Cameron to urge the public "Pay off your debts"

Vonhelmet · 5 Oct 2011 at 12:13

OldCoals said:
If the interest rate went up to 4% and people struggle with their mortgage payments say, you have to ask, should they have taken out the mortgage?

You can't expect people to do that sort of forward planning!

I'm about 18 months into a 10 year fixed rate mortgage, paying 5.49%. I've been told numerous times by people on here that I'm a fool, and that if I had gone for a tracker at 2.49% or whatever, I could make the same payments, making large overpayments, or invest the difference, or whatever, and come out better than paying 5.49%. Now, that's all well and good, but has every idiot on the street who's taken out a LOL 2.49% OMG SO LOW! mortgage on a crappy house in the arse end of God knows where done that? I very much doubt it.

Anyway. For my part, I value predictable outgoings over the risk of interest rates shooting up, and I'm still not convinced they won't shoot up at some point soon.

edscdk · 5 Oct 2011 at 12:16

OldCoals said:
If the interest rate went up to 4% and people struggle with their mortgage payments say, you have to ask, should they have taken out the mortgage?
.

most poeple would have obtained their mortgages before the rate was dropped so they were used to paying 5 - 6%

the people who took out morgages after the drop are likley on 2/3% anyway.

the smart people will take advantage of the drop any keep paying off the same.

the stupid people (like my partners daughter) thought WOOT I was paying 1000 a month I now only pay £600 a month I'll get a car on finance that costs me £400 a month...

Cosimo · 5 Oct 2011 at 12:20

Vonhelmet said:
Thanks for the words of encouragement, Big Dave - I'll press on with my mortgage overpayments, yeah?

Why not. You knew what you were getting yourself into, interest rates are low. Go, go go.....

Freakbro · 5 Oct 2011 at 12:23

Shelster said:
Was just wondering, what is the National Debt on Credit Cards?

The national debt on unsecured loans (c/cards/store cards/overdrafts) is ~ £210 Billion

The amount on mortgages is ~ £1,250 Billion (or £1.25 Trillion)

About 52% of households hold unsecured loans, so they average out at ~£15,500 each, or if you spread it out between all households then it's ~£8,000 / household.

Include mortgages in the overall figure and it's ~ £57,000 per household.

Vonhelmet · 5 Oct 2011 at 12:26

Freakbro said:
About 52% of households hold unsecured loans, so they average out at ~£15,500 each, or if you spread it out between all households then it's ~£8,000 / household.

That's quite horrifying.

Makes me feel better about having £200 on my credit card that'll get paid off next month, mind you.

Freakbro said:
Include mortgages in the overall figure and it's ~ £57,000 per household.

OK, so I'm a fair way above that one.

Freakbro · 5 Oct 2011 at 12:32

Bear in mind this is predicted to rise to ~£77,000 / household by 2015 with the deficit reduction strategy the Government has.

Which is why I find Camerons statement a little incongruous to the predictions they are making.

But hey, lets not let a good buzz word headline and villification of "those people" (whoever they are) get in the way of facts.

But tbh, their skill at forecasting what the figures will be haven't stayed on track for 6 months, so god knows what the actual state things will be in by 2015. You never know, we may take the sensible approach and reduce our personsal debt! But...I'm not holding my breath...Christmas is coming soon!

Like you I have been overpaying on my mortgage and there was a slight downturn in overall debt in 2009/10 due to mortgage repayments (and more realistically, lack of new mortgages), but it is on the rise again.

the stupid people (like my partners daughter) thought WOOT I was paying 1000 a month I now only pay £600 a month I'll get a car on finance that costs me £400 a month...

Unfortunately there are too many people like this, the same ones who thought "WOOT I'm rich" when their house price doubled, then withdrew the equity and *****d it up the wall on cars/holidays/ipads....

Gaygle · 5 Oct 2011 at 12:33

Am i missing something? Why is DC getting flak for trying to persuade people to pay off their personal debts. I mean, isn't that good advice? We have one of the highest consumer debt levels in the world - and from seeing how much people spend on going on a shopping trip or whatever - i'm not bloody surprised. A large percentage of the people i work with are currently paying off irresponsible debt run up by impulse spending on credit cards, store cards, ridiculous car finance, or are constantly in their overdraft. This means that they can't afford to pay into pensions, or pay off their mortgage quicker whilst the interest rates are low or even, heaven forbid, SAVE some money for when they actually do need it. :rolleyes:

I think DC has given some good advice and i think if a lot of households listened to it, they wouldn't have as many problems day to day as they do.

Danthus · 5 Oct 2011 at 12:35

Gaygle said:
Am i missing something? Why is DC getting flak for trying to persuade people to pay off their personal debts. I mean, isn't that good advice? We have one of the highest consumer debt levels in the world - and from seeing how much people spend on going on a shopping trip or whatever - i'm not bloody surprised. A large percentage of the people i work with are currently paying off irresponsible debt run up by impulse spending on credit cards. This means that they can't afford to pay into pensions, or pay off their mortgage quicker whilst the interest rates are low.

I think DC has given some good advice.

Because he needs people to spend.

Destination · 5 Oct 2011 at 12:37

Vonhelmet said:
You can't expect people to do that sort of forward planning!

I'm about 18 months into a 10 year fixed rate mortgage, paying 5.49%. I've been told numerous times by people on here that I'm a fool, and that if I had gone for a tracker at 2.49% or whatever, I could make the same payments, making large overpayments, or invest the difference, or whatever, and come out better than paying 5.49%. Now, that's all well and good, but has every idiot on the street who's taken out a LOL 2.49% OMG SO LOW! mortgage on a crappy house in the arse end of God knows where done that? I very much doubt it.

