Faversham Stoa is a philosophy discussion group meeting on the 3rd Tuesday of every month from 7.30 to 9.30pm in the The Bull in Tanners Street. We cover a large range of topics. If you have an idea for a topic that you would like us to cover why not drop us a line? There's no charge for membership and everyone is welcome to drop in. Just bring your brain and some beer money!

The Credit Crunch

The topic is 'Money, Debt and the Credit Crunch'. Anne Belsey will be navigating us through the intricacies of the issues. There is a very good website called http://www.moneybasics.co.uk which you might like to look at. It provides some good background information.

So just what is a is a Credit Crunch?

In general terms it's slang for a general economic condition in which loans are harder to obtain. There is a sudden reduction in the availability of loans and other types of credit from banks and capital markets at given interest rates.

The reduced availability of credit can result from many factors, including an increased perception of risk on the part of lenders, an imposition of credit controls, or a sharp restriction of the money supply.

The following has been extracted from the MoneyBasics site and will help to put our discussion in context.

Money worries

Money worries concern UK adults more than any other social issue, over and above terrorism, immigration, climate change and gun crime, according to a new report.

However, despite the fact it worries more adults individually than any other social issue, as a nation we class terrorism, immigration and gun crime of greater social concern. 43% of adults said money worries is the issue that has the greatest impact on them.

27% of people with debts have increased the amount they have borrowed in the last three months.

Around 2.03m have increased the amount they owe by 20% or more over the past three months.

33% of adults with debts are concerned or very concerned about their ability to keep on top of their borrowing .

Around 9% (3.04m people) are very concerned about their ability to manage their debts.

Britain's personal debt is increasing by around 1 million every 5 minutes.

It seems that money is fast becoming the nation?s most uncomfortable topic. Research shows that we?d rather talk about sex and health than money.

Three quarters of British couples find money the hardest subject to talk about with their partners.

Over a quarter (27%) of couples regularly argue when they try to discuss their finances; about a third (32%) of couples lie to their partners about how much they spend on their credit cards; over a third (35%) of British couples are kept awake at night worrying about their money situation.

New figures show that debt enquiries to Citizens Advice Bureaux in England and Wales have hit a record high, increasing by 20% in the last year and bringing the total to 1.7 million in 2006/07. Debt is now the number one issue advised on in bureaux, accounting for one in three of all enquiries.

Research reveals that 75% of people in the UK don't understand the monetary value a 1% difference in mortgage rates can make.

Around 15 per cent of 18 to 24- year-olds think an individual savings account (ISA) is an iPod accessory, and one in 10 reckon it's an energy drink.

One in three adults ? or around 12.4 million people ? refuse to plan their finances at all, and those that do find the time to review them set aside a miserly five minutes a week.

The number of people who save regularly is at the lowest level recorded in two years (46%).

A high number of people regularly fail to budget effectively each month resulting in 64% of people running out of cash on average 5 days before their next pay cheque.

Half the population (52%) could survive financially for just 17 days, should they suffer an unexpected loss of income, according to research by Combined Insurance.

Over one in four (27%) have no savings at all ? and a further one in four (25%) have less than 3,000 ? meaning that the savings pot of more than half of all households in the UK will last less than three months.

39% of respondents agree with the statement ?I would rather enjoy a good standard of living today than save for retirement?. It also found that over 14m adults (30%) have no financial savings or investments.

Britain is suffering from a bad case of affluenza ? ?we are caught in the grip of a spiral of conspicuous consumption where it?s no longer enough to keep up with the Joneses, but instead we want to live like our favourite celebrities?.

4.8m adults spend more than they earn and 9m adults just break even at the end of every month.

Debt - The facts

Total UK personal debt at the end of January 2008 stood at 1,412bn.

Total secured lending on homes at the end of January 2008 stood at 1,187bn.

Total consumer credit lending to individuals in January 2008 was 225bn.

Average household debt in the UK is about 9,052 (excluding mortgages).

Average household debt in the UK is around 56,708 (including mortgages).

Average owed by every UK adult is around 29,747 (including mortgages).

Average outstanding mortgage for the 11.8m households who currently have mortgages now stands at about 100,485.

Two fifths of mortgagors have secured debts of over 90,000.

The average interest paid by each household on their total debt is approximately 3,775 each year, which has increased 440 in the last 12 months.

First-time buyers contributed 20.6% of their income towards mortgage interest, up from 20.4% in September and the highest level since 1991, and movers contributed 17.6%, up from 17.5% in September and the highest level since 1992.

15% of adults struggle with over 10,000 in unsecured debt.

27,100 properties (74 a day) were taken into possession during 2007.

Credit cards

There are more credit cards in the UK than people. At the end of 2006 there were 74.4m credit and charge cards in the UK compared with around 60 million people in the country.

Total credit card debt in January 2008 was 54.7bn. The UK collective credit limit on credit cards is about 177bn.

The average interest rate on credit card lending is currently 17.67%, around 12.4% above base rate (5.25%).

More than five million people have missed monthly payments on credit cards in the past six months (11% of credit card customers).

The combined value of transactions made on charge, credit, debit and store cards was 511bn in 2006.

Young People

Adult children are ?sapping? their parents? savings and investments at an increasing rate. Over half (55%) of parents have given or loaned their children or grandchildren thousands of pounds compared to a figure of 39% last year ? an increase of 16%. The average amount given by parents to their offspring is 12,610. Four in ten (42%) adult children have used their handouts to pay off debts and 29% to buy a house.

The average graduate debt has dropped for the first time in six years. Graduates who leave university with debt now owe on average 12,363, a decrease of 889 (6%) on 2006. 54% graduates leaving university with debts of over 10,000.

Debt levels for the under-25s increase with age. The average consumer debt for 24 year olds in 2006 was 16,351. Personal loans make up the largest part of this debt (56%), followed by credit cards (28%).

Homebuyers under 25 owe an average of 20,290 on unsecured credit.

Research shows that two-thirds of teenagers do not believe they have a good knowledge of finance. It also revealed that one in five teenagers do not view being in debt as a bad thing. Young adults seemed especially susceptible to strong pressures to consume, and were prepared to borrow to do so. The use of credit to meet everyday expenditure was a way of life. For some the line between needs and wants was virtually indistinguishable.

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