Tightening Our Belts

You can’t go anywhere lately without anyone mentioning the Credit Crunch, it’s got to a point now where it’s being blamed for everything and I think it’s nothing more than just a convenient excuse.

Have you been affected by the credit crunch? I haven’t, yet. My place of employment still managed to get the same number of bookings for our courses as last year and with that it wasn’t the hardest we had ever worked. My company deals in the professional training arena and what would you expect the first thing HR departments would cut back on in a credit crunch?………training their staff.

On a personal level, I am still able to move my small-ish sized credit card debt between various 0% interest offers, my bank overdraft hasn’t been touched and I found out the other day I am eligible for sizeable loans (then again who isn’t?). Readers may cry “What about mortgages?!”, at the end of the day, when you borrow and there is a crisis with your bank, there is nothing you can do, it’s the same as a pension, you’re taking a massive gamble. People who borrowed efficiently and kept within their means aren’t really worried about the credit crunch, from the outcries I have witnessed it was the people who borrowed above their means and bought houses that stretched their budgets to above a tangible limit, so as soon as the interest rates on their repayments rose, they couldn’t afford the repayments on their house (look at America’s Sub-Prime mortgage crisis, it’s the same here).

I have noticed changes but these changes I don’t think are dependant on the Credit Crunch. The price of oil was sky-rocketing way before the US collapse and with agriculture being hit hard, the food bills have steadily increased. I have been lucky in the respect that I can now walk to work and don’t have to fuel a vehicle nearly as much.

What grinds my gears is the way the media report this “crisis”. Every single morning, headlines are dominated by our economy and rightly so. But what we don’t need are the Fiona Phillips of this world patronising me with how I am going to live when fuel bills rise again and the food bills mean I live on cat food. She earns £500,000+ a year and I really don’t need her fake sincerity.

Life is good and I will continue to ignore this pap they are propogating, I am starting new businesses and buying more than ever before, why should I be worried about some Icelandic bank being bought out by it’s government? The reason is I bank with companies who can afford to buy their smaller counterparts so I will never have to worry.

Bankers, the lot of them.

America: Affecting Everything We Do

In 2007, America suffered quite a few economic setbacks. The Canadian Dollar (dubbed the “loonie”) had risen above it’s American counterpart, lenders went mad with cheap mortgages and Britney Spears went into complete meltdown.

All of these events filtered their way down to the likes of Me, a twenty four year old male in the rainy wilds of Essex, in the UK.

As a consumer, I was in the fortunate position of being able to profit from America’s weak dollar. I was able to order electronics, jewellery, clothing and pay for services at half the price of the British pound. This of course was blown out of all proportion by the British media, the business minds among us who profited from the weak dollar being chastised for taking commerce out of Britain.

I suppose I should have profited while I could. I say this because of my looming house purchase.

I have written couple of posts in the past about the status of the purchase, with me foolishly thinking that the mortgage would go through quickly. It has taken right up until today and is still being processed. It’s caused by the current crisis hitting the US and the UK which is lovingly referred to as the “Credit Crunch”. Let me give you a background:

The “Credit Crunch”, also known as a “liquidity crisis” or a “credit squeeze”, is where the banks won’t or can’t lend. Investors can’t or won’t buy debts. Suddenly it’s very difficult to borrow money. There is a lack of easy money. Consumers and businesses have less to spend. There could be serious ramifications for an economy. [source]

The collapse of such subprime mortgages in the US was the catalyst for the global credit crunch that has left banks nursing huge losses. Some industry analysts suggest repossessions in this country could hit 70,000 next year - the highest since 1991.

Citizens Advice claims the crisis has been fuelled by finance companies which have sold expensive home loans that were ‘doomed to fail’.

This has meant that mortgage applications are being declined in greater and greater numbers. In November of last year, applications were down 6000 from October, which was the lowest figure since the beginning of 2005. [source]

I am lucky that I am in the position where I haven’t been declined……yet. Any such event would leave a black mark on your credit rating, causing you to take higher and higher interest rates from lenders willing to give you the money for your house. I am at the position of certifying my secondary income now, with the accountants playing silly games it could still take a while.

Six months ago, I would not have had a problem, such is the unpredictability of the economy.

I am fending off the Estate Agents and being consoled by the mortgage broker, it’s a tad stressful!