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

[stuart-otterson.livejournal.com]

Like bad refereeing decisions, don't these things just even out over the long term of your life? We've had great years of saving, now it just balances out. Presuming we're all alive in a decades time interests may well be nice and high for savers.

[lupestripe.livejournal.com]

I hope so, I guess I am just frustrated that at the point in my life where I can become a regular saver, I am not getting any return for that investment. Thanks also for putting the main thrust of my argument in a far more eloquent way than I did above :)

[stuart-otterson.livejournal.com]

I don't blame you for feeling frustrated. Sometimes the stars just don't align the way you want them to. Well we can't all decide to take the responsible step of saving and expect the world conditions to be right. It'll be fine mate, just keep hoping and by mid decade we'll be laughing and all this will seem a long time ago. I guess it's easy to be frustrated by the short term gains we hope for, but it's all about the long run. After all saving is about using it in the future.

[lupestripe.livejournal.com]

I live in hope but this seems to be going on forever. Inflation will be between 4-5% for the rest of the year, forecasts now say, and won't go down to 2% until 2013. Interest rates were thought to rise in May but these are going to be postponed until August now, I read. It is very frustrating.

[stuart-otterson.livejournal.com]

Also I think this is the second time you've mentioned about my eloquent turn of phrases. The word eloquence gives me some sort of strange desire to read a book of quotations from Eric Cantona and start spurting out mystical French accent sentences.

[lupestripe.livejournal.com]

How eloquent are you after a bottle of cider, I wonder :P