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Worried about standards of living? Perhaps stay away from the sales

31st Dec 2013
Director Maximiti Limited
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In case you've been in hibernation lately the political ground has been occupied somewhat by talk of the standard of living. It seems that most people are worse off , which is of course a concern, even if it is necessary to heal the economy. If people are telling the truth then why are they spending billions on the High Street , propping up our retail sector ? If you don't have it don't spend it !

Aha , I hear you reply - they are buying bargains  look at the stupendous reductions , up to 75% off . Indeed so , but they have now spent 25% more than zero had they exercised restraint.

In my eyes there are possible reasons that immediately spring to mind:

1. It is comfort spending , a bit like tearing into a bar of chocolate when you're feeling down

2. People have no self control and are at the mercy of the ad-men

3. They are lying to the opinion pollsters about their true financial position

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By tom123
31st Dec 2013 09:57

I am with you on staying away from the sales. I call it 'spending to save'.

However, we did buy our Smart TV in the January sales last year, rather than before Christmas. 

In this house, sales are when we buy specific things, like the TV, that we plan for - rather than a general leisure activity.

I still have bad memories from purchases in the sales as a teenager that I never wore - I give you lime green hoodies for example.

In my first Saturday job, eons ago, we always brought out all the unsellable stock from the cellars when we put the sale on.

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By ShirleyM
31st Dec 2013 10:49

Sales aren't all bad

A lot of trash gets put into the sales, but they often have some good items at very good prices. If you need something that is on offer, then why shouldn't people take advantage of the sales? We all like a bargain. It only stops being a bargain if you buy something you don't need, or will ever use.

I am fortunate, compared to many people, that I don't need to join the frenzy of 'going to the sales' but if me or my family needed something unaffordable and the sales made it affordable, I would be there too.

I also imagine that some people enjoy browsing the sales and treat it as a day out. Also, the sales do benefit many people, ie. the retailers, and the staff they employ.

I bought a few items I needed in the pre-Christmas sales. I don't like joining the 'sales rush' as I hate crowds, but some people thrive on the cut & thrust of being the one to grab the best bargain. Nothing wrong with it ....  unless you spend money you don't have!

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Replying to douggy12345:
Norman Younger
By Norman Younger
31st Dec 2013 14:22

Need or want ?

You speak about "need" , of course you wait for the sales . I was referring to "want" - the 2 are very different

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By JC
31st Dec 2013 11:54

But of course Wonga ....

.. is the way to go if you don't have any money.

Being fairly harsh - but ..

Just borrow a limitless amount and then be unable to feed the children when the repayments become due

On the other hand perhaps 'January sales' should be enshrined in EU law as a basic human right. Then that would solve the problem because the Government would have to cover the debt

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By ShirleyM
31st Dec 2013 14:42

Were you?

I didn't see that in the original post. It just looked like wholesale criticism of sales, and the people who buy from them.

I doubt you will find many people who haven't bought a sale item at some time in their life. The only 'possible reasons' you put forward were negative ones. I was just pointing out a few positive reasons for sale purchases.

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Replying to andy.partridge:
Norman Younger
By Norman Younger
31st Dec 2013 14:45

Sales

I have nothing against sales , they are a great opportunity for both the retailer and the customer , and an accpeted ritual in a capitalist economy .  My observation is that the sheer amounts being spent and the massive crowds thronging the malls seem to undermine th enotion of austerity . Austerity means going without even if something is in the sales . It's not as if the nation hasn't already spent squillions in the Xmas run - up for pressies .

I wonder what Mr Milliband et al would have to say about this , after all the standard of living is his flagship policy .

People want to eat their cake and still have it !

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By ShirleyM
31st Dec 2013 14:51

Eh?

How do you know the people buying at sales haven't any money? They may be rich southerners coming up North for a cheap day out at bargain prices. ;)

There are lots of poor people, but there are also lots of people who have more money than sense! Maybe it is they who are at the sales ...  ;)

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Norman Younger
By Norman Younger
31st Dec 2013 16:13

Debenhams

Looks like customers of Debenhams heeded my call to inaction  ;-)

http://www.bbc.co.uk/news/business-25559780

 

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By arcon5
01st Jan 2014 13:20

'People are worse off' isn't the same as 'people have no money'.

It means you might to Costa once a week instead of twice a week.
You choose a two for one restaurant instead of flashy one.
You choose a bottle of £10 wine instead of your usual £20 one.
You buy a lesser price jumper instead of the more expensive one which you preferred.

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By arcon5
01st Jan 2014 13:42

Also to add, I shop in the sales often - genuine sales on items I've been keeping an eye on for a while ready to pounce - these these 'fake' sales where prices are artificially inflated to make it look appealing to the naive. And I do so as I am in a low income household and its the only way I can get nice comfortable clothing at affordable prices.

