How are people affording the house, kids, cars.....

homeOwner

I am constantly amazed at how people are affording to have the nice house, 2.5 kids, 2 new cars, foreign holidays etc... with creche fees or on one income.

While I dont begrudge them their success, good luck to anyone who can afford to live like that comfortably, I just dont understand how they are making ends meet. I have a pretty good job earning way above the average salary you read about in statistics. I have a morgage that I can easily afford but I live in a 2 bed apartment and want to trade up. I know i can go all out and get a reasonable 3 bed semi in the same area but I would be really over stretched and would kiss goodbye holidays, eating out and all luxeries. Not to mention I would be in serious trouble if interest rates were to go through the roof. I have no idea how people are managing it.

There must be an awful lot of people with an awful lot of money around Dublin. Are they all solicitors working on tribunals earning 2K per day? Or there is some sort of tax avoidance sceme that I am not aware of. Surely people arent all maxed out on debt - they simply cant be or am I being naieve?

Any insights?

Einstein

Hi Homeowner
I'm like you in that I have a house and a car, and can just about get by with a few quid to socialise and get groceries.
But remember what happens, you get married. The tax allowance for both partners goes up, meaning you can get a little more money a month, not that it's a whole lot, but it's something!

But to be honest, I honestly reckon most people in this country live far beyond their means and are in constant debt...sound like fun to you?

D..

Kingsize

They Never Abolished Slavery They Just Improved The Packaging

Dellgirl

They Never Abolished Slavery They Just Improved The Packaging

Haha! FAntastic! Can I have that for my sig please?

Bluehair

homeOwner wrote:

Surely people arent all maxed out on debt?

Yup thats exactly what it is. My generation (I'm 30) has only experienced cheaper and easier credit as the years go by. New car? No prob. Holiday? grand. Conservatory? Here's the dosh.

It'll all end badly though I'm convinced of it. The current attitude in Ireland is that the good times can never end so we'll live for today :rolleyes:

homeOwner

I'm same generation so I know what you mean but I also remember my parents struggling in the 80s with high tax and interest rates.

Bluehair wrote:

It'll all end badly though I'm convinced of it.

Yeah I think you're right. Once interest rates go up it is going to hurt.

MorningStar

On the face of it seems like utter maddness. There are a few things to consider. The boom is about 10 years old. Alot of people who have 2 or 3 kids didn't have them in the last year but over this time period. So a lot of the people have houses that are worth a lot more than their mortgages. So while it might mean if they bought the house now the mortgage would mean the family lifestyle needs to be funded by a huge wage the current family there don't need a huge wage.
Some can even afford to remortgage to get the cars or extensions etc.
People also under estimate the luxuries that are common. Buying a premade sandwich is a luxury as is a dvd rental etc.
In saying that some people are at risk. Intrest hikes would be a problem but they speed they can go up now is so limited while a concern it is not a risk in the way it was in 70's and 80's ireland.
Some people in their 30s have 70% equity. While others don't own at all. It depends on when you joined the market and many people forget that. Friends have a huge house in Raheny and their mortgage is one quarter of mine for a smaller house.

Divers wrote:

The tax allowance for both partners goes up, meaning you can get a little more money a month, not that it's a whole lot, but it's something!

AS somebody who got married recently I can assure you that you don't get any extra tax allowances you can share tax allowances but no real differnce. If you have children you do get tax credits and also get childrens allowance but it's not that much as you said.

Einstein

MorningStar wrote:

If you have children you do get tax credits and also get childrens allowance but it's not that much as you said.

i didn't say how much it was, just pointed out that its something

homeOwner

MorningStar wrote:

So while it might mean if they bought the house now the mortgage would mean the family lifestyle needs to be funded by a huge wage the current family there don't need a huge wage.

I think you are right about those people. I work with someone who bought a huge 4 bed house for IR£70K back in early 90s. The house is worth over 400K now and the mortgage is only 50K.

But what about the people trading up. If you sell now, even if you bought before the boom, the property you are buying has gone up equally, so you still need alot of cash saved.

Something is not adding up.

davidoco

Divers wrote:

........you get married. The tax allowance for both partners goes up, meaning you can get a little more money a month, not that it's a whole lot, but it's something!


D..

The tax free allowance (tax credit) does not go up one cent when you get married. Two single people come out the same when they get married.

