25 Mar 2015, 10:33am
personal finance rant
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20 comments

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  • how Britain fell back in love with borrowing

    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

    Go on Matthew

    Go on Matthew. In the unthinking stir-fry that occupies that cranium of yours, ever look at things like this and ask yourself if there’s more to life that rolling over your Christmas consumer debt from year to year?

    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

    hawks seem on the rise

    and this lot are plotting on wrecking your cars

    1503_deer-IMG_2863_lzn

    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

    Obviously no cashback on this

    Obviously no cashback on this – grew outside the house

    no cashback here either

    no cashback here either

    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 –

    Franchised crap for you to buy to prep some brand new consumers into the Way of Shopping

    Franchised crap for you to buy to prep some brand new consumers into the Way of Shopping

    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

    dolls for the girls, on a  pink page theme, natch

    dolls for the girls, on a pink page theme, natch

    while the boys are still in blue and made of snips and snails and puppy-dog tails

    in the blue corner is some sizeable plastic pollution-in-waiting

    in the blue corner is some sizeable plastic pollution-in-waiting

    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

    A lot of those plastic toys will end up in the North Pacific Gyre

    A lot of those plastic toys will end up in the North Pacific Gyre

    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

    mounting student debt from the student loans company

    mounting student debt from the student loans company

    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 suckers customer.

    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.

    Notes:

    1. 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
    2. 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
    3. 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%

    I believe we’ve had this “spend a shit load so that you can save a tiny bit” discussion before, sparked by the arrival of some ridiculously optimistic spending requirements at local super markets ๐Ÿ˜‰

    Glad to read that I’m not the only one who doesn’t play the time consuming game of bouncing money around a million places in order to benefit from an extra 20p in account interest. Like you; my primary concern wasn’t the effort required but the risk and costs involved with just a single slip up. All it takes is for one direct debit to be blocked by a bank and the whole automated system many on MSE have built up will come grinding to a halt and hit the brick wall of account charges for not depositing the required monthly minimum.

    25 Mar 2015, 4:28pm
    by Neverland

    reply

    I think I saw a pretty chart from McKinsey that the UK now has the highest level of consumer borrowing in the world, apart from maybe the might states of Denmark and Holland

    The UK’s trade deficit with the rest of the world is also at a multi-decade high

    As far as I can tell this is largely sustained by selling off bits of Britain, particularly blocks of flats in scummy parts of London, to foriegners

    I am sure this is not at all related to our recent “economic recovery” whereby most people are so skint they have to shop at Aldi and the government with their “long term economic plan which is working” know completely what they are doing

    “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 thatโ€™s a normal thing” –> Some kind of joke surely!? Ah well, at least I never ended up in this wretched loop. I’m not sure how – a basic grasp of maths, a rejection of all things ‘fashionable’, a distinct lack of interest in what I should be doing to be considered ‘normal’…who knows. It would be helpful to understand why.

    “The whole programme was a depressing litany of furiously futile feckless foolery.” – pretty much poetry there ๐Ÿ™‚

    Mr Z

    (PS I like the photos of the hawk and the pig. Bizarrely a hawk of some kind flew into the lane between my garden and the adjacent gardens on the opposite row of houses and came away victorious with a mouse. I am in the suburbs of a big city with not much in the way of greenery and it was an unexpected treat. Perhaps he has moved this way for the unsecured lending. It was an awesome sight nonetheless)

    Sadly, I was very much like Matthew during my entire 30s! Just as well I saw sense and snapped out of it!

    Mr Z – I live in the ‘burbs of a big city and there’s a sparrowhawk that’s downed a couple of pigeons in my garden!

    @Mr Z – it seems an easy loop to get into. I am always indebted to my parents who delivered the Micawber thing –

    “don’t spend more than you earn, son”

    As for the alliteration, f*ckwittage also sprang to mind ๐Ÿ™‚

    As for the hawk, I’d bet on a sparrowhawk within the city limits. though if it was OK with a mouse it may have been something else. But I’m crap at hawks.