I don't need a pair of shoes, but I will do in a few months. So I buy the sale pair for £12 instead of the typical price of £25. Few months later I have the shoes waiting - it's now a 'need' and not a 'want' and I have saved money and got better value by planning ahead.

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By ShirleyM
01st Jan 2014 14:42

That's sensible, arcon5

If you can get what you want, or need, in the sales then you make your money stretch a little further. 

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Norman Younger
By Norman Younger
01st Jan 2014 15:35

Waiting for sales

Indeed purchasing now for soon is a sound idea if you are paying in cash or by debit card.  How many people are paying on their cards at 25% interest to save 50%  but will take 3 years to clear the balance ?

The only contradiction , if that is the correct phrase, to your hypothesis is that the shops aren't empty the rest of the year

 

In terms of eating out less , that is a choice in an area that is totally discretionary spending , but the reports one hears gives the impression people have no money and that worse off means they are struggling to get by.

Now, if Mr Milliband and his cocolate teapot of a shadow chancellor think that the sacrifice of eating out a bit less isn't worth making to rectify the nation's finances. So we need to be clear , what does "worse off" really signify ? IS it something unjust and unbearable or is it living a wee bit more modestly ?

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By Star Accountancy
01st Jan 2014 16:04

Worse off

Being worse off is different things to different people.  Wages are being suppressed by the ever increasing influx of East European economic migrants and this is holding wages down. I know sub contracts who were earning £15 an hour, and now have to accept £7 or £8.  Sure some in society are doing well, but the average “working man” is not.  We are also seeing a drastic (and in my opinion unacceptable) squeeze on benefits and pensions which means that they too have less to spend thereby again affecting the high street. 

How does this affect people?  For some as indicated above it means eating out less, not buying that fur coat, or cutting back on some other unnecessary luxury. But for others it means much more. The loss of their home, being cold because they can’t afford heating, going without meals. The people most affected are the sick and the elderly, those who don’t have the option of finding a job. In my opinion this is a national disgrace and makes Britain no better than a third world country.

How to fix it?  Get out of the EU, reverse immigration, reduce the number of people in the country, and pay increased benefits and pensions to those who have contributed all their lives.

Are “sales” worth while. Quite frankly they are the only way that some people can afford new clothes etcetera.  

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Norman Younger
By Norman Younger
01st Jan 2014 21:03

Wages

The EU problem , which for reason this country's so called leaders have sailed headlong into like an iceberg, is a national disgrace. The only solution is a referendum and I doubt William Hill will give too long odds on a "no" vote

Pensioners need looking after better but who is going to pay for it ? If interest rates were "normal" many of them would not be living in poverty. This is one area where I don't have an answer to suggest ! Quite rare but I would liek to see what others propose that the country can afford , perhaps by cutting the squillions we give to corrupt countries in other parts of the globe that are warmer than us.

On the sales topic , which is where we started , how much is spent on new clothes because it's the only way people can afford them and their clothes are worn out , and how much on new "must have" latest designs ?   

 

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By Star Accountancy
01st Jan 2014 23:05

A few suggestions

I could suggest a few savings which could go towards raising benefits and pensions to a more acceptable level.

 

Why are we giving foreign aid to countries with their own space programmes?Why are we paying the EU so it can bail out incompetent goat herders in Greece?Why are we paying child benefits and tax credits to anyone earning more than the average wage?Why are we paying a single penny in benefits to anyone who has never contributed to the system, such as child benefit to polish workers who have been here 5 minutes?Why do we allow finite NHS resources to be used by those who have never contributed? It should be hand over your credit card before we treat you.Why do we have so many MP’s, and exactly how do they justify a pay rise that is more than pensioners are expected to live on?Why does any MP warrant a second home at the taxpayers expense?Why are we fighting unwinnable wars? The moment we leave the same barbarians will take over and things will go back to how they were.Why waste billions of HS2 when fares will be too high for any “normal” person to afford.Why do we allow foreign workers to send their earnings out of the country?  They earn it here, make them spend it here.Why do HMRC [***] foot around tax evading multinationals?  If they don’t pay their taxes, seize their assets.   That’s what HMRC would do to your local plumber if he didn’t cough up.Why do we pay vast salaries and perks to senior “public servants” who are clearly incompetent and would have been fired years ago in the private sector?

And last, but not least, why should being disabled or growing old mean that “the state” condemns you to live in abject poverty whilst those making these decisions have no idea what poverty is.  (Interestingly the labour front bench has more millionaires on it than the Tory front bench.)

The current system is corrupt from top to bottom, and the people of Britain are no more free than those in places such as North Korea. The only difference is that they are forced to obey with barbed wire and machine guns, whereas we are conned into obeying by politicians lies.

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Replying to Lorraine Wheeler:
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By Discountants
02nd Jan 2014 16:18

Star Accountancy's points

Why are we giving foreign aid to countries with their own space programmes?