Before individualisation a couple getting married could look forward to a few extra quid if one earned a lot more than the other, but that was before Charlie Mc starting messing with tax credits.

Kingsize

Haha! FAntastic! Can I have that for my sig please?

why thanks! course you can

davidoco

MorningStar wrote:

..... If you have children you do get tax credits .....

There are NO tax credits for children, not a cent, this government don't want to encourage people to have kids.

What there is, is the Home Carers Credit, which fixes the loophole that individualisation caused in 1999 but it don't make you a penny better off, of course somebody has to be the home carer (not working outside the home) to get the full credit.

The tax system here does not have favour the family. That may be a good thing or a bad thing depending on what side of the fence your on.

MorningStar

Divers wrote:

i didn't say how much it was, just pointed out that its something

I know but I was pointing out it isn't marriage it's children that effect your tax. There is not tax increase for being married my accountant assured me.

homeOwner wrote:

I think you are right about those people. I work with someone who bought a huge 4 bed house for IR£70K back in early 90s. The house is worth over 400K now and the mortgage is only 50K.

But what about the people trading up. If you sell now, even if you bought before the boom, the property you are buying has gone up equally, so you still need alot of cash saved.

Something is not adding up.

Trading up is still very possible. As per your example, €400K house sold left with €350k profit non taxable. Buy a €600k house for a mortgage of €300k. If your wages have increased over the time you could easily afford the bigger mortgage and still have 50% equity. The figures are rough so no point in jumping over them. Property does not go up equally by any strech of the imagination. In three years our first home went up so we went from 20% equity to 51% then bought a house twice the size (literally) having 23% equity and a bigger mortgage. A year and half later we have 37% equity on our current home but if we kept the other house we would have made more cash and a large amount of equity and no the fee on stamp duty.
Some people are borrowing on the equity and buying a second property and renting it out. These investors are belived by some to be the cause of price rises and they also belive these people will suffer tha most in a sudden price drop or intrest rate increase. What some over look is that many have stopped investing in ireland and that after a year or 2 the equity has been increasing so that the market would need to drop by about 40-50% for it to effect them. It's possible but more likely some people will rent for life now IMHO

homeOwner

Tax allowances or credits or whatever should be given for putting your kids in a creche. I dont have any (yet!) but it is crippling some of my friends who have no choice but to pay astranomical creche fees (well technically they do have a choice, they could live in a cheaper location and stay at home but its not much of a choice).

MorningStar

davidoco wrote:

There are NO tax credits for children, not a cent, this government don't want to encourage people to have kids.

What there is, is the Home Carers Credit, which fixes the loophole that individualisation caused in 1999 but it don't make you a penny better off, of course somebody has to be the home carer (not working outside the home) to get the full credit.

The tax system here does not have favour the family. That may be a good thing or a bad thing depending on what side of the fence your on.

I stand corrected about the tax but the reason I don't agree with. Childs allowance is given for kids and children clothes aren't taxed right? That part of the tax system favours children but obviously not enough. The fact one person can have the combined tax allowance for both is also benificial to some families but again not enough and fair for all. THere are also a lot of new employment right for parents that aren't fair for some of us who don't want children.

I don't agree that creche credit should be given as it will just push up prices of creches. I would be more inclined to state run creches and programs to train people to work in them.

SparkyLarks

homeOwner wrote:

Tax allowances or credits or whatever should be given for putting your kids in a creche. I dont have any (yet!) but it is crippling some of my friends who have no choice but to pay astranomical creche fees (well technically they do have a choice, they could live in a cheaper location and stay at home but its not much of a choice).

Not much of a choice, it's a hige choice, do you raise you kids youself or do you go and earn more money to give them a better life, it's not an easy answer.

But you have to bring in something to balance that for people who stay at home. People who stay at home are giving up a second wage to raise their kids.

Otherwise you'll end up with one partner staying at home to run a small private creche being paid by the other partner to avail of a tax break.

Dellgirl

Thanks!

babaduck

Divers wrote:

Hi Homeowner

But remember what happens, you get married. The tax allowance for both partners goes up, meaning you can get a little more money a month, not that it's a whole lot, but it's something!

But to be honest, I honestly reckon most people in this country live far beyond their means and are in constant debt...sound like fun to you?

D..

