Comparative costs past and present
I was pondering the other day regarding how my father afforded a new caravan back in 1964. Our Sprite Alpine 4 berth was £306 including gas cylinder and water carrier, we were only an average family on an average salary of around £1000 pa Dad's job however did include a company car (Hillman Husky). I see that a new Sprite Alpine 4 is approaching £20,000 the average salary is now around £31,000 pa Comparatively a new van is two thirds annual salary compared to one third in the 1960s. I know there's a leap in technical sophistication over the years but I can't help thinking that we are not getting better value for our cash currently? Of course housing is even more extreme but televisions are relatively cheaper!
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‘Just borrow more money’ not in my experience I think the last 30 years my income grew massively which allowed me to invest in other things that have been paying off over the last decade giving me a really good disposable income. Just that alone was unheard of in my parents time, I think it’s a case of a different mindset to folk in the 60’s. I truly believe I & my generation has lived thru a golden era🤷🏻♂️
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Evening
Back then I guess disposable income (was that even a phrase back then?) was a lot less than nowadays with both adults normally working now. As dawn mentions above people are encouraged to borrow a lot more too, it's easy to get silly amounts of credit these days.
How many of those nice looking outfits you se on site are actually paid for?
JK
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SKI’ing, there is certainly a lot of that going on👍🏻
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I remember an old boss of mine back in the sixties saying he could solve the traffic congestion problems at the time by banning any vehicle not paid for. I wonder what effect that might have today?
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CY I think your old boss wasn’t very good at his job, Banks make enormous amounts of money from lending money to folk then getting a lot more back meaning most vehicles on the road are not owned outright, take em off the road & there’s no need for a loan. Hopefully for the Banking industry that model was discontinued👍🏻
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As part of my,pre retirement, role as a TU Local Secretary I had to undertake Benevolence Work.I was initially surprised by the amount of debt that some members had accumulated.After several years of such work,I became used to such messes which I had to help to sort out.These were graduate level people who should have been able to work out for themselves that over extending themselves financially put them at great risk if Life took a turn for the worse,for them.
There is a lot of personal debt around behind the ostensibly,glossy lifestyles which too many people are living.
Not being judgemental or Political,just reporting what I have personally encountered.
It does cause me concerns about the rampant debt driven consumerism driving our Economy.Covid shows that the unexpected should be expected.
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The buy now pay later is a good scheme too, you own the big ticket item for 1year then pay for it in one payment👍🏻. I’ve used this 3 times up to now.
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Debt is an asset these days. Companies trade debt as an investment and we can get to benefit if incentivised to provide the source of that debt.
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When I first left school at 15yrs I was an apprentice with SEGB in Surrey That was 1957. it was Quite ,a surprise to me then, ,as the fitter I was apprentice to and I would go to some very big and posh looking houses, with big cars on the drives even boats
.,Once inside it was often a very different picture with old lino on the floors and tatty cheap looking furniture
When I retired in in 1994 I some times helped out a friend of ours in this town who was a blind piano tuner, ,and the situation in some houses was the same as back when I worked for the SEGB
One place that was a real eye opener was Barbrar Cartlands mansion
So it was and probably still is a case of "Keeping up Appearaces"
But now it it seems keep taking out more credit cards
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In the 80s when video recorders became a bit more affordable, I bought one paying a large deposit and took out HP for the other £200 payable over 12 months. The interest on the £200 was £80.00 and it taught me NEVER to buy anything on HP again or take out a loan (apart from a mortgage). I have credit cards which I pay off completely each month and I have bought large items on a pay later basis, but make sure that I do pay it off before the date for payment is due. It amazes me how much some people will borrow for holidays or weddings. It would make much more sense to save up BEFOREHAND and not pay large amounts of interest, which very quickly can accumulate, especially if you miss a payment or two.
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I can't get my head around the fact that Mortgage lenders these days can take up to 10x the annual salary as the limit to the amount being lent.
I bought my house with just 2x my salary and half of my wife's salary.
I feel that there is a big problem coming around the corner when interest rates rise by a couple of percentages for many borrowers.
We are glad we have no debt beyond one months credit card spend.
I am glad that my schooling had an Economics GCE course as it helped me understand how markets and finance worked. Best lesson in school and one that should be repeated up and down the land.
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I agree. Also 40 year interest only mortgages are on offer. Makes you wonder if a big correction in house values is overdue? With worthwhile employer pensions becoming a thing of the past, many young folks seem be buying and renting out second homes as a means of providing income in their later life. All built on the notion that house prices can only go up and they’ll be plenty of equity to be had - I wonder?