Because the country is still very poor and this is also not a lot of money - if you want to spend this on benefits instead it will lead to, for example a 4p a week rise in the state pension (£70 millon a year to India compared to £183.4 billion a year in social security benefits)

Why are we paying the EU so it can bail out incompetent goat herders in Greece?

We're not - our government is loaning them funds at 5%, which considering it's paying interest at 2% to 3% to borrow this money is actually a pretty good deal (as long as we get repaid of course)

Why are we paying child benefits and tax credits to anyone earning more than the average wage?

Because child benefit is a universal benefit (it changed from being a tax deduction in the 1970's)

Which average anyway, the median?, the mean? and for what area, London?, Devon?.

Also what about people who earn more than the average wage but also have higher costs, such as those with disabled children? or those with 4 children instead of 2 (remember those extra children will be taxed when they grow up to pay for your state pension)

Also the tax credits system encourages people who would otherwise not work at all to get at least a low paid job - which still cuts the amount the government has to spend.

Why are we paying a single penny in benefits to anyone who has never contributed to the system, such as child benefit to polish workers who have been here 5 minutes?

Because if we chose not to then, according to those rules, disabled people who cannot work would starve.

Why do we allow finite NHS resources to be used by those who have never contributed? It should be hand over your credit card before we treat you.

Again because we base it on the need of the recipient not their contributory status.

Under your system would we refuse to treat children because they have not contributed? (what about orphans who have no-one to pay for them, for example)

Why do we have so many MP’s, and exactly how do they justify a pay rise that is more than pensioners are expected to live on?

We have so many in order to not have too many voters being represented by too few MPs - currently they 'represent' around 750,000 adults each.

They don't justify it - an independent commission recommended the level of pay by comparing it with other people doing similar jobs (doctors, solicitors etc)

Because the level of MP's pay always causes a political storm it is never raised high enough - I think it should be closer to £250k for an MP and £400k for a minister, then we might get people who have the level of competence and skills we expect.

Why does any MP warrant a second home at the taxpayers expense?

Because we don't pay them enough - see previous point.

Why are we fighting unwinnable wars? The moment we leave the same barbarians will take over and things will go back to how they were.

Because you don't know if a war is un-winnable until you start and then just leaving can make the alternative is worse, yes the same barbarians may take over in the medium term, but this is what also used to happen in Europe (think Spain, Portugal, Greece) and Latin America as well, now these areas are almost all working democracies. You need to think in terms of decades not years or months.

Also we just up and forgot Afghanistan before (in the early 1990s) as it was costing too much and was too remote - then the country descended into civil war and the Taliban took charge.

Why waste billions of HS2 when fares will be too high for any “normal” person to afford.

I agree with you here, I do think the money would be better spent on less public-relations friendly things like maintaining and upgrading the system we have.

Why do we allow foreign workers to send their earnings out of the country?  They earn it here, make them spend it here.

Rubbish - why should we do this when we don't require our citizens to spend their money here either.

Please remember that the foreign workers are paid in Sterling and there is only one place that Sterling can be spent - if they exchange it with others for their home currency then those others are obviously looking to buy our exports or invest in our country so how on earth are we worse off?

Why do HMRC [***] foot around tax evading multinationals?  If they don’t pay their taxes, seize their assets.   That’s what HMRC would do to your local plumber if he didn’t cough up.

Because the multinationals can hire top lawyers to stop this which your local plumber cannot. Their affairs are also sufficently more complex which can lower the level of legal certainty as to whether tax is due on an activity or not.

I agree this is not fair, however neither is the Universe and all we can hope to achieve is to make it more fair

Why do we pay vast salaries and perks to senior “public servants” who are clearly incompetent and would have been fired years ago in the private sector?

If they were in the private sector would they have been paid at that level (hundreds of thousands of pounds) or would they be more like the people running large companies (paid millions of pounds a year) - I feel that there is a similar issue here to your points 6 & 7.

The current system is corrupt from top to bottom, and the people of Britain are no more free than those in places such as North Korea. The only difference is that they are forced to obey with barbed wire and machine guns, whereas we are conned into obeying by politicians lies.

Quite a lot of exaggeration here - our system is widely recognised as being less corrupt than Italy's a lot less corrupt than Russia's and nowhere near the North Korea you mention.

If you want to make a point please try and stay on Planet Earth otherwise you will just be dismissed.

Most of your points seem to concern the current system not having 'common sense' rather than it being actually corrupt.

But the danger of common sense is that you cannot have rules for it - it has to be decided in each case by a human sitting in judgement (should this Polish worker have access to Child Benefit or not - maybe this one because he is going to be paying £20,000 a year in tax and employing 10 british workers, but not this other one because he will only pay £1,000 a year in tax)

As soon as you have humans deciding things on the basis of 'common sense' then you will see what corruption is all about because people are not perfect!

