Straight Answers Are In Short Supply

Published by Paul Dubsky in Credit, 2 months 1 week 3 days 16 hours 13 minutes 35 seconds ago

The evaporation of the extraordinary strong housing market, which played the role of the darling benefactor to thousands of people for so long, means in a nutshell, that the party is now over.

What it also means, is that many have enjoyed things that came to them too easily and early in their lives, and who will now have to face the real world which requires a great deal of effort in order to enjoy the good life. Largely, the blame of course lies with those who offered so much credit to such a vast number of ready takers, unaccustomed to handle big money.

There is no automatic yes to the question if first time buyers are the ones most punished. The answer could well be that Mum and Dad suffered more, because in most cases they were the ones who borrowed money on their house which went up in value and provided the young couple with their deposit etc. The arrival of the crunch means that lots of youngsters are behind with their payments. No doubt the parents are being approached to help out yet again. Unfortunately, this cannot go on forever.

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Now that the price of housing is going significantly down with worse to come, for an elderly couple to owe money in a rapidly approaching negative equity situation on the property they borrowed is not an ideal position to be in. As regards the first time buyers who are more often than not young people starting in life, they will again pose further strain on Mum and Dad by asking permission to live with them. This often means bringing in their little ones as well, which can cause further inconvenience. By increasing the number of occupiers in a household by more than 100 per cent, the parking strain is also bound to cause problems. The answer to the question as to how long the belts have to be tightened cannot be given accurately. It is important to be aware and accept the events as they unfold, rather than build castles in the air. A formula must be found for people to adhere to the realization that there is no such thing as easy money from now on. People with very little cash would do well to remember that many millionaires were made by those who were poor, but not afraid of the difficult challenges created by hard times.

There is no doubt that the present generation has been unaccustomed to respect money in the way their parents had to. This is not their fault, and it has been hugely detrimental to them. To wait and save up money to buy a car was the normal thing to do in the old days, whereas now it seems that to put down next to nothing and drive away is the way to go. The arrival of credit cards made it possible to obtain many items instantly. There is nothing wrong with that, except dishing out credit cards to every Tom Dick and Harry, was a formula for disaster. Ensuring not to issue cards in a nonchalant way is important. Of course it is unpopular to make things harder to get, and it certainly is unpopular for many businesses to see that happen. However, look where it got us!

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