Cracking the Credit Crunch. Recession Veterans v Recession Virgins

Seems I'm the first! David Kuo mentions he'd like to know how people are coping with their increased household outgoings. I'm not finding it too difficult -- so far it's been a relatively easy balancing act (spend more on food = spend less on shoes!). The thing is, I'm still playing the recession V-card, and I’m wondering whether those who've been around the recession block a few times know something I don't -- specifically, whether keeping things in balance is enough, or if now's the time I should be digging in and saving like I've never saved before... Anyone?

I may wether the storm OK - I haven't invested over the last 5 years (and I missed out on the boom), but I have been saving and not spending much. I sold my house in early January, and I'm using the interest on the money to pay for rental for a year or two till I see what happens. What I expect is that the housing market will teeter and totter, but not fall - then when I start to feel confident again, and buy another house - then it will plummet!

I graduated just as the 1990 recession bit hard. Living in an era of high interest rates and rising was not easy but interestingly enough while cash was very, very tight I was able to enjoy life as my expectations were not as high as they are now. Keeping things simple, using the library, buying cheaper clothes at Oxfam, eating well but mostly vegetarian, avoiding expensive nights out, etc. avoided the pain of that recession fairly well. This time around the downturn means more cost-cutting across more areas obviously as I bought a house less than a year ago, am getting married and hoping to start a family with my lovely fiancee. Nevertheless we are keeping our cost base low, saving for large purchases and avoiding debt. A second stream of income is also valuable at these times and we are working on that too. Tough times ahead yes but with good budgeting and a long term view I am confident for the future.

We need to remember that things are never as bad as they seem in bear markets, and never as good as they seem in bull markets. Worry less about what you presently own, and concentrate on the bargains you can pick up in the next 2 or 3 years.

I keep reading about credit card rates going up, so I was quite surprised to get this email from the Halifax today:

Dear Tortoise,

To help you make the most of the credit that's available to you on your Credit Card account, we've lowered the interest rate available on your Halifax Credit Card account to 6.95% p.a. for the lifetime of the balance on balance transfers made before 8th May 2008 plus a 3% handling fee (minimum £3).

Thats down from 12.9%

They wont get me to do it, though ;-)

I keep reading about how sterling is falling in value against the euro so I was thinking about opening a euro savings account.
Does anyone know if this is possible with a bank based in the UK or would it have to be offshore ? I looked at euro offshore accounts online and the rate of interest is always a lot lower than with a sterling account. Why is this ? What are the tax implications aswell ?
Thanks for any info !

I was tripped up by the early 1990's house price fall - mortgage rocketed. I ended up renting out my flat and getting digs. I vowed never again. Took out a 17 year mortage in 1996 and since 2003 overpaid massively. Mortage ended last May - 6 years early. Rather than increase my discretionary spend following a promotion - I used the pay increase to overpay on the mortgage. Now thankfully I have no mortgage or any other debt for that matter and reasonable savings. I am lucky to be able to watch from the sidelines.

My advice is simple. Get the saving habit - get a buzz from putting funds aside for that new whatever.

I know this is not entirely to do with the credit crunch, but it certainly helps make it. When is someone going to stop bodies like DVLA & TV licence & BANKS plus others being able to make mistakes & demands without auto redress against them by law, they demand from you amounts, and you are left to prove you don't owe them, this is all done in the name of a computer error, when you finally prove you never owed the amount in the first place. Then why should their not be a case in Law that if a body has made a computer error, demanding amounts already paid, They be made to pay in compensation to the victim the same amount

sbradnam and wembdon make very valid points. The whole situation was brought about by greed. Remember the old saying - "those who live by the sword, die by the sword".

I'm a mortgage broker. The last 4-5 months have been dire. We have all heard that lenders are pulling the number of products available - but what most people fail to see is the actual scale of it. Simply put it means the choice of mortgages now is limited to a small number and if you dont fit into the banks renewed 'criteria' then tough luck.

The other trick the lenders are doing is pulling mortgage products from the market with literally a few hours notice. Plenty of applicants are falling foul of this - they think they have a mortgage in place then it evaporates in the blink of an eye.

Oh and by the way - its not only Northern Rock that has now pulled away from mortgages (they still offer them but in reality are trying desperately to ditch their mortgage clients) there are many unreported mortgage lenders that have pulled out of the market completely.

The credit crunch is a very real thing from where I stand. Oh one more thing - is our currency slide against the Euro the real integration with Europe? It is nearing parity - when it's £1=€1 then we will be in for ever.

All the best

Mart

HI - I wasn't quite sure where to chip in but here's my two-penneth . .
I recently moved my ISAs to a now provider. While chatting to the member of staff who had just performed the administration of this (in a local High Street bank), they mentioned that they had never seen so many new customers turn up at their counters trying to find a home for cheques of £35000! Looks like the Fool's message has started to sink in.
However, my point is this - if each person's money is spread thinly (if £35000 is thinly) among a selection of companies, surely, when it all goes pear shaped, all (or most) of those deposits will now be covered by the 'guarantee' - or will it? Can the system cope with paying back 90% of (nearly) all the cash on deposit? Or will the taxpayer have to fork out again. It really is a house of cards isn't it?
Cheers

Most analysts agree that this is the worst financial crisis they have seen and some say the worst since the war. So much recent UK wealth has been generated by the finacial services sector that the government are forced to prop it up. Other major growth providers have been house price increases and consumeism. These are really one and the same. People tapping their homes for cash to spend,spend,spend in a consumer debt orgy.Well for one to be up against it would be bad but all 3? Trouble is this government has been debt binging even worse than the average IKEA shopper. Brown as chancellor sold much of the countrys gold (yours and mine-not new Labours)at an all time low value and robbed our pensions to go on a big spending spree. Now in volatile times not only didnt he "fix the roof when the sun was shining" looks like he actually flogged it! When interest rates were so low the smart used it to pay off their mortgages and other loans. For them these times will offer rich pickings. Banks and building societies desperate to recapitalise are offering very generous fixed rate bonds. If you want something more racey these could possibly be the best buying conditions for years with equities plunging. Im sure people like Buffet and Soros are filling up.

Speaking as a Northern Rock borrower whos fixed rate ends 1/7/08 - we are in real bother. Have very large mortgage so difficult to re-mortgage especially as self employed. No-one seems to want to lend to self employed with no proof of income. despite fact we have had mortgages for 30 years and never missed a payment. Cant afford to pay more - help