'Rich Privilege'

cheesyboy · 6 Feb 2015 at 10:20

balky12 said:
True. But then rich person buys a house for £5m and pays ~£500,000 stamp duty. How long would it take a poor person to pay £500,000 worth of taxes..

It's not a fair comparison, in light of what we're talking here: give £5million spread across 50,000 poor people (£1k each), and you won't see much of that saved. It'll be spent, and at 20% VAT for most of it (£1million tax revenue, and the subsequent business taxes arising from profits employment etc).

It all goes back into the system, unlike the £5million trapped in bricks and mortar for the rich person.

mattyg · 6 Feb 2015 at 10:23

cheesyboy said:
Rich people spend a lower proportion of their income or any additional income

Give a poor person £100, and it'll be spent straight away. Give it to a rich person, and it'll not affect their spending.

It's why all the chatter about spongers milking the system is a little silly: anything they get goes back out into the economy. Money is cyclical, except where it's tied up in economically inactive assets. Like houses.

Depends on what is rich.

Example

But I remember when I started to earn more money. I wasn't really any better off earning £1500 per week from when I was on £500 per week.

All that really happened was my DD doubled in costs

I used to have Virgin for my BB and TV.
Then I had Virign for my BB
Sky HD multiroom for my TV

My car finance went from £180 pm to nearly £500 per month

Etc etc.

Now in that situation my example isn't scalable but when I was on £500 per week I thought I'd be rich on £1500. When earning £1500 per week I realised I wasn't rich

cheesyboy · 6 Feb 2015 at 10:25

Diagro said:
My Wife and I take home £3k Per month after tax. And I know people who are jealous of the fact we wholly own a detached house at our age (26).

We don't stress about money, does that make us Privileged?

I know people at work who are earning over 80k... are they also Privileged?

How did you pay outright for a detached house at 26? Surely you had some parental assistance?

Because I would say that would be privileged. To be earning £80k is not necessarily (and probably isn't) to be considered priviledged - you work for that cash, though you may have been in a privileged position to get that job

mattyg · 6 Feb 2015 at 10:26

cheesyboy said:
It's not a fair comparison, in light of what we're talking here: give £5million spread across 50,000 poor people (£1k each), and you won't see much of that saved. It'll be spent, and at 20% VAT for most of it (£1million tax revenue, and the subsequent business taxes arising from profits employment etc).

It all goes back into the system, unlike the £5million trapped in bricks and mortar for the rich person.

But its not trapped in bricks and mortor. If i pay £5million for a house.

My £5million is trapped but I've just released £5million of someone elses money isn't that cyclical

MikeTheNative · 6 Feb 2015 at 10:28

cheesyboy said:
How did you pay outright for a detached house at 26? Surely you had some parental assistance?

He didn't say the price could be a horrible area and they got it cheap.

cheesyboy · 6 Feb 2015 at 10:29

mattyg said:
But its not trapped in bricks and mortor. If i pay £5million for a house.

My £5million is trapped but I've just released £5million of someone elses money isn't that cyclical

Right. And what does a rich person do with £5million? Do they spend it all like the poor?

BuffetSlayer · 6 Feb 2015 at 10:30

cheesyboy said:
How did you pay outright for a detached house at 26? Surely you had some parental assistance?

Good money management? Cut back on your spending and make sure you stay out of debt and you can blitz a mortgage.

Even though we have a fair amount of debt, we have taken advantage of the low interest rates and kept repayments the same. In 3.5 years we have knocked off 9yrs of our mortgage.

The plan is to have it fully paid off in 12. If we were not having to pay back so much debt from poor spending decisions like credit cards and loans, we could repay it in half that time.

We had 0 help from anywhere. So it is not unfeasable that a couple could be mortgage free at such a young age without financial help from parents.

cheesyboy · 6 Feb 2015 at 10:32

Of course, it does depend on house prices. But at a fairly ordinary current income of £3k/month (presumably it's not be £3k always either), you'd be hard pushed to save outright for a house under your own steam.

robgmun · 6 Feb 2015 at 10:34

cheesyboy said:
Right. And what does a rich person do with £5million? Do they spend it all like the poor?

Pay stamp duty on the next property purchase

BuffetSlayer · 6 Feb 2015 at 10:37

cheesyboy said:
Of course, it does depend on house prices. But at a fairly ordinary current income of £3k/month (presumably it's not be £3k always either), you'd be hard pushed to save outright for a house under your own steam.

It isn't always about saving to buy it outright, its about finishing the mortgage ASAP.

If they bought a house in 2007, for example, when 100% mortgages were available, and they purchased a £160k house and remortgaged every couple of years since to get the most of the low interest rates, they could be mortgage free by now.

Not saying thats how they did it, but it is possible.

cheesyboy · 6 Feb 2015 at 10:37

robgmun said:
Pay stamp duty on the next property purchase

In which case, I refer back to my previous stamp duty response

mattyg · 6 Feb 2015 at 10:38

cheesyboy said:
Right. And what does a rich person do with £5million? Do they spend it all like the poor?

