personal finance rant
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In the Ermine world, people clearing their unsecured debts sounds like A Good Thing in general, after all, when I was growing up there was no unsecured personal debt 1 and people survived, the sun rose each day and they seemed to have fewer financial crises… In the Through the Looking Glass world we have now that’s all bunk. Apparently, more unsecured borrowing is a good-news story. Let’s hear it from PriceWaterhouseCoopers
Just as daffodils herald the beginning of Spring, it’s a sure sign that people are feeling better about their economic prospects when they dust off their credit cards. […]
In the five years after 2008 people worked hard to reduce their debts and managed to clear almost a quarter of their unsecured borrowing. But the latest report shows a sudden and sharp return of unsecured lending[…] In cash terms, that’s more than ever before and a reflection that many people feel more confident about their finances than they have in a while.
Matthew’s Moronic Money Muppetry
On the radio I hear such a stupendously moronic statement from a mouth-breather that makes me ask WTF is going on here? Did I stick shift somewhere and end up on a different planet rather than a different lane?
The man-child Matthew tells us something at 16:44 that informed me that the fight is futile, the good guys lost and the bad guys won.
Q: Are you spending money you don’t have:
Err, yes, people do these days, things are expensive, you have big outgoings, …Christmas, I put things on credit card… then you get into a cycle of just paying the minimum amount…transfer the balance again…hopefully that won’t run out
I definitely use credit cards to pay for major times like …Christmas… I’ll spread that over the year, won’t be gone by the end of the year…you wanna have a good time, wanna have nice food and things…it’s important for me to keep a good credit score
Q: when was the last time you were credit free?
6 or 7 years ago
Q: is there any end in sight?
when those interest-free offers run out, and I do pay interest on some things; when that all comes on top of me I will eventually get a loan, and then it will stop..until then it works for me.
Fundamentally my lifestyle revolves around exceeding my income and I think that’s a normal thing
There are times that you weep for all the previous life-forms that struggled their way across the geological aeons, the fish that left the sea, and indeed our own human forebears who endured desperate privation to produce the pinnacle of wisdom delivered by Matthew encapsulated in
“Fundamentally my lifestyle revolves around exceeding my income and I think that’s a normal thing“
Live intentionally, Matthew. Christmas should be about gratitude, not spending to make corporations rich
Now I know you’re not a fellow who’s given to deep thought on the meaning of life and all that jazz, but Matthew, has it ever occurred to you that the purpose of your life on this sparkling blue planet may not be totally summed up in doing as you’re told and buying shit you can’t afford to make other people rich? Let’s take a look at that Christmas thang, for starters. What is Christmas? Why is it there? Ever thought about that, y’know – why do you want to have a good time, drink yourself stupid on wifebeater and pig out? Let me tell you a story
Many, many, moons ago, humans crossed from their equatorial provenance to the cold northern climes. Presumably you’ve noticed occasionally that it gets brass monkeys outside at Christmas time, you know, that bit that’s not your centrally-heated house or climate-controlled car. Those early humans had more to worry about than their credit card balance, like will it ever get warmer again, and since farm crops sensibly don’t grow much when it’s dark and cold they would slaughter their animals over winter to use the energy they stored in their fat. And they lit fires, and because they didn’t have freezers they had to get the whole village round and eat it up when they killed an animal. Unlike your pork snorkers, Matthew, which come in a plastic bag in nice bite-sized lumps a pig is 80 pounds of meat and counting; most of us can’t eat that in one sitting.
Thus we have the ancient fire festival of midwinter, because we’d really like the sun to start turning up and fire is the Next Best Thing and helps cook the pig too. Then a bunch of upstarts come along and co-opt the festival, one of the traditions of their myth is the story of gift-giving to the newborn.
