Always never neverland

Friday 5th April 2019

 

We ran a piece on my JazzFM show, ( https://www.jazzfm.com/on-air/programmes/business-breakfast-with-oanda/) , on the increasing problem of personal debt. One charity last year had over half a million more troubled, indebted souls getting in touch. These were not all low earners, or reckless youths. A significant number were in their early forties and relatively well paid.

 

According to a two year old survey from  comparethemarket.com the average amount of personal debt was £8000 – and this excludes, of course, mortgages, but also student loans. Six million citizens of the UK believed they’ll never be free of debt and a  third of the population said the doors to the bank of mum and dad were forever locked.

At the time, the ‘head of money’ at Comparethemarket,com said that ‘millions of Brits could be in danger of suffering from one of the longest financial hangovers in history.’

No. It’s not a ‘hangover’. You get over that.  It’s a behavioural problem. My parents’ generation used to call it the ‘never never’. My own generation grew up with the genius slogan for the Access card – ‘it takes the waiting out of wanting.’ And we didn’t wait for what we wanted – we just stuck it on plastic.

The pain of paying is further anaesthetised for this generation. In  ‘The Choice Factory’, Richard Shotton pictures a familiar scenario. At work , it’s ten o’clock and time for a coffee. So into the local cafe – ‘where you order a skinny flat white and then, just before paying with your card, you impulsively treat yourself to some millionaire’s shortbread. Or as they grandiosely call it , billionaire’s shortbread. It’s three quid, but what the heck’.

That ‘what the heck’ is the behavioural threshold. The author also notes that some MIT professors tested their MBA students by holding an auction for basketball tickets. Half were told they could pay by credit card and half by cash. The plastic section bid on average $61 – those with cash bid $29. 

I know you aren’t surprised by this -and therein lies the problem. Not only is a credit card an easy way to buy , the calculation of the ‘cost’ is almost impossible since you don’t pay for it at the time, and that ‘spend’ is totalled each month on the credit card statement – and you don’t need to pay it off all at once.

Again, all very obvious. But when I, the ever lazy journo, searched for ‘average UK unsecured debt’, first up were the companies which aggregate, churn and then kick the can of debt down the road .Then were the charities which offer help. The reality is just pain later on. The debt never goes away.

As Richard Shotton  notes as an addendum to the credit card caper – in a riposte to the AMEX strapline the MIT academics ‘titled their paper ‘Always leave home without it’”

But you can’t can you ?

 

Michael

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