Really? Are we in a recession?

[Whiternoise]

Don't really understand this thread.

People may be holding off buying stuff until the bargains come. Who knows.

I'd rather the stores have sales and not have sales to boost the economy.

The point was not that stores have sales - this is common knowledge and it's what stores do. The point was a rant and comment (in that order) that:

a) People moan about having no money and yet flock to a bargain when they see one - when often the bargains aren't really that good (A £500 plasma reduced from £750 is still a lot of money)

b) The majority of people shopping in these sales aren't British

Also, I don't believe that people hold off on bargains for an instant. We're a nation of compulsive spenders, even if we don't have the money to do so. Hence we have the cash4gold phenomenon, micro-loans, etc. People want the latest trend and will do anything to finance it.

[CAT-THE-FIFTH]

People want the latest trend and will do anything to finance it.

Apple iPhone4 and iPad FTW!

http://theoatmeal.com/comics/apple

[mcmiller]

You are not seriously blaming on the stores for doing what they are meant to do (sell / maximise profit / stay ahead of the competition) are you? To me, that make as much sense as blaming casinos for people's gambling habits, happy hours for binge drinking etc.

Trouble is TooNice is casinos and happy hours can fuel unsocial behaviours and I personally believe that as there are 2 parties involved the consumer and shops etc.. encouraging unsocial behavior through clever marketing etc.. they are both to blame and shops need to have ethics which they live up to and follow not just pay lip service to incorporate marketing rubbish.

[TooNice]

^ I disagree. People wants to be treated like adults (the frequent moaning about the UK turning into a nanny state etc.), then people ought to behave like adults and take responsibility for their actions. Shops, casinos and pubs (etc.) are hardly forcing anyone to shop, gamble or drink.

Are the shops meant to make a full credit checks on every individual and tell them "Sorry sir, it does not like this purchase is in your best interest"? By eliminating sales seasons and any other incentive for people to spend, you are punishing the people who -can- afford to spend (who would be able to help the economy). It's not like shops are offering 120% loan at very high interest.

Forget about the Sky TV subscriptions! At least this will be for an entire household. Think about the people spending loads of money on 18 to 24 month phone contracts so they can a flashy and overpriced iPhone 4?? Even a "bargain" iPhone 4 contract with very few inclusive minutes seems to be around £500 to £600 over 18 months! In most cases people are not only paying for the iPhone handset up-front but pay at least £30 to £40 a month for two years! So it will be closer to around £900 to £1000 in total!

The blame Apple phenomenon again. Frankly speaking, anyone with a job probably have £500-600 of disposable income over a period of 18 months (that's £1 per day). If anyone is willing to give up whatever else the £500-600 can otherwise buy over that period of time, then where is the problem?

I don't personally don't get people who spend large sum of money on a fountain pen, or the ladies (and gentlemen) who buy Gucci, LV and whatnot (some items can easily go into 4 digits), but I feel it's none of my business how people spend on what they can afford.

And frankly speaking, if people spend beyond their means, it is still their problem. They'll be caught up sooner or later, and they are the ones who are going to suffer from it. Educate your friends and family by all means if you think they've lost it, but I rather suspect a lot of people you see can afford it. In fact, if people you see on a shopping spree are likely Chinese, then you can bet your socks that they can afford it. China may have lots of issues, but as the world's second largest economy, and one that's still growing significantly, even a small percentage increase of nouveau riche is a pretty significant number.

[CAT-THE-FIFTH]

The blame Apple phenomenon again.

Not really. You are trying to make this into an Apple versus the world debate which this thread isn't about. Also,BTW my answer was to a comment about people getting Sky subscriptions. A mobile phone contract is easily more expensive especially since it is very likely that more than one person in a household will have one. Most households only have one Sky subscription.

I don't personally don't get people who spend large sum of money on a fountain pen, or the ladies (and gentlemen) who buy Gucci, LV and whatnot (some items can easily go into 4 digits), but I feel it's none of my business how people spend on what they can afford.

People who can truly afford such things will pay for them up-front instead of using credit or loans and this thread is not about such people.

However,plenty of people buy such things on long-term credit and if they cannot afford to pay off their loans it affects all of us in the end.