As far as the current system of free-market democracy we have I feel I should paraphrase Churchill in that it is the worst system - except for all the others we have tried.

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Replying to andy.partridge:
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By Old Greying Accountant
02nd Jan 2014 20:20

All wars ...

Discountants wrote:

Why are we fighting unwinnable wars? The moment we leave the same barbarians will take over and things will go back to how they were.

Because you don't know if a war is un-winnable until you start and then just leaving can make the alternative is worse, yes the same barbarians may take over in the medium term, but this is what also used to happen in Europe (think Spain, Portugal, Greece) and Latin America as well, now these areas are almost all working democracies. You need to think in terms of decades not years or months.

Also we just up and forgot Afghanistan before (in the early 1990s) as it was costing too much and was too remote - then the country descended into civil war and the Taliban took charge.

...are unwinnable, unless you have a pogrom of ethnic cleansing. Ah yes, Spain and Greece, what sucesses they are! By waging war you do not persuade the nationals to your way of thinking, you coerce them, and even if after decades they come round to your way of thinking it is still subjugation. As John Farnham sang - "We're all someone's daughter, We're all someone's son - How long can we look at each other, Down the barrel of a gun?"

The only way to get true peace is negotiation and economic pressure. In the case of despotic tyranny's, you can never win so why bother, just leave them to it.

Discountants wrote:

Why do we allow foreign workers to send their earnings out of the country?  They earn it here, make them spend it here.

Rubbish - why should we do this when we don't require our citizens to spend their money here either.

Please remember that the foreign workers are paid in Sterling and there is only one place that Sterling can be spent - if they exchange it with others for their home currency then those others are obviously looking to buy our exports or invest in our country so how on earth are we worse off?

Naive!

Eastern European workers live in multi-occupancy dwellings, or caravans/temporary accomodation. Their living costs are very low so they can afford to take a lower wage than an indigenous family man trying to support a family. Their money is sent largely home, yes it may be exchanged by money lenders and userers (I include high street banks in this loose definition) but it is spent abroad - the likely destination of the sterling is for foreign nationals to buy UK housing stock to rent out, likely to more foreign migrant workers as multi-occupany dwellings. And thus the cycle continues, as meanwhile the UK nationals are priced out the housing market by the demand caused by these overseas landlords. So, once the money is paid to the Eastern Europeans it is out of the UK economy, other than in negative ways,

Not saying we should make them spend there money here, rather stop them coming in the first place - with 2.5million unemployed in the UK, we should be training those to fill the vacancies, not sidelining them and bringing in cheap migrant labour - except they don't want to take the jobs as they get more income on benefits. I agree though it is hard to take something away (it would have been better not to give it in the first place) - but the best course of action is to draw a line in the sand, have a markedly reduced benefit level for new claimants, to have new contracts for new state employees with more commercial pension, holiday and sick pay terms, in line withteh private sector. The first thing to do is stop the rot spreading before we worry about cutting out the existing rot - you need to fix the leak before you bail the boat out!.   

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Teignmouth
By Paul Scholes
02nd Jan 2014 09:50

Need to consume?

I am firmly in the need v want category here.

If the interviews of shoppers are anything to go by, people were queuing and battling for "another" coat or bag, and I would guess that, with the lure of greed and retail therapy comfort buying, this is still the prime motive why people do it.

If my families are anything to go by, even with two sets of Secret Santas, I would imagine that only a tiny proportion of what is bought at this time of year is "needed" and our binging just accelerates the paybacks we will face for our unnecessary consumption.

As a footnote; on the radio this morning the article about the above, and record sales over Xmas, was followed by one concerning the 1 million 16-24 year old NEETS, who feel they have nothing to live for....think on't http://www.bbc.co.uk/news/education-25559089

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Norman Younger
By Norman Younger
02nd Jan 2014 12:04

Nothing to live for

This is a serious matter but I suspect that many of these kids are "condemned"  from birth to poor prospects by virtue of the family circumstances into which they are born.

A stable home environment , proper hobbies and interests , with proper role models may sound terribly "middle class" but strip out such sentiments and you'll find it has substance.

Get rid of Play Stations, XBoxes  and fripperies such as Facebook and you'll give these kids a chance. As to role models I refer to local heroes who do things for tohers , not football and media  stars most of whom I suspect are bounced into much of their good work by virtue of their "status"  and therefore their voluntary work receives coverage.

The genie is out of the bottle and " it is how it is" regrettably

 

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By JC
02nd Jan 2014 17:16

@Discountants - reply ...

@Discountants

Enclosed replies to your responses

Why are we giving foreign aid to countries with their own space programmes?