Our money-men, observing that humans are still suckers for a great story at heart, hitched a ride on these ancient narratives and go telling us a story that if we give each other plastic shit and shiny baubles at this dark time of year then it is a good thing, weaving this with the subconscious thread of salvation and all that jazz. The upshot of this, Matthew, is that you are surrounded by hordes of people cleverer than you telling you to spend, spend, spend, which is why you get from one Christmas to another without ever having paid back the last one. You’re also surrounded by too many other people who do exactly the same thing because they are told that this is the way to Have Fun and A Good Time. Nevertheless, think of the first fish that dragged its finny carcass out of the water. It made the supreme sacrifice so that you could dip the clutch, slip your mind into neutral and drift unthinkingly ‘twit cradle and grave without thinking what’s wrong with the statement ‘people do these days’ as a reason for spending time shuffling your ever-increasing snowball of consumer debt from pillar to post so you can wake up the next morning and do it all again? ‘People do these days’ is rarely a good recommendation for a course of action – before gas ovens sensed the flame was on before opening the gas full whack the standard riposte to kids using that sort of logic by teachers and parents was ‘so if he puts his head in a gas oven you will too?’
One of the tragedies of consumerism, is that the capacity of an activity to nourish the human spirit often derives from the amount of effort you put into it. At least Google CFO Patrick actually invested some effort in the consumer experience of climbing Kilimanjaro; as a result he had the epiphany that he was wasting his life making shitloads of money while he could be having a better time than staring at Excel all the time. Even if he did start off with saying cheese in a tourist trap, he started somewhere. How about you, Matthew – come the next year and the rats are whooping it up on the traces of wifebeater you’ve flushed down the drains, will your overspent consumer Christmases amount to more than a hill of beans?
It’s not just the overspenders who have a problem…
The whole programme was a depressing litany of furiously futile feckless foolery. The Matthews of this world were the obvious cases, but the other extreme had its own issues. I mean, okay, so we have some people who were feeling great about not paying interest, using cashback credit cards and getting the odd few hundred pounds absolute tops. Full marks on paying back your credit card spending full at the end of the month – that is the right way to drive a credit card. Nevertheless, you’re picking up pennies in front on a bloody steamroller, guys. You only have to screw up once in a year to give up all those putative gains and it all incentivises spending. It’s just not a message you want to inject into your synapses.Yes, it’s free money – but you get charged for it in the way you have to invest time and you have to expose yourself to marketing.
I don’t spend enough on shit to make that worth while. I don’t want to give consumerism all these mental clock cycles. If I leave £500 a year on the table through not using quidco, topcashback, the latest Whizz-Bang credit card that gives you 5% cashback for six months on up to £2000 spend, well, that’s the price of a peaceful life and getting to think about something else in the time I could be doing that. There are hawks in the sky to admire
and this lot are plotting on wrecking your cars
It is possible that the whole cashback thing doesn’t give me enough return because I don’t spend enough on Stuff, and a lot of our food appears from the ground
So maybe I’m peculiarly anomalous. I don’t squeeze every dime to make it pay. It’s worth giving headspace to thinking about investments, because these are a gift that keeps on giving if I get it right, whereas cashback is piecework – where the work is spending more. Sometimes it’s easier to save the 95% on the spend rather than get the 5% back – well, it is for me. I just can’t be arsed with salami slicing low-rent amounts from The Man in return for my personal details.
As a result I’m happy to say the Saga corporation hasn’t jumped to the fact that I am over 50 and rushed to tempt me with brochures of cruises, mobility scooters and walk-in baths, because presumably the few firms I deal with haven’t got round to selling them my personal details 2. If that’s what other folk think of as a well-spent hour’s work, well good luck to ’em, I just don’t get it.
It’s not just the plastic of the cards and the financial consequences that’s a problem…
The ermine household received this Royal Mail delivered broadcast missive from the Toys ‘R Us corporation, inviting us to spend money we don’t have on our credit cards in the PwC approved way –
I know it probably shouldn’t, but it tickled the unreconstructed Ermine heart to see that the girls still play with dolls on a pink themed page
while the boys are still in blue and made of snips and snails and puppy-dog tails
I’ve clearly spent too many hours on the Guardian website because I was under the impression that this had been stamped out 😉 I do, however observe that the amount of plastic trash has grown – both by looking at parents’ homes and now looking at this I see why.
New parents often become all of a sudden terribly ardent environmentalists before they discover just how hard it is to live that way surrounded by this sort of advertising garbage. They think of the world they’re leaving to their newborn, and feel guilty about their youthful hedonism busy trashing the joint with all those short-haul city-breaks and Peruvian asparagus they used to consume. Overcome by concern for the planet they…
buy shitloads of plastic toys, many of which seem to be short-lived, either because they are poorly made and children are hard on things, often they are electronic and franchise things that have a useful service life measured in weeks and months – though that Peppa Pig has been going for three years at least. Every single piece of plastic ever made that has not been incinerated is still in this world so let’s hope one of those newborns will discover a solution to this little problem, particularly if they’d like their children to be able to eat fish
and of course the disposable electronics gets responsibly WEEE recycled at the council tip… and then get sent over to Asia where somebody else’s kids can fry them up over an open flame to win any useful constituent metals at some detriment to their health.