    The pig was mighty fine ๐Ÿ™‚

    @weenie – that’ll be a female then – hawks tend to have larger females than males, and ’tis a challenge to down a pigeon!

    It’s a dirty job, but somebody has to do it ๐Ÿ™‚

    Remember, it all has to balance somehow!
    http://coppolacomment.blogspot.co.uk/2015/03/repeat-after-me-sectoral-balances-must.html

    As for birds of prey; I love looking at the Red Kites when travelling on the M40. There are loads of them these days. ๐Ÿ™‚

    It’s a rant Erminie. Amusing, but a rant none the less.

    I agree with every word though.

    I was brought up not to get into debt. My aunt and uncle were not and had to sell their house because of credit card/overdraft debt. He was a consultant surgeon who earned twice my salary. It was a very sad time and it broke their marriage. It was a useful time to tell my kids DO NOT GET INTO DEBT.

    You can’t blame poor Matthew. As you say, he is barely sentient in financial terms. From his perspective, you just have credit card companies saying “hey you! Have some free money!”

    The problem is that the rich just aren’t spending enough to keep the likes of Matthew in proper employment. There was a good IMF paper on this recently which argued “the swings in
    saving by the rich must actually have played the most important role in the consumption
    boom-bust, since since the top 10 percent account for almost half of income and two-thirds of
    wealth.”

    Instead, it seems that the wealthy have been saving excessively and pushing their savings on the likes of Matthew (as @Greg points out, for every debtor there is a creditor).

    http://www.imf.org/external/pubs/ft/wp/2014/wp14225.pdf

    @ERG – at last a kindred spirit! I am reflecting whether my slackness is excessive with regard to cash, because I hold too much of it as it is. But with a credit card the odds are ghastly – you pick up 1,2%. Screw up and you pay north of 10%.

    These good people are clearly more methodical that I am. I track my CC spending in Quicken and when I get a bill I usually just pay what Quicken tells me is outstanding, which is invariably more than the CC bill. I’ve only got so much headspace for finance, and I concentrate that on the investing and big picture stuff.

    @Neverland – when you put it like that

    As far as I can tell this is largely sustained by selling off bits of Britain, particularly blocks of flats in scummy parts of London, to foreigners

    I have to confess to a sneaking admiration for us Brits. We’re selling something that is almost entirely virtual – location, and pumping up the value, and people come and buy it. They can’t take it away with them. There is a streak of genius in it!

    @Greg – looks like Matthew is performing a useful service to the economy by taking up the load! On the balancing front – odd that this is memoryless.

    Like the rider

    “strong growth of residential investment and ongoing growth in house prices and property transactions leave householdsโ€™ gross debt to income ratio rising back towards its pre-crisis peak by the forecast horizon. That seems consistent with supportive monetary policy and other interventions (such as Help to Buy and further support for first-time buyers announced in this Budget), but it could pose risks to the sustainability of the recovery over the medium term.”

    in the OBR doc under the chart!

    @Mattman – it was listed as a rant – I have a whole category for them!

    And same here – the financial advice I got from my parents was simple, and served me well –

    Don’t spend more than you earn, son. The only exceptions are a house, and tools of your trade/productive assets that enable you to earn more

    @Aspiring Franklin – thank you for that IMF paper – it is most interesting read. And does, indeed seem to say the rich are spending less. Not sure how pouring money into the bottomless pit that is Matthew’s lifestyle will work out for them in the long run though!

    26 Mar 2015, 9:05pm
    by underscored

    reply

    i also have 10k cash borrowed off a 3 year 0% card, it allows me to fill my isa at the beginning of the tax year instead of mid way without breaking into my emergency stash. meh free moneyโ˜บ

    I love the rants Ermine. I was planning to go hiking in the forest today and soak up the spring blossom, but awoke to being in a cloud and soaking drizzle. They got that forecast wrong so I decided to have another cup of tea this morning and see what I could read. This latest has been as good as a bit of sunshine.