'.. £70 million a year to India compared to £183.4 billion a year in social security benefits ..' is amount really the determining factor? Surely the point is that these countries prefer to allocate their resources away from their population and into niche spending projects rather than benefitting their own people. So why is it incumbent on the UK or any other country to pick up the slack

Why are we paying the EU so it can bail out incompetent goat herders in Greece?

A more pertinent question would be why have Goldman Sachs never been held to account for 'cooking the books' over Greek entry to the EU. After all they masked the true extent of Greek debt by the use of derivatives to 'legally' circumvent the EU Maastricht rules. Thereby deferring the cross-currency swaps maturity until after Greece had entered the EU and then bringing the problem back on Greece's books to increase the countries already bloated deficit

Why are we paying child benefits and tax credits to anyone earning more than the average wage?

So set a maximum limit (i.e. £60K). Disabled are clearly an exception across the board but why exempt 3/4/5/6/7/8 ... children - no-one is being forced to have large families and surely the concept of 'cut your cloth' applies, unless of course others are paying

Why are we paying a single penny in benefits to anyone who has never contributed to the system, such as child benefit to polish workers who have been here 5 minutes?

Again exempt disabled etc. but taking an extreme example - suppose everyone who was out of work in the EU decided that the UK was the place to be - are you advocating underwriting everyone. If so how do you propose funding this largess? Also at when does many migrants become too many; if at all?

Why do we allow finite NHS resources to be used by those who have never contributed? It should be hand over your credit card before we treat you.

Exempt disabled & children of indigenous population - but why not? Other countries have either insurance or credit card or would you prefer a 'World Heath Service' and how do you propose funding it for all comers?

Why do we have so many MP’s, and exactly how do they justify a pay rise that is more than pensioners are expected to live on?

'.. We have so many in order to not have too many voters being represented by too few MPs - currently they 'represent' around 750,000 adults each ..'

What about cancelled boundary changes that would have reduced the number of MP' - also are your figures correct ‘.. For example, 87,000 voters in the East Ham constituency together get one say in the government.  The 66,000 voters living 10 miles away in Islington North get one say too.  So, if you live in Islington, your voice counts for more ..’

As for salaries - disagree with your comments at so many different levels but too long to go into

Why does any MP warrant a second home at the taxpayers’ expense?

Why can they not use form of parliamentary hostel - or anyone living within 2 hours travelling just take the train like everyone else

Why are we fighting unwinnable wars? The moment we leave the same barbarians will take over and things will go back to how they were.

Some merit is the response, but remember depends whose behalf we will be fighting (recent refusal over Syria) and no-one has ever won in Afghanistan

Why waste billions of HS2 when fares will be too high for any “normal” person to afford.

Agreed

Why do we allow foreign workers to send their earnings out of the country?  They earn it here, make them spend it here.

Agreed - however, the other question is - are benefits being sent out of the country or are child benefits being paid to children of foreign nationals abroad?

Why do HMRC [***] foot around tax evading multinationals?  If they don’t pay their taxes, seize their assets.   That’s what HMRC would do to your local plumber if he didn’t cough up.

Agreed but really the solution to transfer pricing should not in insurmountable with a few intelligent people. After all these multinationals actually want to trade here in the first place

Why do we pay vast salaries and perks to senior “public servants” who are clearly incompetent and would have been fired years ago in the private sector?

Pensions and an ongoing legacy liability for the country are the issue here

The current system is corrupt from top to bottom, and the people of Britain are no more free than those in places such as North Korea. The only difference is that they are forced to obey with barbed wire and machine guns, whereas we are conned into obeying by politicians lies.

Agreed - but it doesn't prevent people becoming infuriated with the system
 

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By JC
03rd Jan 2014 08:29

How to reconcile comments on war ...

@Old Greying Acc... - How does one reconcile your comments on war with history & WWII

In your eyes was it won by one side or another, was there ethnic cleansing, would negotiation other than capitulation have gained true peace - and where would we be now if in relation to Hitler if he had just been left to it '.. In the case of despotic tyranny's, you can never win so why bother, just leave them to it ..'?

Surely sometimes conflict is inevitable - one just has to choose one battles and for the right reasons

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By the_Poacher
03rd Jan 2014 08:51

Follow Martin Lewis' money saving mantra

If you're skint:

 

do I need it?can I afford it?have I checked if it's cheaper anywhere else?

If you're not skint:

will I use it?is it worth it?have I checked if it's cheaper anywhere else

If any answer is no then "DON'T BUY IT!"

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By Old Greying Accountant
03rd Jan 2014 09:58

No ...

... I don't think WW2 was "won", the differences are still there and starting to bubble, the peace we have is fragile and there is nothing like a recession to bring out the patriot - but, there is a big difference between defending yourself against a tangible threat than against a notional one, or worse, using war to change a regime that does think the same way as you.

