financial independence

Although some stores are reporting hard times this Christmas, there are
examples of some success stories in the making. John Lewis, for
example, has reported that so far this festive season, takings are up
in comparison with 2006. It is hard to believe that shoppers are
spending more in the wake of all the financial woes that have been
reported in the second half of the year. By now, you would think that
people would be trying to bring their debt under control.

Global capital markets are lost up to a trillion dollars in recent months, and banks are all developing nervous twitches, with some still not knowing their exposure to the credit crunch and US sub-prime loans
crisis. With banks in that state, they are taking it out on those least
able to fight back - their customers - and the
banks are not lending to them as freely as they used to.

For over ten years we have seen our house values rise, and the economy,
and our spending and borrowing, has ridden on the back of that.
It's over. House prices are beginning to fall; lending is
being reined in. We're not worth as much as we used to be.

The Bank of England cut the base rate of interest last week, but
that's no use to you if you can't get a loan at all.
Credit companies are refusing applications or reducing credit limits; mortgage
lenders are tightening criteria, holding interest rates
(high) and increasing arrangement fees.

We couldn't go on borrowing forever, and now we can't.

The post-war generation knew this and lived within their means. The
generation growing up now is used to living on credit, used to having
what they want when they want it - which is now.

A severe adjustment of thinking is required. How do you teach that lesson? It could be a hard one to swallow.