theFIREstarter

This picture has nothing to do with the budget

Seeing as I practice the Low Info Diet I try to stay away from mainstream news hype as much as possible, but it was hard to get away from the whole yearly budget shenanigans that took place yesterday. It was on the TV at work and so I caught a few bits of it and decided to read some of the paper on the way home. First off, let’s look at the good bits for those of us looking to reach Financial Independence:

• £15,000 ISA allowance increase, converting old ISAs into NISAs (New Individual Savings Accounts – catchy eh) from July 1st
• Slight increase in personal tax allowances
• For those over 65 we have new “Pensioner Bonds” with rates at 4% for 3 year bonds
• Err… that’s about it as far as I could tell?!

OK, so I must admit the increase on the ISA limits is substantial and will allow you to build a significant stash in a faster time but the rest of it seems like tinkering as usual. Even if you look at the tax increases, according to this BBC article a higher rate tax payer will only be £646 better off compared to 2010. Although previous years increases have been significant in the allowance this years and next are only just above inflation, so the effects will be negligable for most.

They give a little here, take a little there, and overall everyone ends up pretty much exactly the same as last year, so why the big fuss? I suppose the papers have to write about something!?

Budget and the Bitches

People seem to love a good old whine in Britain don’t they? Budget day seems to be no different! One of the articles in the paper I briefly read was getting the public reaction to the budget, the general economy and how they think the government are doing and so on. It seems the general consensus across most of the board is, perhaps unsurprisingly, that:

“the government aren’t doing enough to help {insert their given situation/profession/industry here}”

and

“I don’t have enough money to afford to do exactly what I want” – which is presumably to jet off to a tropical Island every 3 months and buy a country mansion in the commuter belt.

A few other bits also got my goat (I am paraphrasing any comments here as I don’t still have the article to hand):

• Guy No.1: “People who work hard in this country are punished so there is no incentive to do anything. They should raise the higher tax rate limit to £65,000 and they’d get the money back anyway via VAT as we’d all spend our way of the recession” – This was coming from a couple with one child who earnt around £80,000 a year jointly from memory. I mean come on?! Really!? And his solution for economic recovery seems to be buying a load of plastic crap from China, which let’s just say I do not personally agree is the best solution or something I’d agree with on any level.

• Girl No.2: “Waaaah. I can’t buy a house as prices are too high. I even had to move back home with Mum and Dad. P.S. I don’t even earn £40,000 a year” (I presume it is only just under £40k as it said: “Salary: Under £40k” in the article). The suggestion that one has to earn over £40k a year to be able to save for a house is absolutely effing ridiculous for a start. Try shopping at Lidl instead of Waitrose, and cutting out the shopping trips, coffee or drinks with friends every evening and no doubt numerous trips abroad every year and you might have a chance! To put things into perspective Mrs TFS and I saved up enough to go travelling (whilst still renting). Went on a 4 month “holiday”, came back, moved in with our parents for 6 months, and saved up another 10K for the deposit on our flat within about 8 months. Granted two people do make things much easier than one but we were both earning much less than 40K per year back then.

• Couple No.3: I can’t remember the exact quotes but essentially they were earning £95,000 combined and generally we’re not very impressed with the government as they were no better off from their memory compared to a few years ago. How much better do they need things to get I ask? The woman was earning circa £50k from a marketing and PR agency and the guy was some kind of freelancer on a similar salary, so they have all needs filled and much, much more from basically tapping away on a computer and making some phone calls… it’s a hard life isn’t it!?

I genuinely have no idea what these people spend their money on but I would love to have a root through their bank statements (and no doubt credit card bills!) and see what the problem really is, and I can almost guarantee it is not anything the government has or has not done for them.

Obviously there are a lot of people in the country at the lower end of the economic spectrum where the few hundred pounds extra that the budget allows them does make a big difference and if those people were the ones in the articles it would be quite interesting to hear those other views (actually they did have one person on benefits. He was moaning as well though, *shock*, although at least he had a case as he was living on £200 a week or something like that!). But the 9 out of 10 people interviewed were actually in what should have been pretty cushty financial situations and really should have no reason to moan about (or likewise celebrate) a few hundred pounds of tax relief or cuts either way that the government randomly decides to dish out on budget day each year.

I would love to have been interviewed for one of those articles:

“Yea I’m earning a fairly middle salary, and getting on fine thanks for asking. Am I better off than one year ago? Yea I’m at least £5,000 a year better off but it was because I started reading a blog called Mr Money Mustache, not because of the UK government or their budget”

Maybe the UK government should just force everyone in the middle class to read that blog (or this one even!) next year then they wouldn’t have to make any tax cuts at all! 🙂

Back on a serious note, as usual the best advice is first to look within, and control the things you can control (i.e. your own finances and spending patterns), before blaming or worrying about externalities (i.e. the government and their policies) that you cannot.

Well this has turned into a bit of a rant hasn’t it? I feel a lot better off for it and I hope you have enjoyed reading! What are your thoughts on the budget or the state of the government / economy. Do you even care* or do you just ignore most of the tedious minutae and get on with it like me?

Update: Further reading and for a much more in depth and witty commentary you should have a read of ermine’s (Simple Living In Suffolk) posts here and here.

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*I should say that obviously I do care on a macro level about what the government is doing and their policies, for example on cutting carbon emissions (side note on that : Sign this petition here please ) and what they let big money coorporations get away with – but I am not going to obsess about the details of 1-2% cuts or increases on taxes.