Ethnic cleasing in WW2, best ask the Jews about that: remember we were the defenders, not the attackers - big difference!

But, who has the last say on our laws - the elected UK government - I think not!

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Norman Younger
By Norman Younger
03rd Jan 2014 09:51

Don't buy it

Martin Lewis is spot on, and that's how I was brought up.

But it takes immense discipline which most of today's youngsters do not have. And even many older people, many of whom are now relatively better off than in their youth, want to enjoy the availablity of goods that are in their reach. the difference between the two is how it is paid for , out of savings or on the never-never.

 

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By JC
03rd Jan 2014 10:35

Method of payment is crux of matter ...

Nowadays credit is incredibly simple to obtain and Governments are just as guilty in this whole process as individuals. On the one hand they need/want people to spend and boost the economy (spend out of recession) and on the other they recognise the damage being done by unlimited credit but refuse to do anything about it

Ideas such as re-imposing Usury Laws have been ignored as have any sensible suggestions of limiting credit card interest to say base + 10% - and so the debt cycle continues and is very hard to break once an individual gets caught in it

Even 'traditional' HP (the cheap option) seems to have gone out of fashion in preference to organisations such as Brighthouse who deliberately target the less well off with weekly drip feed payments (64%+ APR) - http://blogs.thisismoney.co.uk/2012/02/thinking-of-shopping-at-brighthou... - and still Governments refuse to address these issues!

Of course students start off being inured to debt by running up huge student loans and being told that it will not affect their credit rating and if not paid off within x years it will be written off - so a cavalier approach to debt is ingrained at an early age. Seems now the Government wants to sell off the student loan book; which could cause all sorts of excitement if the buyer decided to be aggressive in collecting the outstanding debts

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By Old Greying Accountant
03rd Jan 2014 11:24

The sensible approach ...

... is minimum deposits for HP, maximum rates, re-mortgage lending being restricted for specified purposes, such as extensions, business capital (backed up by proper a proper business plan and cash-flow) and not for holidays, cars and new furniture etc.

But, as stated already, the government no more wants to curb spending than it does drinking, smoking and gambling - it has too much to lose!

The trouble is, the genie is out the bottle - it is much easier to give than to take away and the Labour years have much to answer for.

Pandora's box has been opened, and it looks like Hope is on an early dart!

 

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Norman Younger
By Norman Younger
03rd Jan 2014 13:14

Spend spend spend

It looks like Next aren't grumbling https://twitter.com/FDComment

I wonder how much of that was on credit cards , perhaps Next will tell us......would make fascinating reading surely

 

As for Labour "answering" - the next general election will give us exactly that answer

But is it not possible for a current government to introduce new credit rules ?  How would the markets react ? Or is it a matter of "want" instead of "need" in the eyes of the Treasury ?

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By JC
04th Jan 2014 09:33

Credit card rates of interest ..

One of the advantages of having high rates of credit card interest is that the providers are pretty much exempted (no due dilligence etc.) from determining whether people can actually afford credit in the first place because potential problems are being underwritten by the rest of their client base

After all, 30% interest allows headroom for mutualising bad debts over the rest of the card population, especially if the providers can borrow the money in the first place for 1%-4%; it then becomes a numbers game. Inevitably there are going to be bad debts but ridiculously high interest rates actually encourage cards to be handed out to everyone willy-nilly because the providers downside is covered

Now if the maximum interest rate chargeable was limited to say base + 10% then the providers would be far more choosy about handing out credit cards in the first place, because they would not have the latitude of absorbing any ensuing problems with high interest rates.

Providers themselves would ensure the whole process became self-regulating because they would not want the bad debt exposure without being able to cover it by 30% interest from the rest of the population. They would therefore become a great deal more selective when handing out credit cards

It’s not rocket science – just cause and effect

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Replying to pbm1980:
Norman Younger
By Norman Younger
04th Jan 2014 19:19

Rate of interest

Simple but clever. I had never even thought about that .

Is it practical ? 

 

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Replying to The Innkeeper:
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By Old Greying Accountant
05th Jan 2014 15:35

don't think the government would dare ...

Flying Scotsman wrote:

Simple but clever. I had never even thought about that .

Is it practical ? 

 

the interest rates tey charge (sorry, penalties) make Wonga et al's rates seem positively benevolent!

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By peterdell
05th Jan 2014 04:41

Nothing to live for

Sorry to hop back to this subject (tax returns and missed the thread) but the reason one million youngsters feel they having nothing to live for is because a whole generation has been failed by society, the education system and most importantly government. It is very easy to blame the youngsters themselves but we have had governments that have stitched up the working class for generations. When they felt that to many poor were getting to the top they closed the grammar schools, increased tuition fees and did away with apprenticeships. The rich are now in the process of gobbling up residential housing so that most poor people will never have a stake in society at all. It is like a return to serfdom. Remember to doth your caps to the public school children. Also there seems to be an anti consumption band wagon out there I should point out that by consuming more the price comes down making whatever the item is more affordable. Fifty years ago bananas were considered a luxury. 30 years ago smoked salmon was considered a luxury. 10 years ago a laptop was considered a luxury. So maybe its not a question of consumption but the distribution of income and wealth. Maybe if we had more ambition within the country, a fairer tax and political system which doesn't simply prop up the little angels from public schools and a look towards different outcomes from the capitalist system the country might be in a better shape. 

