Fiscal Fisting

[lupestripe]

Current CPI rate of inflation - 4.4%
Current RPI rate of inflation - 5.5%
Current rate of interest on my savings - 2.9%

I can't help but feel that the prudent ones amongst us are suffering for the avarice and greed of everyone else. Whilst the value of my savings decreases so does the value of the debt of those who took out loans and mortgages they could ill-afford.

I have a student loan, whose value is also decreasing over time (which is the only positive at the moment) but the worst debt I have ever been in is an overdraft of £800. Consequently I do not benefit from the current economic conditions and the message appears to be to get yourself into eyeballs of debt as you will not suffer as much as those who are sensible.

In a country which has a mantra of property is king - the rise in house prices over the last decade resulted in many people over stretching themselves and this is now the main barrier preventing a rise in interest rates as it would force many people to default on their mortgage. So prudent people like me must suffer interest rates on our savings which are wiped out by the rate of inflation. I have no intention of buying a house any time soon.

Not even stocks and shares ISAs will be sufficient now nor accounts in which you lock your money for a number of years. Clearly I made the mistake of not spunking all my money on material goods - I now know for next time.

*In response to some of the comments below, I will further the above by saying many people with mortgages were merely responding to market conditions. They shouldn't have been offered mortgages that they had no realistic way of paying back and the blame here should largely be laid at the banks and the previous government's lack of regulation. However, it was clear this country was in a property bubble and taking on such mortgages was a decision that these people made and some responsibility should lie at their door. Despite this, I think it was more down to market conditions than greed, a comment I reserve for those who have high credit card and store card debt etc. I probably should have checked this post before posting it but my bus had just arrived then my phone battery died - as crap as an excuse as that is.

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Comments

[rustyfox.livejournal.com]

Yes, I get that. It's still profoundly different from the life-shattering experience of loosing a home.

And that calculation is still only 'on paper'. No actual money is being deducted, and it's still only applicable at this present time. Whatever money isn't earning so much in a savings account today is still there to potentially earn lots more tomorrow. I'm sure in the long term, even the medium term, savings will still increase in value.

In the mean time why should anyone be exempted from the current climate because of how smart they think they are? It's a bum deal for almost everyone, but not earning so much (or loosing on paper) is in no way comparable to loosing a home, and the suggestion that anyone who does somehow deserves to through being "greedy" actually made me feel a little bit sick.

[lupestripe.livejournal.com]

Read my previous posts clearing up this matter. The greed relates to credit card debt and accruing of loans. I do think people on high mortgages were drawn in by the availability of cheap credit and didn't think about their ability to pay it back as thoroughly as perhaps they should have done. I know they were responding to market conditions but they do have to take some responsibility for the decisions they made. Despite this, I don't think these people are greedy, proving I should have checked my post before editing it as I have clearly conflated two issues.