Frankly speaking, anyone with a job probably have £500-600 of disposable income over a period of 18 months (that's £1 per day). If anyone is willing to give up whatever else the £500-600 can otherwise buy over that period of time, then where is the problem?

but I rather suspect a lot of people you see can afford it.

Not necessarily true as credit is still easy to get. After all getting onto an 18 to 24 month contract is still a credit agreement and even a student can get one.

I am also making the assumption that the user does not go over their allocated usage allowances for the month.

Also,what happens if you lose your job then?? You are tied into paying for a contract for upto 2 years.

The whole point is that many people don't realise how much money they spend on a mobile phone. A lot of mobile phone contracts are big ripoffs ATM and trying to defend the high cost of them is counter productive. If anything the cost of the contracts should be less but when people are defending them no wonder companies think they can rip people off!

"Rip-off Britain" only has happened because people are willing to pay beyond the odds for many things. In fact I think Apple has done a commendable job profiting from people who in many cases have more money then sense!

The Apple iPhone is a very good example because not only is the phone expensive but the contracts which come with it also tend to be more expensive than normal too. IIRC,when the iPhone was first released Apple even had a cut of the line rental on top of the handset price.

Unlike in the past where a contract was usually around 12 months with a decent phone most are 18 to 24 month contracts.So basically you are spending more and having to keep the phone longer too. In the end you are spending a large amount of money and many people don't realise this because it is not one lump sum.

Even people who don't have much money are getting caught into this trap.

Guess what?? The same thing has happened with people buying items and paying for them on credit cards and store cards or using easy payment plans which have interest.

[k3vst3r]

Think a lot of people have lived beyond their means which is now biting them.

[usxhe190]

The point was not that stores have sales - this is common knowledge and it's what stores do. The point was a rant and comment (in that order) that:

a) People moan about having no money and yet flock to a bargain when they see one - when often the bargains aren't really that good (A £500 plasma reduced from £750 is still a lot of money)

b) The majority of people shopping in these sales aren't British

Also, I don't believe that people hold off on bargains for an instant. We're a nation of compulsive spenders, even if we don't have the money to do so. Hence we have the cash4gold phenomenon, micro-loans, etc. People want the latest trend and will do anything to finance it.

Oh ok I guess we can all rant about that but it is always the case. I still remember the silly Amazon "Black Friday" sales which was so so silly.

As for non-British shopping at these sales, I like the fact that they are all travelling over here to buy stuff rather than somewhere else (e.g. France) as it helps our economy. Keeps all the salespeople, hotels, restaurants, travel, etc busy and not sacked due to low demand.

[TooNice]

People who can truly afford such things will pay for them up-front instead of using credit or loans and this thread is not about such people.
[...]
Not necessarily true as credit is still easy to get. After all getting onto an 18 to 24 month contract is still a credit agreement and even a student can get one.

How do you know that? Credit cards are really not that difficult to apply for, I've had one since 1st year university (now I have two and at one point three). By and large I shove everything I can pay by card on my card though I only do so because of cashback and I do pay it off each month, but I am pretty sure that many don't. Actually, my combined limit exceed my yearly income, so I do have to watch it.

And don't phone sellers perform a credit check? Well, I suspect that it's as loose as credit card applications as the only people I've heard having issues occasionally are foreign students (and even then, it's rare).

Also,what happens if you lose your job then?? You are tied into paying for a contract for upto 2 years.

It's a risk you take. Same thing for a mortgage which is easily much more. And frankly it's a cost you can cover even part-timing on low wage.

Rest of the post

Last time I checked, Tesco do offer the iPhone 4 on 12 months contract, though there is a pretty big up front payment. Well, probably not a bad thing. But yes, I am not a big fan of this trend of longer contract term either.

But really, if someone can't work out the total cost a mobile it's still not the fault of mobile providers. How hard is it to do [Cost of handset + Monthly cost * contract length]. "Caught out"? You don't even need GCSE maths to work out something like this, the only way someone can be "caught out" is because they were too lazy to do some basic calculations. When I considered an iPhone 4, I worked out the minimum cost (there are additional charges on 0870 numbers etc.) from all providers before giving it a miss and sticking on my 3 years old phone (Tesco 12 months contract were the best though).