Funny old world, eh? If we all did less of this then Matthew might be able to pay off Christmas, parents wouldn’t have to keep taking broken plastic toys to the dump, other people’s kids far far away wouldn’t inhale so much poisonous shit. Ain’t capitalism a little bit dirty on the underside. That’s the great thing about globalisation and long supply chains. You can hide all sorts of Bad Stuff in between the cracks.
About that excellent news that unsecured debt is going up
You and Yours is riffing off the PWC report “UK unsecured debt set to rise to nearly £10,000 per household by the end of 2016“. One area I will challenge PwC is they include student debt. Apart from the usual MSE rant that student debt isn’t the same as other sorts of debt, a large amount of it is mounting up
at 6bn a year in nominal terms. Much of this is in fact government debt, there aren’t enough jobs in the future economy for 50% of the population to get what used to be known as graduate jobs. Tuition fees have been tripled, so it possible to consider student loans are responsible for about half the £20bn
Total outstanding unsecured borrowing grew by nearly £20bn in 2014 or 9%, its fastest rate of growth in at least a decade (PwC)
In that case we may not all be spending like drunken sailors on shore leave. While university may have become an unaffordable luxury for most it still isn’t in the same category as Matthew’s credit cards wilting under the strain of carrying the ghosts of Christmas Past. Some of us, however, are spending like sailors, and the general lack of financial awareness in many You and Yours listeners is shocking. None of this is beyond primary school level arithmetic – we are talking cash and credit cards, not the Black-Scholes model. 160 years ago, Wilkins Micawber had it sorted. So if you want to know where the next credit crunch is coming from, maybe it’ll have something to do the whole spending more than we earn thing. Consumerism, eh, don’tcha just love it? We consume like we need two Earths and people like Matthew think their lifestyle exceeding their earnings is a normal thing and PwC think that’s really dandy. What’s their trade again? Oh yes, accounting.
Perhaps the biggest worry, though, is that too many borrowers have a poor understanding of how financial products work – which suggests that many could take on higher levels of debt without understanding the true cost. As the market for financial products changes and innovates, it’s essential that lenders keep their eye on transparency and simplicity.
Yeah, because innovation in financial products always leads to greater transparency and simplicity. Let me fix that for you PwC
…keep an eye on transparency and simplicity to make sure that all traces of such are stamped out so that you can make more money from the
Absolutely never is financial innovation used to bamboozle the shit out of consumers like Matthew who are only just sentient in financial terms as it is. I was a wage slave for 30 years. In future the 99% are going to be indentured labour to the 0.1% for generations because they’ll sell their children’s labour without realising it – for example grizzled BTL landlords staying in the middle class by rental income puzzled by why their adult children are still living at home. The residual 0.9% may be able to break out of the system and live on the edgelands.
In some of the few words of wisdom uttered by George “Dubya” Bush
this sucker could go down
Disclosure: The Ermine owes > £10,000 on credit cards at 0% interest 3. The money is now sitting in bank accounts – because you pay up front to borrow this there’s no advantage to repaying early. I needed to raise it to underwrite a cash-flow crisis, and I didn’t want to mine my NS&I savings ‘cos I wouldn’t be able to replace them. I am therefore part of PwC’s stats, though probably atypical.
- this isn’t strictly true, there were ways and means but usually associated with the threat of violence for defaulters. What we know as consumer credit to buy Stuff was regulated hire purchase secured on the goods ↩
- perhaps they simply think I’m too skint, of course. Either way, I’m chuffed because the paper they print their bumf on that is inserted to my RSPB magazine (even when I was 40) is on shiny paper, no good at all for firelighting ↩
- having, of course paid the 2% arrangement fee, making it 2% interest not 0%, an minor example of financial innovation bringing greater transparency and simplicity to the world, though I can’t say I was bamboozled by 0% actually meaning 2% ↩