I can remember interest rates hitting 15% or so in the 1980s, the implications of that happening again for some people don’t bear thinking about.
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I agree with you as so many rushed to buy to avoid stamp duty but may find that they struggle to pay their mortgages when their utility bills go up, if mortgages rates go up as well. I didn't have any lessons at school (senior school in the 60s) at all regarding economics and I think that it is something which ALL pupils should be taught,, even if it only the basics of how loans/mortgage and credit card interest rates work.
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Was very similar with us. We too were going to pay cash up front for our Volvo, but the offer of interest free loan, monthly repayments and a price reduction was too good not too accept.
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The best cash purchase we have made was our present house ,,in 1994 when and many other long turn employed staff, I was offered retirement from the soon to be privatised railways,
It was also when the housing market was still in the doldrums ,,,and Maggie had come up with right to buy
So I gave the LA a cheque
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Oh how I agree.
House prices would never have reached their current stupid silly levels. We were offered twice joint or 3 times hubby's, women would very rarely have had the main breadwinner. It was still tough, no foreign holidays etc.
Didn't have economic lessons at school, but domestic science touched on it, along with time plans. When lessons needed you to plan a tea for 2 schoolboys, wash, starch and iron a tray cloth keep a clean and tidy working area etc 🤣.
However my parents instilled us with good basic financial management, we were encouraged to save half and spend half with any money gifts. And to save for a wanted item, sometimes by the time we'd reached the target we'd gone off the item we so desperately wanted!
We've taken advantage of interest free offers buying big ticket items, paying monthly but had saved the cost before so if we couldn't pay one month we had a back up. It was in the days of decent interest rates too! We kept up with the increasing mortgage rates, 17% stands out in my mind, my in-laws were enjoying a very good return on their savings sadly not the case now we are in a similar position to them then.
I bottled taking out the what appeared to be too good an offer when purchasing our last car.
Our generation, must be one of the first to be able to house/feed/cloth ourselves and our family and still have a little left over. I cannot imagine how depressing it must be to receive your salary and almost every penny being accounted for before it hits your bank. I have vague recollections of odd months where there was more month than money and when the children were younger robbing Peter to pay Paul for shoes or similar, that only being possible because of budgeting for bills, and hoping pay day arrived before whichever Peter you'd dipped into arrived 🤔
Financial education should be taught from a very early age, being prudent can be beneficial in so many ways - including not clogging up the environment with unnecessary disposable stuff.
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10 times!!!! I thought the most was 5 times. And that interest only deals were limited to BTL properties. Interest rates are bound to increase eventually, how will people be able to afford the repayments?
I think DD and SIL got up to 4.5 times back in 2018, we thought that was a lot then, fortunately they have had some good salary increases since, and she was very careful to save as much as possible so they could afford for her to take a year off when each of the boys was born.
The housing market in Scotland, other than in a few hotspots like Edinburgh, Aberdeen, and some areas in/around Glasgow, is much more stable than in many areas, so we have not seen the huge rises and big crashes that seem common elsewhere. We have been in this house just over 33 years and it has probably "only" increased in value by a factor of 3 to 4.
Some places like Aberdeen had huge rises, due to the oil industry, but prices have crashed, so there is a good deal of negative equity around up there.
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In the late 1930s my Dad & Grandmother bought a house on a mortgage for a similar cost to the 1964 caravan! The mortgage was sustained by working and taking in lodgers, it was a small 5 roomed terrace so I guess everyone had a room with a communal kitchen and bathroom.
I discovered these living arrangements in the war time census.
We live in very different times but I think houses have held their value more than caravans.
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Unbelievably so, they’re no longer just an investment against paying dead money on rent they are now a standalone investment as an edge for releasing the equity in the future👍🏻
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Only if you can’t read the markets JV, I’ve used the equity markets & tools successfully for over 30yrs without major issues👍🏻
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I am wondering if you are talking about the same thing as JVB? I imagine JVB is talking about taking some of the value of your house as a lifetime mortgage which reduces the value of any property from an inheritance point of view? Equity Release used to have a bad reputation but there are some big players in the market now like Nationwide. Interest rates are pretty low at the moment so you have the choice of not paying the interest which will compound onto the original loan amount or you can pay the interest so that it is only the principal sum this is deducted from the eventual sale of the house.
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You’re wondering right and I think JVs warning is appropriate. Quite a few schemes have been ‘missold’ over the years, but I’m sure they work for some. Most of the problems seem to stem from the valuation of the property.
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