Sadly untrue for must of us married couples - we're on the same tax band & we get exactly not one cent extra. If one of us was on the lower tax band, or gave up work, then the other would get the extra tax free allowances... not in our case though

I am seriously convinced that a lot of people are living WAAAAYYY beyond their means. We're not flush by any standards, but everything we own except for the house & cars were bought outright - no interest free credit on the furniture or white goods etc. like so many people. We saved like lunatics for our stuff and then upgraded it when we could afford it. Our only loans are the mortgage & car loans (both to be cleared in 18 months).

Einstein

www.revenue.ie wrote:

Personal Circumstances 2005
Single/Widowed without dependant children 29,400 @ 20% Balance @ 42%

Single widowed qualifying for One Parent Family tax Credit 33,400 @ 20% Balance @ 42%

Married Couple one spouse with Income 38,400 @ 20% Balance @ 42%

Married Couple both spouses with Income 38,400 @ 20% with increase of 20,400 max. Balance @ 42%

This shows the difference in annual income. Therefore allowing slighly more net money per month.

davidoco

SparkyLarks wrote:

Otherwise you'll end up with one partner staying at home to run a small private creche being paid by the other partner to avail of a tax break.

If they were to give a tax credit to people who have their kids in a creche I can't see the above happening. Apart from the hassle of registering as a creche etc, the tax relief you get for paying the partner would be wiped out by the partner having to pay tax on that income.

Back to the original topic, for every couple that you see who are seemingly living the good life (house holidays etc) there are probably 20 more just getting by with the average house, one holiday in Ireland etc.

homeOwner

SparkyLarks wrote:

Not much of a choice, it's a hige choice, do you raise you kids youself or do you go and earn more money to give them a better life, it's not an easy answer.
/QUOTE]

I think you misunderstood me. What I meant is that for some people, financially, there is no choice, they need the second income. The only way they can afford to stay at home is to relocate somewhere cheaper and sacrifice living near their support system of friends and family and work etc.... So for them creche is the only choice.

Einstein

Then is the revenue site wrong? Or giving misleading info?

davidoco

Divers wrote:

This shows the difference in annual income. Therefore allowing slighly more net money per month.

That just spells it out even more

Two single persons 29400 x 2 = 58800
Married persons 38400 + 20400 = 58800


Trust me, in 1999 Charlie Mc tried to do married couples out of it, it was an idea to get women back into the workforce. Of course the backlash came and he brought in the Home Carers before the budget took effect.

Think of this one, married couple both aged 55 one working kids raised. They only get a band up to 38400. Married couple with dependent kids up to 58800 band. The 20400 @ 20% is the Home Carers Credit.

Einstein

sigh!

b'stards

SparkyLarks

homeowner I understand you point but ther is always a choice. people can change jobs for ones with less hours, stay at home, find a work from home job, use a creche.
Raising a child will always require sacrifice, be it financial(using a creche) or career( staying at home), or income( combination of the two).

As to wher people get the money, I think if you have a morgage for a few years you repayments still the same but you wages have probably increased. You might have a house worth 300,000 that cost 200,000 so you repayments are around 800 instaead of 1000. You wages may have gone up by 2 or 3 hundred a month net

I don't know of anyone who's just bought a house who has loads of money for holidays ect. If you've just bought a house and that's followed by a child joining you family quickly then you'll definately need the second income, and a creche( or a grandmother, that's what people used to do for years). and things will be very tight

If you've had a house for 5 years before a child joins your family, your morgage payments will be much lower relatively and so you might be able to forgo the second income.

homeOwner

SparkyLarks wrote:

homeowner I understand you point but ther is always a choice.

Yes but in my opinion its a Hobson's choice. ie all the choices are equally undesirable involving enormous sacrifice.

I agree that having kids involves life changes and it is a shame that in this country under the current situation with house prices being too high for a lot of people, high creche costs and salary increases barely keeping up with inflation, people are forced to put their kids in a creche, commute long hours and not have much quality time together to keep a standard of living that is just middle of the road.

MisterAnarchy

This is how people can afford it (or cant )
Debt levels exceed incomes for the first time
Consumers could face serious financial risk if interest rates rise sharply or if they lose their jobs, such is the high level of personal debt in the economy, the Central Bank has warned.

Last year, for the first time to date, Irish people had more debt than they were able to pay back out of their disposable income.

