How has the credit crunch effected you

[mdk1]

For us this year has started alot better, although not due to the credit crunch we survived on only swmbo's wage last year due to me being off work for 11months, Now i'm back at work things are looking very nice for us at the moment, although we are still careful (ish) with are spending.

[matt_theforce]

We've not done too bad upto now and have only made a few small changes which has allowed us to cut about £200 on outgoings per month, this has helped us clear off the last or our credit cards and has enabled us to start saving some money.

Our biggest problem is the slowdown in the housing market, we've been trying to sell our huose for the last 9 months but with NO success, we have quite a bit of equity tied up in the house but we need to get at it in order for us to take the next step in progressing our dreams and were finding that quite depressing as now is the perfect time for us to move on.

[slider]

have just had to take a salary cut to (hopefully) secure my job and am working harder and longer hours than ever.

No holiday this year, much less going out, canceling Sky..

['daiking']

40% drop in takings, blasted into me every day on the news.

Simple way out of this is for the government to estimate how many ppl stand to loose their jobs and sub the employer's to keep them on on reduced wages that the government will have to make up for the worker instead of benefit, there are rules to this to stop every boss in the land hopping on the cheap labour bandwagon, but to keep up the spending of hard cash not credit cash going is the only way to stop a meltdown, the difference this time is all the countries are in bed with each other this time, so if they don't act it's gonna be domino time and maybe even as mentioned Mel Gibson in leather killing punk rockers.

What you describe is what the tax credit system already does. Subsidises companies to pay inadequate wages to allow them to profit and still they cry for help.

The problem is that this has been the policy for a number of years although instead of the government borrowing the money, it’s been the public. Now the public have less appetite to borrow and their supply from the banks has become endangered it should not be the turn of the government to step in and borrow it on our behalf whether we like it or not and still expect us all to pay it back whether we benefit or not. This is intended to be complete and exhaustive explanation (I couldn't do one of those even if I tried) but it covers the very basics for a layman (i.e. me)

Over the past 10 years, much of the apparent wealth you have seen has not been earned merely created as debt. Money invented for the purpose of greasing the economy that one day must go back from where it came, with interest to make those that invented it rich and the rest of us feel satisfied from the baubles we were able to buy with it. Most obviously this "debt wealth" has been displayed in the UK in a good old fashioned asset bubble, that asset being property. We've all seen some of this debt wealth money directly and indirectly as it has been flushed through the economy. What we as consumers failed to see was that the more debt wealth we had, the poorer we became. This money has sustained a great number of otherwise poor businesses. Businesses that should really have been killed off to allow profitable business to take their place. Whether it is owners using debt to survive, flatter the figures to push up the share price or customers using their debt wealth to buy a company's product or service. The so-called boom has only succeeded in getting people into debt.

How? Well, central banks instigated an open door policy on credit expansion, retail/investment banks discovered more and more imaginative ways of creating "credit" and consequently had to find even more imaginative ways of giving it away. Which gave us low interest rates, mortgage backed securities, higher lending multiples and sub prime lending. Except this can only go on for so long before a wheel or 2 falls off which it did (in earnest) in summer 2007, starting with Northern Rock and leading to the nationalisation of most of the UK banking sector.

So, a reasonable section of the population have taken on more debt than they can reasonably sustain and new consumers of credit are expected to take on levels of debt that would be considered foolish on any traditional basis at the same time as the providers of that credit are having to be far more choosy in who they give money to and also charging the appropriate premium for borrowing that money. This is why more borrowing is not the answer. Perhaps the most foolish part being the death of deferred gratification and the consideration only of servicing the debt rather than paying it off. When it boils down to £XXXs a month we lose track of the amounts of money being talked about. £10K is not the sort of sum than can be easily saved by a typical person/family and yet due to credit we talk about hundreds of thousands of pounds owed against property as small change. Our acceptance and willingness to consume debt has severely affected our collective judgement on monetary matters.

Coming back to that first paragraph, where does that leave us? Well, if you borrow money you are expected to pay it back. If you don't that's fraud but that's a separate matter. So a couple of years ago we (collectively) were running along spending normally and borrowing a bit more to spend extra. Now we only have that normal spending money and can't borrow that bit more. Except we don't even have that much money, as we need to pay back the extra we borrowed over the past couple of years. So, we have even less money than our normal spending money. Bugger. That swing may only be a few percent over the whole economy but it will cause a lot of pain in the transition to debt repayment from debt taking. People will lose their houses and jobs, companies will go bust. This won't be an easy solution but it is the right one. Borrowing again (to give out free money) will only sustain poor business (waste of money) encourage the feckless to carry on getting into debt and delay the day we pay it back. Do we expect our children to pay for the mess we got into? We got ourselves into this mess and unfortunately we must sort it out ourselves.