However, if you think that we are getting ripped off on mobile phones in the UK, you should look at how much they cost elsewhere. IMHO, mobile phones are about the only things you don't get royally ripped off in "rip off Britain". Not saying I wouldn't like it cheaper, I'd love to have everything as cheap as possible, but it's worth keeping things in perspective.

For a start, many countries were already (and are) on 18-24 months contract before the UK started on the same trend. A £30/month contract is also not on the high side when compared to many countries (including our American cousin who typically have everything much cheaper than us). As an example (just because I am currently here and have been asking) a typical phone in Japan cost £50 (on two yesar contracts). And according to one of my friend who's been studied here for a year, it's not unheard of for some students to maintain two handsets including an iPhone 4 (combined monthly expense probably exceeds £100). And this is a country that's supposed to be in recession for two decades. To be honest it's not so much the students are haemorrhaging cash, somehow they just seem to like spending on mobile phones. I don't really get it, but I won't judge it.

And if you are willing to put up with a basic phone, you can get a PAYG mobile for as little as £10 (sometime with £10 credit!). Again, it's not something I've seen/heard in elsewhere.

[Whiternoise]

Oh ok I guess we can all rant about that but it is always the case. I still remember the silly Amazon "Black Friday" sales which was so so silly.

As for non-British shopping at these sales, I like the fact that they are all travelling over here to buy stuff rather than somewhere else (e.g. France) as it helps our economy. Keeps all the salespeople, hotels, restaurants, travel, etc busy and not sacked due to low demand.

Funny thing is, the UK is actually lower priced for many things than our EU counterparts (say France, Germany, etc). Aforementioned Uncle lives and works near Nice and he buys a lot when he visits the UK simply because it's a lot cheaper - even for things like a Brita filter (it was twice as expensive over there). It's a bit like us going over there to stock up on wine.

[CAT-THE-FIFTH]

But really, if someone can't work out the total cost a mobile it's still not the fault of mobile providers. How hard is it to do [Cost of handset + Monthly cost * contract length]. "Caught out"? You don't even need GCSE maths to work out something like this, the only way someone can be "caught out" is because they were too lazy to do some basic calculations. When I considered an iPhone 4, I worked out the minimum cost (there are additional charges on 0870 numbers etc.) from all providers before giving it a miss and sticking on my 3 years old phone (Tesco 12 months contract were the best though).

If people were so good at maths then we wouldn't be in the midst of such economic problems would we??

The reason that many people are so much debt is because they could not do the maths in the first place.

However, if you think that we are getting ripped off on mobile phones in the UK, you should look at how much they cost elsewhere. IMHO, mobile phones are about the only things you don't get royally ripped off in "rip off Britain". Not saying I wouldn't like it cheaper, I'd love to have everything as cheap as possible, but it's worth keeping things in perspective.

For a start, many countries were already (and are) on 18-24 months contract before the UK started on the same trend. A £30/month contract is also not on the high side when compared to many countries (including our American cousin who typically have everything much cheaper than us). As an example (just because I am currently here and have been asking) a typical phone in Japan cost £50 (on two yesar contracts). And according to one of my friend who's been studied here for a year, it's not unheard of for some students to maintain two handsets including an iPhone 4 (combined monthly expense probably exceeds £100). And this is a country that's supposed to be in recession for two decades. To be honest it's not so much the students are haemorrhaging cash, somehow they just seem to like spending on mobile phones. I don't really get it, but I won't judge it.

And if you are willing to put up with a basic phone, you can get a PAYG mobile for as little as £10 (sometime with £10 credit!). Again, it's not something I've seen/heard in elsewhere.

In many countries people pay a larger up-front cost so they need to have the money in the first place. OTH,even someone who really does not have much money here can get a phone contract which is another debt on top of any other credit they have taken.

Also,not all students are careful with their money and end up with bigger than necessary debts after university. I suppose the whole "I want it now" culture is to blame.

The buy now pay much later attitude means that people can accrue huge amounts of debt quite easily.

[usxhe190]

Also, I don't believe that people hold off on bargains for an instant. We're a nation of compulsive spenders, even if we don't have the money to do so. Hence we have the cash4gold phenomenon, micro-loans, etc. People want the latest trend and will do anything to finance it.

Oh I missed this comment.

I agree that we are a nation of compulsive spenders (hence no use ranting but don't really care as I do moan sometimes about other things) but I know I waited for the sales to come along to buy some things for my home rather than before

[aidanjt]

"where's all the money coming from?"

