Most regrettably, I was in a situation last week that caused me to watch the six o'clock news on the television - Something I rarely do and which I've avoided for many years. It's rubbish you see, propaganda, and is designed to destabilise individual thought and imprint how to think upon people too stupid to think for themselves. It is, quite simply, poison to the mind, and should be shunned - There's better ways to remain apprised of important events that matter to the individual.
I was unsurprised to see a "news story" about the amount of money that will be spent in the retail sector leading up to Christmas by Australians as it's a story they run at this time of the year, multiple times. I'm not sure where the figures come from, but it's large, $63.9 billion dollars, which equates to just over $2,450 for every Australian citizen or permanent resident. What the bloody fuck? #WTBF
It is expected that the vast majority of that spending, and the post-Christmas sale spending, will occur on credit cards that people will take years to repay, if ever, and buy-now pay-later schemes like After-Pay will also feature prominently.
This, at the same time as the cost of living skyrockets, the cash rate, determined by the Reserve Bank of Australia, is increasing in a bid to stem inflation and banks reacting with increases to mortgage interest rates adding hundreds and hundreds to average monthly repayments and...well, you get the idea. We're not in an environment that's heading in the right direction...but the credit spending will ensue nonetheless.
I learned the true cost of credit spending around the age of eighteen when I ran my first-ever credit card up in a few short months and spent two years paying it off.
It was $2,000, a lot of money back then, and the pain was palpable but it was a powerful lesson. Looking back, I should have known better, I was raised in a family that had very little to go around after essential spending and I felt I had a reasonably good handle on financial matters, but yeah, I was a fucken knucklehead I guess. #WTBF
These days, I'm still a knucklehead, but a much wiser knucklehead, and I'm smart enough to understand the difference between good and bad debt...and am lucky enough to have next to no debt because I worked really hard and not amassing bad debt and at paying off any I happened to have. I owe a modest amount on my house, under 20 percent of its market value, and that's it; the sum and total of my debt.
I know there's many out there who have a good understanding of financial matters and do a great job managing debt, but there's multitudes who do not. I wish they taught this stuff at school as I see it as essential to a person's life but they do not, people tend to learn the hard way, or they simply don't learn at all and carry vast sums of debt and pay exorbitant amounts of interest...whilst running up more debt.
Come Christmas time, there'll be millions of people tearing open gift-wrapping and beaming broadly about whatever it is they find. I wonder though, how well people sleep knowing the (usually) crippling amount of credit debt they place themselves in; it must be very unsettling. I also wonder how many will take whatever money they have and give themselves the gift of paying it down on their debts as a Christmas present? (I think I know the answer to that though - None.)
What's the true cost of credit spending and credit debt? I don't know, but I know it's nothing good.
I also know people will turn up to the malls, online and shopping precincts like good little lemmings to spend their other people's money then spend years repaying it with interest. They say, the definition of insanity is doing the same thing and expecting a different result. I agree, but irresponsible credit spending could be supplanted into that phrase right? I think so anyway, but what do I know, I'm just a knucklehead.
What do you think? Feel free to tell your own credit-related story or just make a comment if you wish.
Design and create your ideal life, don't live it by default - Tomorrow isn't promised so be humble and kind
The image is my crypto.com VISA card, photographed by me, with name blanked out of course. 😉
I always used to wonder how people making less than me were buying much nicer things than me. Then I realized just how imaginary the credit system really is. They had stuff, but they were swimming in debt.
My dad actually paid off credit cards with credit cards in the 80's. We spent ten years paying it off and it wasn't until my grandmother died and left him an inheritance that he was finally able to get out of the hole.
You would think I would have learned. But no, I'm a debt slave. It started as essentials, padding the budget when we couldn't afford car repairs or things for the house. Then it just blew up into who the hell knows what. I don't even know what I'm in debt for, it's been so long making payments.
I agree with @oceanbee that the system in the US is awful. You have to get credit to have credit. It's a bit like needing ten years of experience for an entry level job. If you pay off a debt, don't dare close it, because that kills your credit score. Without a good credit score you can't get credit to buy anything that credit has inflated the price of. It's a vicious cycle.