They probably don't fritter it away like the people who'd you give the money too.
Maybe because they understand the value of money.

Do you have a positive bank balance right now.
If you do then quick you must give it to someone who will spend it on crap to put back into the economy.

mattyg · 6 Feb 2015 at 10:41

cheesyboy said:
In which case, I refer back to my previous stamp duty response

And they will spend it on their next house purchase.

Or they will buy land and then employ a bunch of skilled workmen to build them a new house. Putting it straight back into the economy.

But each move in that sequence puts money back into the system

More money than will go in if you spread it around and the poorer spend it on fags and ale

cheesyboy · 6 Feb 2015 at 10:43

BuffetSlayer said:
It isn't always about saving to buy it outright, its about finishing the mortgage ASAP.

If they bought a house in 2007, for example, when 100% mortgages were available, and they purchased a £160k house and remortgaged every couple of years since to get the most of the low interest rates, they could be mortgage free by now.

Not saying thats how they did it, but it is possible.

Well, yes. If they had been able to afford paying about £2,200 mortgage per month out of their £3k earnings, which they were earning from age 18.

cheesyboy · 6 Feb 2015 at 10:45

mattyg said:
They probably don't fritter it away like the people who'd you give the money too.
Maybe because they understand the value of money.

Do you have a positive bank balance right now.
If you do then quick you must give it to someone who will spend it on crap to put back into the economy.

mattyg said:
And they will spend it on their next house purchase.

Or they will buy land and then employ a bunch of skilled workmen to build them a new house. Putting it straight back into the economy.

But each move in that sequence puts money back into the system

You don't understand the cyclical nature of money. That's fine. I'll not waste my time going any further.

(BTW, my point wasn't about saying "take all of rich people's money" or anything: simply explaining that money distributed to the poor doesn't get lost - quite the opposite, as it's actually an economic stimulant)

oulton · 6 Feb 2015 at 10:48

SiD the Turtle said:
A rant off the back of some of the comments in this thread: http://forums.overclockers.co.uk/showthread.php?t=18653649.

I live in greater London. I have a decent job, a flat with a mortgage on it, a car and a big TV. Am I rich? No. Am I privileged? No!

My dad grew up in a Commonwealth county where the family home was a tin shack. Only the boys went to school. He came to the UK in the 70s to study engineering but soon after he arrived his dad died so he had to find more money quickly to support his younger brothers and sisters so he retrained in the NHS. My mum grew up on an council estate in Kent and left school as young as was allowed with no qualifications to speak of.

When I was born they both worked every hour in the day doing several jobs to pay for me. They taught me about working hard and studying and I went through school, got decent grades and then a decent degree and a fairly well paying job.

I'm probably biased but my family is a great example of what you can accomplish if you actually put the effort in. It's only thanks to my parents that I had the home-life to concentrate on school, get decent grades and to be honest, help fund my mortgage. My kids will be better off because of what my parents did and what I am doing.

So why the bloody hell does the '99%' and the Labour government feel that I should be penalised for working hard? Why do they give off the impression that people who have enough money to pay taxes and inherit parental homes are super rich bankers that need to be punished with more taxes?

Rant over.

YOU'RE NOT RICH THOUGH!

robgmun · 6 Feb 2015 at 10:49

cheesyboy said:
(BTW, my point wasn't about saying "take all of rich people's money" or anything: simply explaining that money distributed to the poor doesn't get lost - quite the opposite, as it's actually an economic stimulant)

Wait, you're saying that the poor being rubbish with money is good for the economy? Because they're wasting it and staying poor?

wow

cheesyboy · 6 Feb 2015 at 10:50

robgmun said:
Wait, you're saying that the poor being rubbish with money is good for the economy? Because they're wasting it and staying poor?

wow

Who said anything about waste or being rubbish with money?

I'm saying boosting domestic demand is good for the economy, and that poor people will tend to spend any small windfall rather than save it.

robgmun · 6 Feb 2015 at 10:53

cheesyboy said:
Who said anything about waste or being rubbish with money?

I'm saying boosting domestic demand is good for the economy, and that poor people will tend to spend any small windfall rather than save it.

That's being poor with money, so you rather the poor stay poor by not saving money, that is what the upshot of what you are saying, it's ok to admit.

mattyg · 6 Feb 2015 at 10:54

cheesyboy said:
You don't understand the cyclical nature of money. That's fine. I'll not waste my time going any further.

(BTW, my point wasn't about saying "take all of rich people's money" or anything: simply explaining that money distributed to the poor doesn't get lost - quite the opposite, as it's actually an economic stimulant)

Actually owning several businesses makes me acutely aware of the cyclical nature of money.

I have to know where it comes from and where its going.

However some of my workers think I can just conjure it up