The Central Bank now estimates that personal debt stood at 120 per cent of disposable income at the end of 2004, up from 97 per cent in 2003.

This means that for every €1 of after-tax income last year, people owed €1.20. Ten years ago, before the economic boom, they owed just 48 cents for every €1 in after-tax income.

"In general, the more developed an economy, the higher the ratio is," Mr John Kelly, the deputy head of the bank's statistics department, said yesterday. He was speaking at the publication of the bank's first quarterly bulletin of 2005.

This surge in the ratio of personal debt to disposable income could cause big problems in the future if the pace of growth is maintained, the bank's economists believe.

The bank warned of the "heightened vulnerability" of households to higher interest rates or changes to their job status. Interest rates are currently at a cyclical low, but most commentators expect them to begin rising within the year.

When taken together, all households in the Republic owed €85 billion at the end of September. This was almost six times :eek: higher than in 1995, with the increase attributable to a greater general level of comfort with debt.

Disposable income has, however, grown much more slowly, allowing debt to surpass it for the first time last year. Irish households are now more indebted than most of their European neighbours.

MorningStar

MisterAnarchy

A little slanted on one view. In truth only a a certain section of the population are in that debit. It is more to do with the fact that are population is so young that we have such a large debit. Younger people have to borrow more. It's not to say it isn't a bit scarey.

Many of the people with kids and cars are not in huge debit due their equity. If a property crash truely brough the market down by something like 80-90% there would be a concern.

You made some points very well but economic theory basically says we are doing fine. In european view this is good for us too. It's basically gGermans who are saving the money we are spending. The revenue they are getting form our economy should help them

SparkyLarks

homeOwner wrote:

Yes but in my opinion its a Hobson's choice. ie all the choices are equally undesirable involving enormous sacrifice.

I agree that having kids involves life changes and it is a shame that in this country under the current situation with house prices being too high for a lot of people, high creche costs and salary increases barely keeping up with inflation, people are forced to put their kids in a creche, commute long hours and not have much quality time together to keep a standard of living that is just middle of the road.

Agree 100%.

As for debt levels they are a risk.We might get away with it but intrest rates will rise at some time, 1 year 5 year 10 years?? who knows. The economey can put up weith a certain rise but once things go ad everything will go bad.

If inetrest rates rise to 6 or 8 percent(double your monthly repayments, so you house despite being the same value is now twice as expensive) then people will have to seriously tighten the belt but will probably able to keep making repayments, house prices may will level out.

However if the economey slows down people won't be able . People won;t be able to afford new houses and the price of houses will fall. Then people will hold off buying houses because their prices are falling. Plus a 200,000 euro house would cost the same as a 400000 house cost now to service the mortgage so the cost of a mortgage is rising even though house prices are falling.

It will then become difficult to sell houses so proces will drop even further( a reversal of what is happening now. That will mean there will be less building being done as the price of houses have fallen. Building wages will probably fall too. ect ect.

If people sto being able to make repayments banks will repossess houses, but if they can't sellthem or only get some of the money back from the sale of them the'll raise intrest rates to recoup the losses. making things worse

The high intrest rates will also affect buisnesses many of whom will eith go out of buisness as they are unable to finance their debt, or find investors who would be more cautious. that and the fact that they can get a resonable return from banks due to hgh intrest rates. Overseas investment will relocate, either back home due to down sizing or to lower cost economies. Making things worse.

A bit of a doomsday scinario but unfortunately when things are going wrong everyhting else starts goin wrong.

ther are alot of people living now of debt, which if intrest rates rise will cause them serious trouble

Bluehair

SparkyLarks wrote:

A bit of a doomsday scinario but unfortunately when things are going wrong everyhting else starts goin wrong.

This is precisely the problem and is exactly what many are sticking their heads in the sand about.

Everything is this economy is so tightly linked to construction that even a serious slowdown in new home building will have a bad effect, one that make itself felt throughout the whole economy very quickly.

The problem is that the whole situation currently smacks of being a house of cards. One significant problem and the whole thing will fall down.

dublinguy2004

davidoco wrote:

If they were to give a tax credit to people who have their kids in a creche I can't see the above happening. Apart from the hassle of registering as a creche etc, the tax relief you get for paying the partner would be wiped out by the partner having to pay tax on that income.