Thin air, which is precisely why the global economy is in a mess.

[aidanjt]

Apple iPhone4 and iPad FTW!

http://theoatmeal.com/comics/apple

Love that one, and it pretty much applies to the economy in general.

[TooNice]

If people were so good at maths then we wouldn't be in the midst of such economic problems would we??

The reason that many people are so much debt is because they could not do the maths in the first place.

Then we have a major problem with our education system. But really, I don't buy it it. I am sure that most GCSE students can work that out. We aren't even dealing with mortgage interest here! There are many more variables influencing the economy, and I wouldn't presume that most people (myself included - not that I see myself as being good at maths) would be able to fully understand all the cause and effects and work the numbers out.

I really think it's just neglect (and perhaps the "want it now culture" or a lack of appreciation in the value of money), and the blame lies on the buyer not the seller.

I rather have the option of contract and PAYG and make my own choice rather than have the choice made for me. On one end, pre-pay phones are so rarely used in Japan that I had lots of trouble getting information - though from what I've gathered so far, they'll start at £50+, and carriers here do not unlock their handset under any circumstances. And in the past, I have shopped for mobile phones in Hong Kong and Taiwan and end up finding that I am better off with a £20-30 contract, so I stand by that the UK is one of the better countries when it comes to mobile phone ownership. But what are you suggesting? That we shouldn't have mobile contracts because some people aren't responsible enough to work out the costs / people can lose their jobs? If you are taking that route, then what about mortgages and other subscriptions?

[CAT-THE-FIFTH]

Then we have a major problem with our education system. But really, I don't buy it it. I am sure that most GCSE students can work that out. We aren't even dealing with mortgage interest here! There are many more variables influencing the economy, and I wouldn't presume that most people (myself included - not that I see myself as being good at maths) would be able to fully understand all the cause and effects and work the numbers out.

I really think it's just neglect (and perhaps the "want it now culture" or a lack of appreciation in the value of money), and the blame lies on the buyer not the seller.

I rather have the option of contract and PAYG and make my own choice rather than have the choice made for me. On one end, pre-pay phones are so rarely used in Japan that I had lots of trouble getting information - though from what I've gathered so far, they'll start at £50+, and carriers here do not unlock their handset under any circumstances. And in the past, I have shopped for mobile phones in Hong Kong and Taiwan and end up finding that I am better off with a £20-30 contract, so I stand by that the UK is one of the better countries when it comes to mobile phone ownership.

http://news.bbc.co.uk/1/hi/8499939.stm

From the article:

"Recession comparison

Compared with the last recession in the early 1990s, the latest figures show a very different picture.

The number of individual insolvencies has shot up in the past decade, and now far outstrip the numbers seen in 1992 and 1993 of about 37,000 each year, although it is easier now to be declared bankrupt.

Experts said this was because the amount of credit built up by individuals - especially on plastic - mushroomed in the last decade. Since 1993, the amount of personal debt in the UK - including mortgages - has risen from £398bn to £1.46 trillion.

IVAs were also in their infancy in 1992-3.

This means that 0.3% of the adult population was declared insolvent in 2009, a far higher rate than the 0.1% recorded in 1992 and 1993.

But the number of companies being wound up, via various forms of liquidation, still falls far short of those recorded in 1992.

Then, 24,000 companies were wound up, 2.6% of all companies in existence.

The current liquidation rate, which has increased in the past two years, is still less than 1%."

[Bugbait]

I have a few friends who don’t quite understand the implications behind taking an interest only mortgage versus repayment on their own home. Two of them are doctors (GP and Specialist). In theory they’re “intelligent” people yet they lack a lot of common sense which I suspect is due to their upbringing (rich parents who spoiled and sheltered them).

Sure, anyone with a high school education can compare and derive the numbers however the problem is with culture and attitude more than academic intelligence. Some people will always base their financial decisions on a sunny day until they get swept away by the rains. Even then they sometimes don’t learn (know a few friends in this category also). When you’re making a decent income (£100k+) and barely manage to cover your outgoings each month then something is wrong.

The recent recession was hardest on those who relied on credit on a daily basis. It had little to no impact on the cash rich or those with adequate savings.