) Those who are in debt due to being aspirational in wanting to own a home. Nothing really wrong with that imho, as long as people didn't fudge their earnings to get silly mortgages

2) Those who went on the lash with multiple credit cards, running up debt which they ignored or felt they would never come back to haunt them. This is just plain stupid and people have to take responsibility for that.

+1 RMCF, you put very succinctly what I was trying to get at in my long winded post!!

Yet, I've been hearing a lot of the following on the radio/Tv and reading it newspapers etc;

We need people to get out and spend spend spend...!!

How do we encourage people to spend...!!

People are afraid to spend as they are nervous about the upcoming budget,so we need to ease those fears and get them out spending!!!
Go figure...

thedaras said:

We need people to get out and spend spend spend...!!

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There are plenty of people with money on deposit who will not spend it because they are afraid times are about to become harder yet and they will need that money to supplement reduced income.

In theory some people could pay off their negative equity - but they want to keep that cushion.

My point is ,The Government are telling us to go out and spend..
However IMHO, those who have money on deposit are probably doing the right thing by holding onto what they have.
I wont be spending,.as its obvious that you have to hold onto any money you have now,due to not knowing when the government will come along and make a decision to bail out joe bloggs.
So although they want us to spend they have done everything to prove we should hold onto anything we have..just in case..

Just to add to that, I could and I was thinking of for example;

Buying a sofa in November;
Taking a few days away over the October bank holiday in Ireland with the kids.
But there is no way that I will do any of the above and lots more now,as I don't know how much our income will go down at the next budget,and no matter how much or how little it does go down,we have next years budget to look forward to ..so they can tell us to spend all they want but for most people we have learned that we cannot be sure what this government will come up with next.

This in effect will lead to more job losses,once again the result of the government and its decision to bail out the banks ..and the governments lack of leadership and vision and inability to make the hard calls..

thedaras said:

My point is ,The Government are telling us to go out and spend...

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thedaras - I was agreeing with your point - you are absolutely right in what you say - I personally would be afraid to get out and spend given the cuts Ive taken in the past 2 years. I am in negative equity - but I can make my repayments and I do not have any other debt, but my household income is down to 33% of what it was due to my OH out of work and my own salary being subjected to levies and paycuts. Spending for me at this point would be madness - I could easily end up with no savings and less of an income (I could be facing another pay cut this year). The interest rates can only go up so my mortgage repayments are likely to rise leaving me with even less disposable income, add to this how hard the government are going to hit me in the budget - its a no brainer to sit on whatever cash I have - and even that might not be safe.

A lot of middle income PAYE workers are in "only spend money if you absolutely have to" mode right now. They dont know whats coming in the budget, but you can be almost certain that they'll get the brunt of it and end up paying multiples more that everyone else.

Uncertainty is more or less the worst thing. Even if we knew, for a fact, how bad it was going to be a few simple calculations would tell us if we could afford the sofa/holiday etc. (and chances are many people will still be able), but its not knowing that puts the brakes on everything.

I think a good few people are in the "famine or a feast" category, basically if you keep your fairly well paid job then all will be grand, particularly if you're not up to the limit on debt and at the mercy of an interest rate hike, but for most of us (well private sector anyway) theres no such job guarantees dished out.

So do you anticipate a job loss, pay down debt and save for that imminent event (generally my default setting) or do you live prudently, but not excessively so, in the expectation of remaining in a job. Hard to know if having saved like crazy will make a huge difference in the event of a job loss (depends on the figures I suppose) but at least your lifestyle will require less correction.

Slightly off topic, but what got on my nerves was Nicola Byrne from 11890 on Hook last night.

She was going on about people being negative about what is going on. She said nothing has changed for her in the sense that she still does the same things, picks her kids up, goes to work, washes clothes, that effectively nothing major has changed in her life - except now it's under the shadow of an recession.

She said people should take a step back and realise that not much has changed in the greater scheme of things.

Which is all well and good a on a large salary, but what about the people unemployed? What about those that are teetering on the brink of major financial trouble with the upcoming budgets?

Rant Over.

Locke said:

She said nothing has changed for her in the sense that she still does the same things, picks her kids up, goes to work, washes clothes, that effectively nothing major has changed in her life - except now it's under the shadow of an recession.

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Well she is the lucky one - try losing one or both household incomes, taking paycuts, needing to move out of a 1 bed apartment because of a child on the way but being stuck in negative equity.

And none of the above has anything to do with previous mad spending on easy credit.