Back to the original topic, for every couple that you see who are seemingly living the good life (house holidays etc) there are probably 20 more just getting by with the average house, one holiday in Ireland etc.

It's certainly true about the 20 people propping up the wealthy. It's probably more like 100. People don't really notice the less well off: disabled, homeless, pensioners, prisoners etc. Not to mention the working/'call centre' classes. I guess if you own a scutty flat within 30 minutes of the city you can count yourself lucky these days.

There certainly has been a huge transfer of wealth in terms of property in recent years. Property ownership is now beyond the reach of a large percentage of the population and will be a permanent feature of our society for years to come (in my view). The Irish economy is now at an advanced stage and like other advanced economies, large swathes of the population are tenants; most of whom remain tenants for their entire lives.

It's not all doom and gloom though. I guess if you can land a nice job, you and your partner can be the bank's bitch for 30+ years and you live in suburban bliss for the rest of your lives. The other option really is to take hold of a buoyant economy and make it for yourself. Entrepreneurship is the way forward and there are considerable opportunities for young, enthusiastic Irish people out there that just did not exist in say the 1980s. So in this sense, living in Ireland in twenty 05 is not too bad. Although I'm thinking of moving to pastures greener myself as a native Irish, non-home-owner, 24 year old graduate.

MorningStar

I think many people have missed the fact theat the boom has been for the last 10 years with increaese of 20-30% year on year at the start. That wasn't everywhere with some areas going up a lot more and some not moving.
The building trade has increased and decreased new house production a few times in this ten year period. Right now we are peaking at building again but the planning applications are down right now. That means there will be less built in a few years. So supply is slowing already for the next 5 years.
The new stock of housing is also not the prime desiable house which no matter how boring is 3 bed semi with front and back garden. Due to demographic changes approaching (increase in divorce, single parent families, people staying single etc...) the desirable or needed home may change to somehing else like a 1 bed appartment. A boyount hosuing market does not actually require new building just property movement.
Currently I agree the economy is too reliant on the construction industry. I think it would be better to utilise current property stock better. My areas is a wash with retired people living in large family homes close to all services and the city. My friends are living in appartments and townhouses that aren't big enough for them and their kids and there are no services. Surely some kind of incentive scheme could be orgainsed where everybody wins. I have made my suggestions before but not many agree.

Victor

davidoco wrote:

There are NO tax credits for children, not a cent, this government don't want to encourage people to have kids.

Tax credits are an inefficient means of supporting people with children (because you have to be on at least a middle income for tehm to be meaningful), hence for the last 10-15 years it has all been funnelled into Child Benefit.

homeOwner wrote:

Tax allowances or credits or whatever should be given for putting your kids in a creche. I dont have any (yet!) but it is crippling some of my friends who have no choice but to pay astranomical creche fees (well technically they do have a choice, they could live in a cheaper location and stay at home but its not much of a choice).

Improving the supply side for creches would probably be better. Tax credits would end up determining the price set by creches and would lead to a tiered system where those on high incomes would benefit disproportionately and would fail to bring people into the job market.

MorningStar wrote:

THere are also a lot of new employment right for parents that aren't fair for some of us who don't want children.

Who's going to clean you up when you are 75, arthritic and incontinent? Those children.

Also the benefit accrued to 2 parents and 2 children is less per capita than that for just two adults.

MorningStar wrote:

A boyount hosuing market does not actually require new building just property movement. Currently I agree the economy is too reliant on the construction industry. I think it would be better to utilise current property stock better. My areas is a wash with retired people living in large family homes close to all services and the city. My friends are living in appartments and townhouses that aren't big enough for them and their kids and there are no services. Surely some kind of incentive scheme could be orgainsed where everybody wins. I have made my suggestions before but not many agree.

Changes last year to stamp duty should have some effect, but in reality we just need granny (and mummy and daddy) to move somewhere more in line with her needs.

SparkyLarks

Bluehair wrote:

This is precisely the problem and is exactly what many are sticking their heads in the sand about.

Everything is this economy is so tightly linked to construction that even a serious slowdown in new home building will have a bad effect, one that make itself felt throughout the whole economy very quickly.

The problem is that the whole situation currently smacks of being a house of cards. One significant problem and the whole thing will fall down.