    Alliteration can be like a blunderbuss, but I think in the hands of an Ermine it’s more of a scalpel. Love it too.

    Here we have these huge, black kites. They soar around over the mountain gaps in the late afternoon as if just to say “look what I can do”, at least that’s what I’d do if I was them.

    A profoundly true and important underlying message about indebtedness. Shame your spleen dilutes the veracity of your message when your personal prejudices cause you to shoot the messenger.

    28 Mar 2015, 8:52pm
    by Willem de Leeuw

    reply

    @ Ermine: There’s no doubt that unsecured credit is more readily available than back in the day but I think you may’ve forgotten about organisations like Provident Financial, founded 1880?

    Someone suggested to me that the debt based profligacy of the type you’re ranting about here might be to do with fewer (younger?) people going to church. Not that never attending has affected me but I understand that people used to be regularly lectured on this stuff on Sunday’s.

    Ah, your comments about using Quicken* and not being able to manage a credit card bill well and only having “so much headspace” is revealing: you’re no good at managing cash or you’re not interested. That’s fine, but why not say this rather than saying people are stupid or foolish for using cashback and other offers? If you pay the bill in full using a DD each month it’s very hard to slip up with the cashback CCs. Easy money for spending what you would anyway, and then combined with the cashback websites. Believe me, there’s still time to research stocks and shares… I’ll stop, but each to their own in the journey towards FI. Someone said recently that for most people it’s all about compounding marginal gains. What I haven’t seen mentioned – though you’re doing it tangentially – is when to stop.

    *I have the 2014 version but don’t like it. Terrible UI, portfolio management and reporting. Although it won’t download stock prices automatically anymore I still find Money 2005 much better, but it always was a Marmite type argument.

    28 Mar 2015, 8:55pm
    by Willem de Leeuw

    reply

    I meant, stocks and bonds.

    @underscored nicely done on the ISAs!

    @Martin it was billed as a rant. Matthew’s tribulations aren’t going to be a huge hit on the economy, but the general thinking is going to lead to needless suffering. I have sympathy for people who suffer bad luck and get into trouble – the big Ds of death, divorce and disease. But Christmas?

    @Willem de Leeuw

    Charge of being an idle barsteward in some areas accepted ๐Ÿ˜‰ I’m not in accumulation mode which may make this look different to me. I have to satisfy Micawber’s rule (in terms of spending relative to what my pension+investment income will be) and avoid being a Matthew, but I don’t have 30 years of accumulation ahead of me.

    I’m not in the class of squeezing every cost down, because life is a balance. As an example, I was prepared to drink homebrew wine last November in raising that cash without gutting my NS&I savings, because it was an emergency – I will lock down for that. But I’m just not going to do that any more, because it’s not as good by a long way; that’s an expense I’m prepared to pay because I value it. Homebrew beer can be okay, but not wine. Although it’s hard to qualify Micawber’s rule without an income I do okay.

    I found chasing the big wins to be the things that worked for me. Tax-advantaged pension savings, investment income, outing the mortgage. The savings/increased earnings from these shifted the needle on the dial, in a way squeezing cash doesn’t seem to do at the moment. If I wanted another ยฃ1000 p.a I’d rather go out and shoot some pictures and do some sound recording or the odd bit of soil research, because I own my own time so I don’t have to squeeze it in after work and it’s more interesting that looking at 20 login screens in my view.

    Each to their own, the comments were on the programme and some of these guys were sweating for not much return, it seemed seriously low-rent work, as described. They were scraping the barrel at the levels MSE people who fill in online surveys are.

