'Life savings' - do people still have them?
Discussion
Years ago the term 'life savings' was fairly common. 'He lost his life savings in the stockmarket crash', or 'they used their life savings to buy that new car' or 'the pensioner was conned out of his life savings'.
The thing is, no one I know seems to save any more. If you want something, a new car, a boat, an extension, it doesn't come out of savings, you just finance it. People seem to live to their means, if they have any spare cash it goes on 'lifestyle' or holidays, or a deposit for that new four berth caravan.
So has the mindset of years of careful saving, slowly accumulating a nest egg gone? Is the idea hopelessly outdated?
The thing is, no one I know seems to save any more. If you want something, a new car, a boat, an extension, it doesn't come out of savings, you just finance it. People seem to live to their means, if they have any spare cash it goes on 'lifestyle' or holidays, or a deposit for that new four berth caravan.
So has the mindset of years of careful saving, slowly accumulating a nest egg gone? Is the idea hopelessly outdated?
Garvin said:
Yes, some of us have been saving since we started working full time - good pension schemes, max ISA protection, high interest accounts, stocks and shares. Now 'sitting pretty' relative to some of my 'live for the present' friends and colleagues who are only now realising they are completely screwed for retirement and no time to recover the situation - the same folks who thought us stupid for planning so far ahead, so long ago!
Boringly, we lived within our means but now have little fear of old age!
Except that when they, and you, go into an old people's home, guess who will be forced to pay for it until almost every penny of that carefully hoarded stash has been drained away by the state... Boringly, we lived within our means but now have little fear of old age!
Sorry, I'm with you, you've done the right thing, but it won't necessarily ultimately put you in a better place.
Justin Cyder said:
Ari said:
No, its ok, the government have zeroed interest rates so those people will never have to suffer.
The savers suffer instead...
The tide is going out in the next few months & when the BoE get going in earnest, it'll be a different story. Easy credit is never that easy in the long run.The savers suffer instead...
TwigtheWonderkid said:
Exactly. I heard someone on the TV talking about homelessness. Said we should all be sympathetic, as if we lost our job tomorrow, we are all only a month away from being homeless ourselves.
What a load of crap. Loads of people have cleared their mortgage, loads of people have enough to cover many months, and even if you haven't, it would take far longer that a month to miss a payment and go thru all the rigmarole of getting repossessed.
Daft bint.
Agree with you entirely, but that thinking is what prompted this thread. Many many people do live exactly like this. Money comes in at end of month, all spent by end of next month, hopefully (but not necessarily) just in time for the next chunk of money in. What a load of crap. Loads of people have cleared their mortgage, loads of people have enough to cover many months, and even if you haven't, it would take far longer that a month to miss a payment and go thru all the rigmarole of getting repossessed.
Daft bint.
And I'm not knocking that. I lived like it for years, just because there simply was none to spare for saving (or even clearing the frigging overdraft!)
As I always say, good money management is the easiest thing in the world - provided you have enough of it!
But the question is, how many people that are fortunate enough to have surplus, will simply spend it on a better phone/holiday/car payments/mortgage/rent/whatever? How many these days do actually say 'you know what, I'm just going to save the extra and let it build'?
Mind you, there's precious little incentive to save when you make the square root of feck all interest and the value of it is probably going backwards...
RizzoTheRat said:
The other thing I find scary is just how little many people seem to understand about financial matters. For example an otherwise reasonably intelligent friend of mine was saving for her wedding in an account paying a pittance in interest, but had debts on a credit card at over 20% APR.
That's quite common I think. I had a mate almost fall out with me when I pointed out how daft he was to buy a £9K motorbike on finance with a fairly high APR when he had £10K sat in the bank. Apparently he couldn't touch his savings. I asked him whether, if he had £1,000 in the bank, he'd borrow £9K and put it in the same bank account as 'savings'? I was being stupid apparently.
It was beyond him that taking on the same amount of debt whilst he already had that money was effectively the same thing.
Kermit power said:
You could take another view on this one.
At the moment, he's paying interest on the motorbike, whilst earning significantly less interest on the money in the bank, so, as you say, that doesn't make sense today.
What happens if he loses his job tomorrow though?
If it was me, I'd rather know I've got £10k to live on (including paying my motorbike payments!) whilst I find another job than find myself faced with having to sell the motorbike at a big discount because I desperately need some cash to live off.
Of course, option three would be to forego the bike until he's got £19k in the bank so that he doesn't drop below his arbitrary £10k, but leaving that aside, you could say that the interest payments on the bike are the cost of prudence on his part.
Whatever way you look at it, it's far more sensible than borrowing £9k to buy a shiny toy if you've got nothing in the bank to fall back on if you lose your job!
Then I'd ask you the same question I asked him.At the moment, he's paying interest on the motorbike, whilst earning significantly less interest on the money in the bank, so, as you say, that doesn't make sense today.
What happens if he loses his job tomorrow though?
If it was me, I'd rather know I've got £10k to live on (including paying my motorbike payments!) whilst I find another job than find myself faced with having to sell the motorbike at a big discount because I desperately need some cash to live off.
Of course, option three would be to forego the bike until he's got £19k in the bank so that he doesn't drop below his arbitrary £10k, but leaving that aside, you could say that the interest payments on the bike are the cost of prudence on his part.
Whatever way you look at it, it's far more sensible than borrowing £9k to buy a shiny toy if you've got nothing in the bank to fall back on if you lose your job!
If you had £1,000 in the bank, would you take out a loan for £9,000 'just in case'? And call the interest payments 'prudence on your part'?
Because that is exactly what you are advocating.
Don said:
There is a balance between flexibility and paying the least amount possible in interest.The trick would be to save up £20K, buy the bike for cash, and still have £10K savings.
This, of course, means doing without the bike for however long.
You pays your money, you takes your choice.
That way he's no worse off day to day, his savings pot is quickly being restored, he's got his bike and he's saving himself the cost of the finance interest.
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