I'm accepting any and all upvotes to help pay down my debts 😂
Yeah, I wonder the same all the time, then Rembert that living on credit seems to be in vogue. It catches up on people though, eventually.
You, and many many others, struggle with debt/credit repayments and whilst, on the surface, it seems easy to deal with (just pay more) in reality it is not at all easy. Society is leaned towards credit spending, the marketers make it look so easy and enjoyable, and people fall into the trap in exactly the way you mention; essentials then other things. A habit of spending.
I hope you're able to work yourself out of it, but aim know so many here in Australia who will never do so.
You know, I wonder about the inheritance scenario. Back in the day, it was viable to think an inheritance would be left upon the death of family. These days, I think that's largely a thing of the past (at the average-person level, due to the debt they carry. I wonder what that means moving forward.
Thanks for your comment. Here's a vote to help with your credit card payment.
You're exactly right. Australians will be spending big, but they will be spending money they don't have. Christmas might as well just be renamed to Buy Now, Pay Later Month because most Australians already overleveraged will be using credit cards, Zip Pay, Zip Money, AfterPay, Hummm, Klarna and all of the other purchase now to deal with the consequences later services.
How are people surviving right now? Australia is dealing with a serious cost-of-living crisis. Sky-high rents are now one of Australia's primary drivers of inflation. It's sad, we are seeing inflation fall in the US and other countries now, but Australia isn't out of the woods yet because of our vulnerable economy.
The next CPI figures are going to be dismal. Rents have gone up double-digit percentages, which has rarely happened in the history of rents. They rarely go up this fast and hard.
And then we have the floods in NSW, causing the price of lettuce to hit $10, and electricity bills are projected to increase another 50% next year. But people will buy gifts stupidly, not knowing that Australia has yet to experience a true financial storm. It's coming. There will be a severe credit crunch next year, and some people will lose everything.
Australia used to be called the lucky country. Now you're lucky if you have a house and you're not living in your car with your family and your possessions in storage.
Well said, all of it, and I agree with it. When writing this post I was thinking about all the factors you mention and others and was shaking my head at what's to come with the Christmas/Post-Christmas credit spend...and the ramifications of it moving forward and felt good about knowing I'll not be one of those spenders.
But yeah, there's other issues as well and the cost of living is rocketing upwards and it'll not go well for so many people.
Thanks for your comment and thoughts, I appreciate it.
It's quite sad. I've thought about this a lot too. My household is very privileged. We have a good combined household income of over $200k a year. However, our mortgage payment is now 50% of our monthly income. We are at the 3% buffer that the bank used to lend us the money to buy the house.
And I am not complaining. We are fortunate to have a house, but the interest rates are biting hard. We also drive a diesel, and we've been paying $2.38 a litre for diesel. We don't even fill it up all of the way anymore because it's a 150 L tank.
I started a vegetable garden to try and offset the increased cost of living. We are growing two types of lettuce, spinach, cabbages, lots of herbs, tomatoes and a bunch of other things. Still, two adults and two kids, we don't get away with spending any less than $150 at the shop a week. We aren't living lavishly; we buy home brands where possible, yet two bags of groceries are all you can get for $150 now at Coles or Woolies.
People should be scared. I mean, we are scared, and we aren't struggling (yet). We have started to wind back our expenses because we know there will be at least another 0.25 BP increase and some more next year.
It's great to meet another Australian here. I know a few of us, but it's refreshing to encounter someone who also puts effort into what they write. It's rare on Hive you encounter well-written content.
Keep at it. You've got a new follower.
It's rather chilling, all you say, but it's the reality. Many have a lot of suffering ahead of them.
It's sad a combined income of over $200K is insufficient. The good thing is that you're addressing it. I often say it's those who react quickly and with certainty who will have the easiest of times moving forward; but that easy time might not be so easy at all. We are all in for some rough roads moving forward.