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By JC
05th Jan 2014 09:52

Mind-set – the only limit to achievement is oneself …

@peterdell

Here we get into the debate of nature .v. nurture. Yes, successive governments have completely fouled up the education system and getting rid of grammar schools was a huge mistake. However, it was actually introduced because of an overall wish for the state to be egalitarian by dumbing everything down with no winners or losers and not some Machiavellian master plan by the ‘toffs’. This lack of ambition still exists today in areas such as children’s sport where there are no losers – just ‘deferred opportunities’ - eh!

However, attributing motives to ‘..to many poor were getting to the top ..’ is far too simplistic and just paranoid. Again removing Polytechnics (sandwich courses etc.) and trying to channel everyone into university (by statistically impossible cooking the A level results) was a disaster and resulted in students having no underling trade to fall back on in hard times; in any event it is questionable whether subjects such as accountancy (howls!) and law are suitable university courses anyway – become articled etc.

Your assumed link between ‘rich’ and ‘.. Remember to doth your caps to the public school children ..’ is simply an archachic (fashionable) point of view and does not really hold good in reality. Frankly, the one single major benefit from a public school education is that you come out believing that anything is achievable/possible and life holds no constraints. Whether this is borne out afterwards is another matter but perhaps it is this over-riding confidence that is absent within the state system?

The trouble is that we need an absolute definition of ‘poor’ as a baseline – although, it seems remarkably difficult to get anyone to commit to this, and as a result ‘poor’ includes all manner of those who are not really in this category or have a nebulous link. This is not to decry the genuine poor where we should be concentrating resources – however, whilst vague catch-all terms continue to be used (25% of children in the country can be defined as in poverty?) it is very difficult to target those genuinely in need without wading through everyone else in this category

The issue for a great many children from poor backgrounds is that they simply don’t recognise education as their passport to a better life – so they perceive it as having no value and don’t try. It is not about ability, but more about ‘can’t be bothered’ because they don’t understand how education can change lives. Quite how one alters that perception is the challenge, together with instilling a sense of ‘can do’, without the historic hang-ups displayed by your post and which will always be an underlying impediment

Contrast this mind-set to those in Asia & the 3rd world (no 'toffs' exist!) where they recognise the value of education as an enabler and do everything in their power to provide their children with the best they can find, often doing without to achieve this goal; also the children play their part in the process because they understand the difference it can make

Perhaps the place to start is by convincing children from poor families that education has the same (or greater) power as ‘celebrity status’ and then move onto the actual education itself once they understand the benefits.

Surely it is all about targeting the message to the audience to get the best result - also we now have some amazing young graduate teachers in the system who with a bit of luck will start to make a difference

PS. On the subject of teachers - not every teacher is brilliant but when was the last time one was sacked for not being any good at their job? After all the teachers empower children for the future and if they cannot do this then the children suffer

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Replying to atleastisoundknowledgable...:
Norman Younger
By Norman Younger
05th Jan 2014 17:06

Failed education

If successive adminsitrations for over 40 years have repeatedly failed to fix the education system perhaps we need a root and branch rethink on the whole subject . For starters , kids need to learn that there are "haves" and "have nots" . I grew up without a proper holiday and most of the class did go on holidays . Many people around me had bigger cars and more luxurious houses - I looked and I aspired . Aspiration is a wonderful thing , but we seem to reduce everything to the lowest common denominator and more many "poor" kids , bettering themselves materially through study and hard work is a taboo subject. Can't get into university 'cos you haven't got the grades - don't worry we'll dumb down the courses , inflate the grades and create empty soft subjects like reading the newspaper . Who wins ?Nobody !   Who loses ? Everybody !

Woe woe and thrice woe for socialist education policies

Let talent flourish by recognising it exists and celebrating it .

As to teachers , I think it is seen as a last resort prospect , possibly due to the unending meddling of OFSTED and the like - what has it achieved ? A generation of dissillusioned teachers. The rubbish ones get destroyed by the kids , a bit like market forces ...

