Almost everyone, indeed, thinks like this from time to time about an expensive purchase.
But some people are much more inclined to take on debt than others. Often such people have an admirable, life-is-to-be-enjoyed mentality.
But prudent people can be admirable too, if they don’t tip into meanness.
The sort of people who deny themselves luxuries while providing for others, who live by the advice of that old man in Hamlet, ‘neither a borrower nor a lender be’.
Whether or not you are a spender or a saver is one of those things like whether or not you are a night owl or an early bird. There is a case to be made for either way of living.
And yet public policy for much of the time after the Second World War punished savers badly, and rewarded borrowers.
In Britain, and to a lesser extent in America, much of the postwar period was marked by high inflation. Indeed it was such a problem in the 1970s that there was a major political effort to stop rising prices on both sides of the Atlantic, that has been successful ever since.
The cost of living has been largely stable, as it should be.
Inflation is an appalling thing because it wipes out the value of the savings of careful people who put money aside for the future.
And it rewards carefree people who take on debt, often far more than they should.
I have really noticed this in my parents’ and grandparents’ generation. The middle classes who borrowed more for bigger houses between the 1950s and the 1980s have ended up the most asset rich of the affluent classes.
People — say teachers — who were more cautious and took out mortgages based on smaller multiples of their income than other people on the same income have ended up with less assets. Differing approaches to borrowing often explain why two people of the same age and salary have ended up in a house worth, say, £170,000 or one worth £300,000.
I write about this now because for the first time since I became an adult in the 1990s, there seems to be a risk of significant inflation. If it does happen it will be rooted in a number of things, one of which is understandable and innocent — the flooding of economies with cash as a response to Covid causing massive demand outstripping supply.
But one reason for inflation will not be so innocent.
It is that as a society we have colluded in a culture that never says no, that spurns fiscal discipline both personally and publicly, and has led to ever more unmanageable debt piles. The whole teetering edifice is kept from collapse because the collusion to which I refer is world-wide, and includes abnormally low interest rates.
Thus not only can you borrow five times your income to buy a house, if you are first time buyer you have little option but to do so to get on the housing ladder.
I am old enough to remember interest rates touching 15% in the early 1990s.
If we were to return to even half that rate, there would be widespread house repossessions. But the older generation of homeowners, the one that did well out of previous inflation, will be fine.
This is one of the reasons I am so opposed to a stupid mentality that celebrates high house prices (see recent article below on booming prices).
Governments are addicted to debt too, including supposedly responsible conservative politicians in America and — as the Budget reminded us — Tories here in the UK.
At Stormont I can think of barely an MLA who has a track record of arguing for responsible spending (in part because with devolution, NI is never carrying the debt).
Indeed look at how MLAs echo the furious demands of multiple interest groups and spending gets skewed in favour of those who shout the loudest. Other stuff gets neglected. I noticed this over the summer when a hedge at the end of a road near where I live went uncut by public authorities so it was almost a dangerous junction. Who shouts on behalf of hedge cutters?
Populist politicians at home and abroad will be happy with a spell of inflation, because it will erode the value of debt in real terms — in the same way that those people who took out big mortgages in the 1970s saw the real cost of their debt slashed by ever rising prices and incomes.
The people who will lose will be the dull but thrifty folk who are the backbone of society.
• Ben Lowry July 31: The last NI housing boom was disaster, and we need to beware a repeat
• Ben Lowry (@Benlowry2) is News Letter editor. Other articles by him below and information on how to subscribe to the paper:
• Ben Lowry Oct 23:Centenary church service should have celebrated Northern Ireland
• Ben Lowry Oct 16: Lord Frost’s speech on NI reflected notably more robust UK tactics
• Ben Lowry Oct 16: David Amess was a conscientious Tory MP who always seemed to be smiling
• Ben Lowry Oct 9: Echoes of 2019, as Boris Johnson fails to proclaim his unionism in speech
• Ben Lowry Oct 2: Unionism could make great headway lobbying in the United States
• Ben Lowry Oct 2: A belated happy 284th birthday to ourselves at the News Letter!
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