S3 Blog

2008 was a year that saw many changes all over the world, it was also the year in which the finances of millions of people suddenly thrown into turmoil. All of a sudden the credit driven lifestyles that many people were used to came to an end. Banks and other financial institutions realised that their reckless credit giving had caused thousands to live way beyond their means. This meant that repayments for mortgages, credit cards, loans and hire purchase agreements were suddenly being missed and people who had taken out large mortgages up to 125% were now faced with repossession.

From the late 1980s up until 2008 the feeling in the UK was one of spend, spend, spend on something had to give. In 2008 well-known shops and banks were now in financial crisis thanks to the global credit crunch that was hitting both the UK and the US hard. This meant that people could not afford to lead the lifestyle they have become used to and thousands found themselves out of work as businesses folded or were trying to save money through losing staff.

So what have we learned from 2008?

- Financial institutions giving lenders credit that is way beyond their means is not financially viable and this can plunge a bank, building society or the lender into crisis.

- People should learn to live within their means, even if this can seem as though they are putting their own wings. Getting credit you can’t afford is not the way to live your life and businesses will ultimately suffer as consumers are not able to carry on spending excessively.

- Jobs are not forever - too many people felt safe in the knowledge that they would have their job for life. 2008 show the world that no job is forever and any people who thought that their jobs were safe were soon to find out that this was not the case.

- With so many people out of work and with so many banks collapsing people had to find out how to live more frugally and within their means. For some this was a very difficult process and one which did not come very easily to them, whereas for others this was not a problem and something that came easily.

- Businesses also learned that they needed to look for more cost-effective ways of operating which meant that they could keep their costs low while still providing the same service to their customers.

- Giving potential homeowners mortgages of up to 125% just before house prices crashed was a very poor and miscalculated financial step for many mortgage companies.

2008 showed both businesses and consumers that the previous 15 or so years of reckless and often needless spending and living on credit was not good for the economy or the country. Today people are actively trying to combat the problems that were caused in 2008 that it will take some time before the economy is back on its feet again.