Like Oil at 100 dollars a barrel

lomb

Victor wrote:

Changes last year to stamp duty should have some effect, but in reality we just need granny (and mummy and daddy) to move somewhere more in line with her needs.

lol, after a lifetime of work, and paying mortgages u expect someone to sell there large house and live in a 1 bed flat, thats a joke. its nearly impossible to mentally trade down to something never mind physically going and doing it.
still people may have to to get children on the property ladder.

MorningStar

Victor wrote:

Who's going to clean you up when you are 75, arthritic and incontinent? Those children.

I didn't say people shouldn't have children. The fact my boss can take 6 months off and additional time through the years paid and unpaid. Try and get a promotion when your boss is not there. If I took 6 months out for a personal life choice it would effect my job. I agree we need the next generation but not having children should be as valid and supproted.

Victor wrote:

Also the benefit accrued to 2 parents and 2 children is less per capita than that for just two adults.

In what way?

Victor wrote:

Changes last year to stamp duty should have some effect, but in reality we just need granny (and mummy and daddy) to move somewhere more in line with her needs.

The changes only really helped the FTB but not really as many prices went up. THere was no benifit to encourage people to down grade. Some kind of pension benifit and FTB involvment benifit would be what I want

lomb wrote:

lol, after a lifetime of work, and paying mortgages u expect someone to sell there large house and live in a 1 bed flat, thats a joke.

Nobody suggested moving into a 1 bed flat. I was thinking more like a small bungalow that could cater better to ageing couples or individuals. It also an idea of incentives not forced movement not all would take it up either. When people get old they do have to get used to the idea they can't always remain where they are. At the moment there is a lot of money pumped into grants to adjust property for OAPs. It's grossly inefficent my gran livs in an old corpo house where the bathroom was downstairs so we needed to get her a bathroom upstairs. We lived in a similar house very close and did it for less than €3k yet after 6 months of documentation for my gran we got hers done for €16k. It was a higher spec because it needed to be wheelchair friendly but it was not €13k. That's your 13K but that's not it her gutters have been replaced , alarm allowance, drafting exclusion and additional home help. I'd guess there has been at least €35k spent on her house by the council. The same applies to her neighbours. I think this money could be better spent and benifit more. At the moment the people who will benifit in the long term are realistically going to be my parents who already own additional property. They think it is unfair too but there aren't other options.

dublinguy2004

Eh I'm not sure what institute educated you. Anyway, I sense a bit of resentment about people who live in houses beyond their needs. People who buy a house are entitled to do whatever they want with it and I think the government should not interfere in any way with ones property whether there's a single bachelor or a house full of kids inside.

And as for your friends who complain because they live in tiny townhouses and apartments: Well it's their fault if they're unhappy. Nobody forced them to buy a property in public-services-lacking, gird-locked Meath or Celbridge or Lucan or some other west-Dublin suburban hole. It's a dog eat dog world out there and maybe if they planned their lives better, they wouldn't be complaining. In fact, they should count themselves lucky.

MorningStar

dublinguy2004 wrote:

Eh I'm not sure what institute educated you. Anyway, I sense a bit of resentment about people who live in houses beyond their needs.etc...

You really should say who you are talking to if you are going to start with an insult. If you are talking to me say so and re-read what I said.

Rubens

I know of a couple who top-up their mortgage up on an ongoing basis to:

1) Upgrade their car
2) Buy electrical goods
3) Go on holiday
4) Pay off Credit cards

Madness - they come out with stuff like "Well it's only an extra 50euro a month..." - and I say yeah "for the next 20 years" (and thats at the current interest rates)

There are a fair number of people living this way - Imbeciles.

RJ

uberwolf

back to the original topic somewhat. Fintan O'Toole had an excellent comment piece in the Irish Times earlier in the week on this topic.

He argued convincingly that we as a nation have completely changed our attitude to debt. Owing money no longer carried the stigma of poverty. Having a loan out to finance a lifestyle is now the norm. Easy come, easy go. The ease of securing free money creates an illusion of security which has placed many in a very precarious position.

My favourite line from the piece was reflecting on the fact that the desperate times in the eighties saw a nation crippled by debt but individuals in the black. The converse being true now. Debt, like our state assets, have simply been privatised.

MorningStar

uberwolf wrote:

He argued convincingly that we as a nation have completely changed our attitude to debt. Owing money no longer carried the stigma of poverty. Having a loan out to finance a lifestyle is now the norm. Easy come, easy go. The ease of securing free money creates an illusion of security which has placed many in a very precarious position.