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By peterdell
05th Jan 2014 18:05

JC

Although I agree with you in some parts there are many parts of your post I disagree with and some parts which I didn't explain properly and perhaps there is a misunderstanding. Your post is slightly contradictory by saying its a nature v nurture debate and then stating anyone can achieve anything. What you fail to state is that the biggest contributory factor to all of this is money. I will personalise slightly to illustrate the point. My child gets a good education and is top of the class that is partly down to reasonable parenting partly down to the fact when he started to fall behind I could employ a private tutor. How on earth is a person on benefits who cant afford such a tutor supposed to complete. Likewise my child (like many other children) spends most of his days in school coaching his peers to get them up to a basic minimum standard. How are they then supposed to complete with those from private education. And by the way I have no problem with children going to public school I would positively encourage it, my issue is with the parents of those children rigging the system to benefit their offspring creating a them and us situation. This is not a fashionable point of view, this is a factual situation. I could point to 100s of areas of the law when the sole purpose of the law is to protect those who are rich and powerful. Lets take a simple example you steal £3.50 easter egg from Tesco you will get prosecuted and a criminal record. You steal £3.50 through your tax return by claiming something you are not entitled the Revenue wouldn't even bother collecting it. Take your lets all go do articles situation. Very easy if your parents own 20 properties and are the top client of ABC Chartered Accountancy who will then be obliged to take on little darling child and give him as many chances as possible to become qualified. Not so easy if you are on benefits and have no such connections. If my top clients came to me and told me to take on their child there would be no option. Of course a slightly larger fee note would be in order. Also I although I partly agree that education isn't valued enough I have first hand experience of the Asian way of doing things and it is not as rosy as you paint. Highest suicide rate amongst the young in Korea and Japan and children burnt by the age of sixteen. I have nephew who could speak five languages by the age of 11 and couldn't get in to a polytechnic now because he hit a wall at sixteen. A really great lad though such a polite and considerate young man, just couldn't keep up with the pressure. And I should add I totally agree with  Flying Scotsman and I think most people do.

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By peterdell
05th Jan 2014 20:36

On topic as well, isn't it about time we campaigned for better financial education across the board, particularly amongst the young. Maybe the ACCA and ACA could look to send volunteers into school to teach the value of money. Anyone with any financial sense would rather starve than go to a payday lender because you know you will be in hoc to the lender for the rest of your life. These lenders are now advertising on childrens TV to make this type of lending appear normal. This type of lending is for the vulnerable and financially illiterate and we have to push them back into the shadows (along with the gambling industry). This is one for the industry to tackle and something if organised we have the power to change. 

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Norman Younger
By Norman Younger
06th Jan 2014 08:48

Going into schools

I get invited into local schools to talk to GCSE pupils as part of the citizenship studies. The past few years they asked me to talk about the recession and theses kids are spellbound by what I tell them , especially as many have felt the effects at home but never really understood why times were tough.

There are orgamisations that  recruit volunteers to talk in schools about aspects of the big world out there and I wholeheartedly endorse your idea for the accountancy bodies to encourage members to do so

A well structured talk is rewarding for all parties

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By Peter Bonetti
06th Jan 2014 10:46

Devil's advocate

Sorry, can't resist this ...............

When you go to schools to talk about money, do you go in the Bentley you (presumably) needed?

Apologies, as you were.

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Replying to Tim Vane:
Norman Younger
By Norman Younger
06th Jan 2014 15:18

Travel to school

I used to walk when it was across the road but there's no space in the car park for a Bentley - it's not a pukka private place ;-)

 

In terms of "need" I needed to tick the box of things I always wanted to do . I think it was the last item on the "must do" list.

Reminds me of when I got my first brand spanking new new car a  Saab 9-3 Turbo . Somebody who knew me fairly well then and very well now , asked me "what do you need it for" ? I looked at time in the eye and said "I don't need it ...I WANT it" , and with that hopped in and drove off .

 

 

 

 

 

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By Old Greying Accountant
06th Jan 2014 12:48

In his defence ...

... FS criteria were

If you're not skint:

will I use it?is it worth it?have I checked if it's cheaper anywhere else

I think the answers were yes, yes, yes

:oP

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By daveforbes
06th Jan 2014 13:01

disappointment

When my teenage daughters were keen on cash in lieu of presents from friends and family this year I assumed it was to put into a sensible investment scheme (Tessa in particular).

How disappointing that it was just to splurge on January sales.

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By Peter Bonetti
06th Jan 2014 13:17

No serious point being made

I was being a little mischievious rather than trying to score any kind of point. I rather felt it was tee'd up and I had to stick it in the back of the net!

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By Sheepy306
06th Jan 2014 13:33

What better motivation than to have an educated, qualified, hard working, generous and charitable local professional businessman turn up in a Bentley to explain the complexities of life and work to teenagers who can then see the value (and ultimately rewards) of education and life skills. I wish someone had taken the time to do that when I was at school, luckily I had parents with those values and the self-determination to succeed.

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By Old Greying Accountant
06th Jan 2014 17:39

Cars don't do it for me ...

... but I could probably answer the same about women!

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