I spent 20 years as a commercial and residential real Land Agent and property developer and have seen the best and worst of situations around it. I am also lucky to owe a very small amount on my current residence and carry zero debt elsewhere. I don't go without anything, have multiple vehicles including a big thumping 200 Series LandCruiser, and have hobbies that cost money...but...I have made some adjustments, a lot really, and feel it will pay dividends down the track when things get really hard. I've got my own vegetables and fruits growing, don't go out much, am careful with running vehicles needlessly (my company car with paid fuel helps there) and generally apply an expenditure-conscious ethos. Being the sort of chap that takes care of my things, makes them last and one who has a need-over-want buying ethos helps.
Thanks for your kind words. I'll be honest and say I don't write many leofinance posts but I write daily and enjoy it. I try to inject passion, personality and effort into each, no matter the topic or theme of the post.
Thanks for the follow, I appreciate it greatly.
My credit card story? It began when I moved to Australia. At the time I was 28 and didn't have any need for a credit card in Germany but I thought it might be good to have one going down under. I didn't really use it there, it was more of a security-back-up-ticket-home thing.
Fast forward to the future - here in the US you have to have credit cards to get 'credit' e.g. to get a loan for a house. No credit card and showing that you can handle it and your f*cked. It still seems so bizarre to me. But yeah, these days I have my credit cards (yup, plural - you know for the good credit score...) on auto-
pilotpay and pay attention to the statements.Christmas spending? Well, I don't watch the news but I have a good imagination of what will be spent and - I don't understand why everything always has to be bigger, more expensive and - maybe - better. It's the world we live in.
Credit-scores are a thing here too. It used to be called credit-rating and was essential for lending as you say. It's a good way for creditors to force people into credit spending and it works a treat considering the credit debt in this country.
On the Christmas spending...Yeah, people are taught that they are lesser people if they don't have Christmases that look a certain way, as dictated to by corporations and those that market services and products. It's pretty disgusting really. Still, people have the choice and I, for one, choose a other path...many do not.
I don't know where it would fit in at school, there's so much nonsense crammed in there already and yet more stuff that "should be taught in school".
And like many other things taught in school it might not even stick beyond passing a test anyway.
It took me a few years but I finally managed to convince the outlaws that buying each other crap because "you have to have something to open on the day" (which was a borderline terrifying obsession my mother in law had, she seemed legitimately shocked when I responded with "no you don't") was pointless, and eventually my sister in lasw backed me up (she's a very neat and tidy person and I tyhink was struggling to find places for things) and ever since the kids get presents (usually money in a card for mine lately) and the adults buy each family lotto tickets or scratchies (satisfies the need of especially mother in law to give a present but isn't a thing, and hey maybe at least one of us might solve financial problems).
My parents on the other hand I let them get away with whatever because we see them 1-3 times a year.
On the one hand I don't know why anyone would go into debt for a holiday but I guess like my relatives everyone has this firm idea of what Christmas "should" look like and are determined to stick to it at any and all cost.
Yeah, and besides, they don't get much teaching done anyway, judging by the level at which school children read, spell and write. The world's fucked anyway, so it won't matter in a hundred years, if that long.
I've given one ounce silver rounds as gifts in the past...I guess I see more value in giving something that has value and it has prompted people to start stacking also. So, a double win. I buy what I need during the year so have no need for whatever nutbaggery people think I'll like at Christmas time.
It's madness! Utter madness, I say!
Love how you describe the TV news as well. Spot on
Yes to financial literacy being taught at school. Even just a basic rundown. Here's what taxes are, here's what a loan is, etc. My experience was nary even a mention of these things in passing. Stupid money taboo nonsense I suppose.
As for debt... I've been very critical from an early age and largely avoided it. At around 18-19 I discovered how fractional reserve banking works through online reading. I'm lucky I had access to the Internet at the time and could teach myself about the world... my family could barely afford the connection.
No credit card, ever. No interest in getting one. No mortgage. Got a little house that I'm restoring. It hasn't always been smooth sailing but things are okay right now. I just keep working, setting goals, building... And I try to spend money in ways that provide long term value, or mean spending less in the future.
Sometimes I'll share with a person a phrase I learned years ago, if they seem like an actual critical thinker and economics/debt comes up:
"Debt will always present itself as a service"
People get bombarded with the consumerist mentality from a young age and there's not a single bit of financial grounding offered. When I was a kid, I'd hear my parents discussing how they would make ends meet and that made me curious (and sad). I learned the hard way but learned nonetheless. That helped me get where I am today, and I'm grateful. But here's the thing, they (whomever they are) want the populace in debt...like good little slaves to the masters. I refuse.