This is all without considering a number of other factors and contributory mechanisms to the problem such as the Yen carry trade, deliberate undervaluing of the Chinese currency to boost exports of cheap, crap products, the use of faulty economic indicators, wholesale credit markets, credit insurance (CDO/CDS/Monoline), joke regulation of the financial sector, imprudent spending by the uk government, divisive tax system, inflation/deflation etc, etc.

[silvrs]

I'm being made redundant in a couple of months which has meant that I've been forced to look for a new job. Thankfully it looks like I've secured a new job, on very similar money, and the job itself looks much better than what I have been doing. The downside is starting all over again in a new company not knowing anyone. Hopefully the small redundancy package I will get will pay for some flights back to the UK for a holiday and catch up with family.

[ap0gee1978]

We still (just about) have more coming in than going out, although our fixed-rate mortgage looks distinctly uncompetitive now. Likewise the loan I have for my car. Then again, I had real trouble getting a new credit card on a decent rate when the balance transfer term for my last one ran out - it's abundantly clear that the banks are keeping all 'our' money from the Treasury to themselves! Echoing the thing about being shafted for being a saver, our savings used to earn more interest than our credit, but that's far from the case now. Me and SWMBO talked about paying off one with the other and then 're-stocking' with the money we'd use on repayments, however seeing how the interest rate cuts seem to have failed epically in getting the banks to actually lend, I don't personally think they'll stay this low for long - after all, if the banks are nominally in public hands, it's in the government's interests for rates to go back up to increase the banks' income...

[edit] Should point out our savings are variable-rate, hence the drop in interest compared to our (fixed-rate) credit. [/edit]

['daiking']

We still (just about) have more coming in than going out, although our fixed-rate mortgage looks distinctly uncompetitive now. Likewise the loan I have for my car.

I've thrown caution to the wind and have decided to stick on the bank's SVR for the foreseeable future, keep savings at an appropriate level for means tested benefits and paying down debt with any surplus. My wife is hoping to go back to work only 2 days a week to save the frustation of working the other 3 days only to lose it all paying out for tax and childcare (stealth tax).

I'm fed up of being beaten like a ginger stepchild so I'm trying to fight back. I'll say it again, it you can't beat them join them

Bring... it... on.

[Clunkclick]

Life much as usual - wages not keeping pace with inflation. Above inflation price increases especially food and utilities.

A total lack of appreciation, especially when I leave my house in the morning, dodging the strewn rubbish, fly-tipping, potholes in the road and break-ankle uneven paving stones, of what benefit I am receiving for my over £1300 PA Council Tax for my postage stamp sized rat-trap.

And widening the meaning of CC, a stunning realisation that I am rapidily becoming "The foreigner" in my country of birth - usually occurs, on emerging from my house, and having to answer at least 20 enquiry's for directions from the patrials of 20 other mother countries in the space of 10 minutes.

Below inflation (CPI not RPI) pay rise deferre, for nine months, by the government and some ineffective industrial action.

Credit card (HSBC) companies that pull your credit card, on the grounds of fraud every time you make an occasional purchase on the internet.

Exorbitant bank account charges imposed in arbitary fashion.

Groups of drunken youths roaming the streets at all hours of the night, littering and braeking stuff.

And of course an employment regime that is entirely orientated towards the support progressive and enlightened living - a life worth living.

Fax calls from remote diallers at 04:00

Next door neighbours returning home at 12 midnight to 04:00 and having a shout-up 7 nights a week after completing their second job tied with their tenancy.

So, yes, all the usual benefits of Globalisation and living in Europe's sceptered off-shore ****-tip.

Nick

[DaveI]

Luckily we do a lot of work for a huge building firm that has a lot of government contracts so we are still quite busy, we have next to no private enquiries for our services (A doctors and a charity are the last couple of jobs we have had).

Going back to the op's comment of a competitor looking shaky, one of our biggest competitors has had rumours they are going down the pan. When the sales of one of your divisions are down by 50% you get a glimmer of hope that you will have less competition and customers we have to buy equipment from us!

So at the minute i'm ok but my Dad has been made redundant due to a lack of work, companies cancelling service contracts to save money apparently.

One of our divisions offer low cost calls, line rentals and internet access to companies so they are doing quite well at the minute as everyone is trying to save money.

[gadgetman]

Well it seems the wags/celebs are struggling: WAG Alex Curran, Wife Of Liverpool Captain Steven Gerrard, Curbs Her Spending in The Credit Crunch | UK News | Sky News

[R1chard]

I havent cut back on anything since the credit crunch all started, I bought the fabia late last year and I have also bought my first house just recently which I feel I'm very lucky for it being mortgage free !

However my job now is 50/50 as I work in the building/manufactring trade in a factory and we have been told we arnt getting a pay rise at all this year and possibly next year and we have also lost our shift pay as there isnt enough work for the factory to work on 2 shifts (suits me doing 6-2 though lol)

All that is left to happen at work is to be told we dont have a job, this may or may not happen though as they are investing some money on new machines !

We are all just waiting to see where things go :(

All of my car plans have been put on hold for now but hopefully things will pick up and get sorted