    Repaying on time – I get that right, indeed using Quicken. Unless I choose to borrow at 2%, natch ๐Ÿ˜‰

    There’s a bigger picture. I used to stooze back in the day, But I can’t be bothered to chase a ‘profit’ of < about ยฃ500 p.a. or even more if it involves either a disproportionate risk of screwing up or lots of transactions and those MSE rotating bank transfers or opening zillions of accounts. I don't want more accounts, more passwords, more security risks. Not for the paltry win. When interest rates rise, then I'll reconsider. But perhaps this is also a Marmite issue, and I'm definitely in the No camp there! I'm mulling Santander 123 as you kindly pointed out, however, because it may cross the line. In general, however, I'm just too idle. I am also anomalous - I have no income which would makes running those bank accounts easier and I have lower consumer spending - I just couldn't make things like topcashback work because I didn't spend enough for it to be worth the candle. Quicken (I use the 2004 version) and Money are basically both ugly - it depends which one you started off using and got to know. All the online stuff looks so much better. But I'm just not going there either! Interesting theory on fewer people going to church. Certainly the UK is a much more individualistic and much more diverse society now,than it has bee and there are probably fewer shared values. The diversity seems to help us respond to change faster. Thrift seems particularly associated with Protestantism - Niall Ferguson made the case for that fairly strongly in his TV series Civilisation.

    There also seems to be a dreadful standard of general education, and financial products are much more complex and deliberately obfuscated which is a bad mix. Take this Telegraph how good are your maths skills. For starters, this isn’t maths, it is arithmetic. I haven’t been to school for over three and a half decades but I was able to do all these, because the bar is set pretty low. The quiz was to illustrate their article that employers are moaning about literacy and numeracy. Work has become a lot more analytical and less physical with time. We can’t afford this sort of thing as much as we used to, when the economy had more skilled craft/labour and unskilled labour jobs. At least our overpaid Council chiefs can get someone to show them how to work out a percentage on a calculator.

    If we are really churning out people who are challenged by that then no wonder Matthew doesn’t understand the arithmetic behind Micawber’s rule. And, to be honest, no wonder that Britain is falling behind in the world.

    It occurred to me that while debt can become an acute personal problem for the debtor it (initially at least) does not seem like one for the lender spreading it as they do over hundreds of thousands of individuals.
    60 years ago my parents owned a small grocery shop and were forced to extend credit to compete and survive. If one of our debtors din’t repay it became a personal problem for my parents as well – and quickly.
    They got around this dilemma by knowing the obvious deadbeats in our little town and – wait for it – refusing to extend them credit. I suppose this refusal approach is too simple a concept for our sophisticated society today (be it in the UK or the Colonies.)

    Oh yes on the subject of home brew I don’t do that either. However I got some very nice Australian and Italian stuff from a guy whose Windows 8 PC I set up and configured last week. I suppose that is 2nd career income of a sort.

    @Ray I guess that’s what credit scoring is about. Mind you, my credit score is crap and probably lower than Matthew’s – he has an income and I don’t. The score seems ot be a combination of income and not doing things wrong – I’d avoided the latter at least.

    One of the things people often miss is that retirees live and interact with others in very different ways. When I was working I jealously guarded my time, whereas now I’m happy to lend a hand if something sounds interesting.

    Like you, we occasionally open a bottle of wine that was part of a thankyou ๐Ÿ˜‰ The gift economy is a bit more pervasive once you’re shot of The Man. We’ve eaten hare, pheasants and pigeon that way too!

    @article: “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 canโ€™t say I was bamboozled by 0% actually meaning 2%”

    It’s not “2%” APR. You pay the 2% up front, on all of the borrowed money. The first (5% often) repayment you make after a month is some of the most expensive money you’ve ever borrowed — you paid 2% to borrow it for a month, an APR of 26.8%.

    Of course, subsequent repayments cost less, but your overall APR is well above 2%.

    @Jonathan Yup. Underwritten by the original caller on the cashflow. Sometimes you gotta be preprepared to pay the Man ๐Ÿ™‚

     

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