DEBT AND DEBT FOREVER
 


Personal debt among oldies is actually worse (the average adult owes £ 33,000) but the difference is that oldie debt is backed by security in the form of house values. Average debt per household when mortgage debt is excluded is about the same as personal debt for the under-30's i.e. £ 7,750. It is mostly the recent first-time buyer suckers (often under- 30's) who bought just before the crash whose personal debts including mortgage debt exceed home values, i.e. they are in the NEGATIVE EQUITY BOG.
Up to the 1950s, personal debt was scary. Job security was for the lucky few. These oldies could borrow for houses and cars.
But 4 out of 5 oldie families rented their homes and scraped through from week to week. Most held small rainy-day saving back-ups in piggy banks or saving clubs.
So from personal debt being scarce 50 years back, the Great British have become addicted to it: consuming more than the country produces. By 2007 personal debt in the UK had become a greater sum at around £ 1 trillion than total national production - GDP (see GDP for how the countries "output" statistic is made up).

Total consumer debt (shopping is driven by perceptions of wealth - the "feel good factor") rose by 7.3% in just one year (2006/7). Significantly this was the year before house prices crashed. Here is a big clue to the financial mess since 2008. Rising debt is linked to rising property prices (see HOUSE PRICES for our look at houses, flats and the importance of good locations; within house prices we discuss location grabbing and the destructive power of high Land Value).
Through property dealing and tax breaks many oldies (including MPs) impoverish the rest of us. Under-30's are not only compelled to carry their own higher education debt but are also burdened by existing oldie liabilities (future healthcare and pension) debts.
A few million fortunate oldie home-owners have paid off their mortgages. They are ferocious defenders of low property chargesDebt (and critical of Council Tax) despite their property prices increasing mostly without personal effort (e.g. because their local schools or transport links have improved). They feel free to use this share of national wealth to borrow. They may borrow to buy more property (see BUY-TO-LETS) which can earn them real rental income. Or they can, like us young renters are compelled to anyway, borrow on plastic. Expenditure on credit cards typically runs to £ 22bn of personal debt.

Personal debt concentrated among today's young is the result of deliberate economic policy. Bad-economist experts hatched the devious 1980s government plan to spend more on higher education. Oldies were sucked in by promises that all their kids would get degrees. The "higher education for all regardless of quality mirage" became a sure fire way to increase rents and property prices around good colleges and universities.

Thus as student numbers and individual debt soared to £ 23,000 [1] groups of oldies got richer. By 2006 under-30's had an average unsecured debt of £ 7,700 in 2006 but a fifth of all students owed more than £ 15,000. A half of all bankrupts today are under 30!!!

Smart young business guys and girls only borrow to get some wheeling and dealing going. Work in shops or anywhere where the owner works and see how it is done. Ask him questions - he'll be flattered and will pass on trade secrets - maybe even see you as someone to trust when he takes a holiday.

Work as a wage slave in a big outfit and you remain a tax slave - you only see a tiny bit of the action. Get some skills and work for the home owners who live near you: "I can fix that for you." "Would you like that front door painted?" "I know how to wash and clean your dog." "Can I try to fix this for you?" Buy or borrow equipment, tools, sewing machine, software, a van, a garage to fix up a few motorbikes.

Seek out people who do this. Copy their skills.

DEBT is great - IF it is for investment.

DEBT lifestyle is for mugs. Avoid these people. It is an addiction that sticks, like smoking.

Having a credit card and running up debt on it has become the norm in only 20 years. Competition between companies to attract debt is ferocious. We young are targeted hardest because spending is a status symbol. Resist. Education connives in driving the debt habit: few schools include financial planning in the curriculum. Consequently between one and two million households are said to be permanently and irretrievably in debt, i.e. they will never repay.

Debt can literally make you ill. About half of all heavy debtors suffer from depression. Pressure to spend more than can really be afforded from income is a big cause of stress and family break-up.

 

 

 

 

 

 

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Source:
[1] http://news.bbc.co.uk/1/hi/education/8205539.stm