Did he consider that the people who were ones from less well off backgrounds are getting themselves into debt. To me it seems pretty convieviable that the problem is the same attitude to money exists but now certain people who were not allowed credit are being given it now and don't know what to do with it. I am not try to be snobbish but social economic background has allways been an influence on lifestyle. There are always generational differences which changes things but it seems like more too me. I would never think of owning something on credit like a TV but I remember a lot of people who had to when I was growing up. If people were accustomed to that idea of paying on the never never it makes sense as credit is alowed they may apply it to everything as we are told things like money has never been so cheap. The principle attitude they grew up with sill applied to their lives but the maths changed and they just aren't money smart!
Some questions that come up here are a little scarey because some people really don't understand certain basics. Somepeople don't understand how you are meant to deal with a car on their mortgage. Watching the TV show with Eddie Hobbes shows this.

Bluehair

MorningStar wrote:

Did he consider that the people who were ones from less well off backgrounds are getting themselves into debt.

I think you have an interesting point here. I know quite a few people from poorish backgrounds who are now living the high life on credit.

We're not talking poverty here or anything but from perhaps large familys where the kids never got the luxuries that maybe some of their peers enjoyed.

Now they're older, in relatively well paid jobs with no commitments like kids themselves and most importantly; real easy access to loads of credit.

Hey Mum and Dad has to suffer so why should we deny ourselves now? The more I think of it the more people I know with this background... Whats worse is no-one has ever taught them any kind of financial prudence. They grew up living hand to mouth but aren't seeing the consequences of it for their parents because many of them are now equity rich.

It's a sad situation.

BrianD3

I can't believe that this thread has gone on for 40+ posts and nobody has mentioned Tax Evasion. I believe that this is a bigger problem in this country now than ever before. Even when income tax rates were higher than they are now the rewards for evading tax were less than they are now. The building industry is probably the biggest in Ireland today and there is huge potential for evading tax in this industry. There are literally billions being lost to the exchequer every year through tax evasion and this money is going into foreign holidays, high living etc.

This is in addition to legitimate Tax Avoidance and as already discussed, easy availability of credit.

MorningStar

BrianD3 wrote:

I can't believe that this thread has gone on for 40+ posts and nobody has mentioned Tax Evasion.

I don't disagree with you about tax evasion but I am not sure how it is relevant to how people are affording their lifestyle. There are a lot of people living the big expensive lives that don't have jobs that would allow tax evasion. There are certainly many small contractors that avoid tax and bigger ones who hire accountants to come up with places to hide money.
There is tax evasion by a lot of newer landlords too basically because they think all landlords do this. I reckon in 10 to 15 years the revenue will be taking houses off people alright. I don't think people are actually getting much income from the property right now but I am sure they are avoiding tax. Hard to get facts but I have met new landlords who are amazed I pay tax on rent.

BrianD3

MorningStar wrote:

There are a lot of people living the big expensive lives that don't have jobs that would allow tax evasion.

True. There are thousands of people with expensive lifestyles who don't evade tax at all and finance their lifestyles through credit. But at the same time there are thousands of others who fund their lifestyles through tax evasion. Tax evasion is an important factor but by no means the only factor.

MorningStar

BrianD3 wrote:

Tax evasion is an important factor but by no means the only factor.

You could be right but I have not seen anything to suggest that. It could be just my circle but I only know of one who really could and probably is avoiding tax that allows him to fund his life. Most of the time it appears to be through credit. A guy in work took out a €6k loan for his TV! I don't get that. Right now there isn't much to suggest saving as rates are so low.

crazymonkey

i bought my hose 2 yrs ago and i have a car, i am heavily in deth at the moment but its getting easier, with proper budgeting it is possible to lead a comfortable lifestyle, ok if the interest rate goes through the roof i maybe in trouble, but at 26yrs of age i am willing to take that risk, its better than paying rent in my mind,,

magpie

There must be an awful lot of people with an awful lot of money around Dublin

There are, they're called Culchies.

EU funding for unneeded produce + rezoning of farmlands for building + selling off the licence in the village pub = 05 D mercedes and €1.5 million gaff in Sandymount.

People don't have that lifestyle through work, salary or savings.