Debt/Saving Inspiration

Someone with lots of savings can spend much more money each year than someone in lots of debt
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Well yeh because they are not wasting it on high % interest, common sense. This is why I save and not spend every time I have it. I will be the smiler in the end.

Fools to the people who ain't bothered about debt. One day it will get you.

UNLESS: Your getting a return some how at a higher % than your paying out :P with the money you borrow!
 
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The issue with inflation is that the inflation figure is an indicator based on a basket of products and services. If you save for the express purpose of buying a basket of those products then inflation absolutely does have the effect of reducing your savings value by whatever percentage inflation is.

But many of the things we save for do not inflate at that percentage. Some even fall. You should calculate your own personal inflation rate based on net change in the cost of the things you actually save for.

If you save for tech products you might be quite suprised at what your inflation rate is.
 
I should just clarify when I say you need to match the inflation I mean in real terms if your saving against something.

E.g If you saving against Item X that has 2% inflation. You have saved £5000, and it costs £10000. Your getting 3%

It will go up by 10000x2% = 200 in a year, you need to exceed 5000/200=4% to be closer to your goal of owning that item, if you cant make 4% or better you will lose ground over that year. Then you need to factor in the costs of what you could borrow that missing £5000 for and if that still meant you were better to save or to borrow and buy it now. In a normal economy its almost certainly the fact your better saving, wit the current one with ultra low interest its just about possible you should buy it.
 
Errr ok, not sure how its relevent though. Resale value on cheap products doesn't really matter. Sure its a big deal when blowing £10-20k on a car but I doubt many people consider or care how much a 200 quid CPU will be worth in 3 years time.
 
[TW]Fox;22293938 said:
Errr ok, not sure how its relevent though. Resale value on cheap products doesn't really matter. Sure its a big deal when blowing £10-20k on a car but I doubt many people consider or care how much a 200 quid CPU will be worth in 3 years time.
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But it's still a loss on products you purchased, a lot of people on here take finance... costing a % of interest a year. Then sold on at a later date for 3/4, 2/4, 1/4 of the price.
 
Not as bad as the horrible loss on food, I hear the resale value of a £10 pizza is £0! And don't get me started on the depreciation on holidays :(
 
This thread had potential but OP seems to be making the mistake of thinking any critical response that disagrees with his own POV is a personal attack.

Anyon had some fair points but OP derailed his own thread by not having any worthwhile response other than making it personal and constantly pointing out how "right" he was, ironic.
 
The thing about tech products is they are not exactly typical of the average product.

They have :
Short lifecycle, so are more like perishable goods
Are producted typically in economies that themselves have fairly high inflation (so they in effect transfer that inflation through to the UK)
Are highly sensitive to the $ rate
Typically very large capital expenditure that needs to be paid back, but in general quite low actual manufacturing costs (so can be highly aggressively priced when it suits the manufacturer)
 
mrbell1984 said:
I actually wouldn't like to add up all the % interest / loss just on this forum on what the tech products would amount too. I bet it would be a lot though.
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Most people, without realising it, depreciate consumer products to zero when they buy it anyway. They purchase a TV and think 'That just cost me £500'. Thats it. Done.

They don't purchase a TV and think 'It will only be worth £50 in 4 years so its just cost me £450'.

Depreciation on low value items is just a pointless irrelevence.
 
[TW]Fox;22294002 said:
Most people, without realising it, depreciate consumer products to zero when they buy it anyway. They purchase a TV and think 'That just cost me £500'. Thats it. Done.

They don't purchase a TV and think 'It will only be worth £50 in 4 years so its just cost me £450'.

Depreciation on low value items is just a pointless irrelevence.
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But it all adds up though, every penny.
 
I would depreciate that TV to zero.
But mentally subtract what I get for it from the price of a new TV.

"oh this new TV cost me £500 minus the £50 I got for the old one"

Kinda the same thing, but it's only worth what people are willing to pay - and you don't know that at purchase time.
 
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