Anyway. For my part, I value predictable outgoings over the risk of interest rates shooting up, and I'm still not convinced they won't shoot up at some point soon.

If they shoot up soon, so will the number of reprocessions, and in the process, it'll help stagnate or preferably crash the housinf market cost of property.
Be time to buy a nice big place then, dont overly care when it happens, but a good proper dun with lots of reprocessions would be a way forward.

Gaygle · 5 Oct 2011 at 12:39

OldCoals said:
Because he needs people to spend.

To spend responsibly, sure. But by spending willy nilly and living beyond their means, this creates an even bigger problem.

As i understand it, if people are spending lots of money and can't pay it off, they default, which kills their credit rating, meaning that getting things like mortgages is much more difficult, which means the housing market goes stagnant and then you have all the problems associated with that which i couldn't even begin to detail.

EDIT: i also assume that he wants people to pay off their debts as much as possible so that they can put the interest rate up, without it hurting as many people, in order to curb inflation?

[Damien] · 5 Oct 2011 at 12:41

sigma said:
And pay off any debt if possible!

That's my plan. Got 4.5ish grand left to pay (down from 6) and am currently chucking about £500/mth at it. Screw the economy.

Danthus · 5 Oct 2011 at 12:42

Gaygle said:
To spend responsibly, sure. But by spending willy nilly and living beyond their means, this creates an even bigger problem.

As i understand it, if people are spending lots of money and can't pay it off, they default, which kills their credit rating, meaning that getting things like mortgages is much more difficult, which means the housing market goes stagnant and then you have all the problems associated with that which i couldn't even begin to detail.

EDIT: i also assume that he wants people to pay off their debts as much as possible so that they can put the interest rate up, without it hurting as many people, in order to curb inflation?

Yes but in the short term spending "helps" growth.

SKILL · 5 Oct 2011 at 12:42

Capn' $qu!ff said:
They'd have assumed the bank did one of their so called "Credit Checks"(which we all know they either a. don't do or b. have sevear problems with the way in which these checks are carried out otherwise they wouldn't have handed so many loans out) to see if they could afford it or they were foolish ***s who knew they couldn't pay it back but took the money anyway because they believe they'll get away with it blaming the bank for giving them a loan the bank should've known they wouldn't be able to pay off.

Basically the banks were irresposible for pushing these loans the people in serious debt were irresponsible for applying for these loans they wouldn't be able to pay and the govt. was irresponsible for allowing this to go on!

So the people taking the loans were too stupid to determine whether they could afford something, expected the banks to do that work themselves, and of course it's the banks fault that they didn't?

That's just idiotic, yes the banks were stupid to lend like they did, but the people were equally stupid to take it without questioning whether they could afford it, both parties equally to blame, if not more on the person taking out the loan.

Gaygle said:
Am i missing something? Why is DC getting flak for trying to persuade people to pay off their personal debts. I mean, isn't that good advice? We have one of the highest consumer debt levels in the world - and from seeing how much people spend on going on a shopping trip or whatever - i'm not bloody surprised. A large percentage of the people i work with are currently paying off irresponsible debt run up by impulse spending on credit cards, store cards, ridiculous car finance, or are constantly in their overdraft. This means that they can't afford to pay into pensions, or pay off their mortgage quicker whilst the interest rates are low or even, heaven forbid, SAVE some money for when they actually do need it.

I think DC has given some good advice and i think if a lot of households listened to it, they wouldn't have as many problems day to day as they do.

It's good advice on an individual basis, bad for the economy though, the economy needs to grow to sort out the mess we're in, paying off debts will stagnate/contract the economy...

Gaygle · 5 Oct 2011 at 12:44

OldCoals said:
Yes but in the short term spending "helps" growth.

I'm not an economist at all, but yes i'm sure it does. But nobody has got any money to spend at the moment. That's the problem. If many people "spent" now they'd default on payments and cause other massive problems like i mentioned above.

I imagine that they want to raise the interest rate next year to keep inflation under wraps and they want to encourage people to reduce as much personal debt as much as possible so that they aren't affected as much by this.

Gaygle · 5 Oct 2011 at 12:45

SKILL said:
It's good advice on an individual basis, bad for the economy though, the economy needs to grow to sort out the mess we're in, paying off debts will stagnate/contract the economy...

True.

This whole economy thing is so finely balanced and with so many variables and is making my head hurt

Danthus · 5 Oct 2011 at 12:46

And that is why debt fuelled growth is insane!

It is akin to taking out a new credit card, to pay off an existing credit card.

Freakbro · 5 Oct 2011 at 12:47

Gaygle said:
True.

This whole economy thing is so finely balanced and with so many variables and is making my head hurt

Throw in the fact that money is only created by debt, and to service that debt you have to create more money, by creating more debt....and you will have to go and lay down in a dark quiet room to recover

Bear · 5 Oct 2011 at 12:48

OldCoals said:
Yes but in the short term spending "helps" growth.

Of course it does but the country as a whole and personally (at least for some) are in a debt crisis. Spending more money that you dont have is just plain stupid.

Danthus · 5 Oct 2011 at 12:50

Apparently tonight there will be a Party Political Broadcast by the Conservatives asking us to give more money to the Horn of Africa, on top of the existing foreign aid budget.

Does the left hand know what the right hand is doing?

Cameron asks us to pay off debts yet this evening we will be asked to donated money to foreign aid projects.

Danthus · 5 Oct 2011 at 12:51

Bear said:
Of course it does but the country as a whole and personally (at least for some) are in a debt crisis. Spending more money that you dont have is just plain stupid.

Hence you can't spend your way out of a recession.

Labours plan, although Ed Balls has tempered that now.