It sounds like you are on the right path, because you put yourself upon it, and that's a good thing.
People want too much these days, but don't need my half of what they want. They get it anyway, with credit, and then feel sad and anxious that they don't have the latest one, the blue one, the slimmest one, or one with the highest megapixel camera, (or whatever) three months later and they start again. No discipline and no ownership.
Like your last line indicates, people see debt as a means to an end and a way for people to provide for their voracious want-ethos in a bid to support their lack of genuine self-worth, status or happiness. The things provide it...or an illusion of it at best.
Thanks for your comment, it's much appreciated.
Yeah, the consumerism treadmill... chasing transient thrills for ever. Never satisfied. And the planned obsolescence: Consuming the world for... what? It's a mugs game. But, we're all on our own paths. Some folks know better and live nonsensically anyway, others just don't realise the truth... maybe one day they will. I hope so, but I try not to judge. Maybe that's just naive on my part, maybe not. I'm not anything special, just a regular person. I could have easily been living the debt-addled, pointless consumer existence to this day. I think some difficult experiences in early life made me realise what really matters and what doesn't and that changed my trajectory. Lots of pain, but inestimable good came from it much later on. Life is funny...
From the old webcomic Pictures for Sad Children:
I wrote a think like a leader post a couple days ago which will go live on Thursday as part of my ongoing series...it's about the future and the fact that I believe people can lead better lives for better outcomes...but they won't. The comic above made me think about what I wrote, and believe I'm it even more.
Reminds me of a thought I had a few weeks ago; jotted it down somewhere. A kernel of an article... something to expand on one day. The idea being that there's two basic forms of cynicism. Two poles, I suppose. Constructive and destructive. The first is closer to realism while the latter is more unrealistic and self-defeating, shutting down human potential whenever it's expressed. A connection to Viktor Frankl's Will to Meaning and how every individual is an unfolding expression of the whole and therefore we all effect each other integrally, with every action.
Pretty fragmentary, but with time and effort it'll coalesce into something worth reading
That comic highlights the wider effect of a kind of leadership. Consumer product companies leading consumers into buying more products through marketing. But a narrower definition of leadership, one I prefer, would exclude that kind of broadly negative action.
Though, in reality, these corporations are winning the game we're all expected to play: the game of earning the most money... consequences be damned
I'll keep an eye out for your piece Thursday!
There might be a think like a leader week dedicated to this coming up.
Society is a strange place these days. I wonder if it was ever not strange though? I guess the difference is that people have so much choice these days, so much pressure, when back not that long ago, the pressure to survive the winter was the main thing. Society, for me at least, seems upside down and I'll be honest and say I don't like it.
Strange indeed! Best of luck to us all
May decency, freedom and human brotherhood prevail...
Join us for a Merry Christmas and a Happy New Year!
😊
I canned my CRO card, sold my stake off. I can now get better rewards on my traditional credit card, and provided I pay (and I always do) by the due date, I never pay a cent in interest.
Meanwhile, my money sits and offsets my mortgage. Win win.
There's so much trash that people buy. I hate meaningless gifts from people that just clutter up my house. You want to make me happy with a gift? Buy me a steak, or something. :D
Lol, one steak coming up.
Well ok, it might not be a steak...a burger maybe.
No need to get me anything :)
I'm "suffering" through intermittent fasting at the moment (its working, 125kg to 114kg in ~20 days, while increasing my weight lifting for all lifts +2.5KG) and right now, I'm so hangry that the only logical thing to do have a drink of water and go to bed. :D
(Don't worry, I'm still hitting around 1800-2000 calories a day, I won't be withering away)
Don't fade away mate, we need you!
Sounds good though, when you're done you'll probably find you have more energy and all. Good work.
Already feeling that way :)
The most enjoyable part is the three litres of water a day, minimum. I've cut out alcohol entirely, too. No need for that.
As my physio said to me the other week, "Stronger people are harder to kill." My dentist had a different response to that "They're also harder to get rid of."