Buzzword: CreditCrunch! Argh!

I don’t usually delve into political debate, preferring to watch others on TV argue and abuse one another and silently make my own decisions. However, there is one phrase which keeps popping up with increasing regularity and it makes me angry each and every time: Credit Crunch.

I would hope that by now anyone who has chosen to read my ramblings would have arrived at the conclusion that I’m not stupid, I can form ideas and opinions etc, formulate well grounded arguments and so forth. So I’ll take it that I don’t have to explain my understanding of the strange financial situation that has riddled the news of recent months. Anyone who watches the media will know of what I am talking about.

The purpose of this post is to vent my anger/disgust/annoyance at this nasty buzzword which has popped into common usage all of a sudden. Okay, so there seems to be a recession in the works, either happening or about to hit us. Financial markets are supposedly in a bad way, unemployment is rising slightly, and the common people interviewed by local reporters are apparently worried about their future. Quite how severe this all really is remains to be seen, as we all know the media only reports on the harsher side of life, otherwise no one would take any interest. Well, other than those: “And on a lighter note…” topics at the end of the news about some cat stuck in a tree….blah blah.

On a side note part of me believes there is a lot of scare-mongering around at the moment, it’s just a gut feeling I have. The media portrays the world as a scary place about to go BOOM and we’ll all be back to the stone age again. For anyone with an iota of intelligence they will be able to separate facts and reliable information from rumour, speculation and plain stupidity from the media.

Now to my gripe. I’m not too sure where the CreditCrunch phrase came from, SkyNews? BBC News? The Times? Someone somewhere was sat in an office drumming up a key phrase to describe the financial situation a lot of people are facing. Maybe they needed a headline or fancy graphic for a news bulletin intro sequence, you know the type. The horrible red letters to the side of the reporters head on TV that scares the elderly, annoys the rich and wins the Phrase of the Year Award 2008.

So we have governments bailing out banks everywhere, millions wiped off the stock markets, food prices rising at a stupid rate, the common folk on the street saying things like: “I’m concerned for my future” and so on. And then we have the buzzword to describe it all. BUT….it’s not being used solely for the description of what is a global problem, but I now see it being used in adverts! Business are using this as a method to sell us stuff, by appealing to our sense of financial concern they promise not just discounts but huge reductions dedicated to BEAT THE CREDIT CRUNCH NOW WITH OUR INSANE 99% DISCOUNTS!!!!

And people supposedly will buy into this, because we’re basically pack animals and follow what the media dictates to us. We see discounts and become intrigued, we see the buzzword and realise that particular business is trying to ‘help us out’ by lowering prices. Awww, how kind of them. Bullshit. It’s just another promotion designed to keep us spending our money. And there lies the real problem.

We have become a consumable society. Through decades of advertising, social behavioral modifications and the need to keep up with current trends, we have entered the age of being unable to stop spending money, and often money we don’t have. The world is like a clock, each cog needs the other cogs to revolve at just the right speed, connecting with each other perfectly in order to maintain stability. Consumers are a small yet powerful cog, we make purchases and our money travels to another cog, the businesses, that has a whole set of cogs that in turn connect to other cogs, some lead back to consumers, others to financial cogs and so on.

If we stop our consumer cog, suddenly spending less money, that will drastically effect the rest of the cogs, they will eventually mismatch and the clock will slow down or falter in places. So who do we blame? And can we place blame? As a business owner you would want to make a profit, that means selling your product, advertising and creating a brand people recognise and want. But that isn’t enough, you have to keep your brand at the forefront of the consumers mind, new offers, new versions etc, challenging the competition etc. So once you have a solid consumer base and make regular profit you then have to maintain your product, update it, and keep consumers paying for it.

We blame ourselves. We’re driven to keep spending, therefore businesses are driven to keep selling. Each and every one of us earns a figure each year, but so many of us are living beyond that figure, spending more than we earn each year and leading into debt, this debt creeps along very slowly making it seem manageable. But it isn’t and never will be. There are credit cards, debit cards and store cards with huge APR that most don’t notice when they sign up. So we go and spend, every weekend we trundle into the city, pay for things we actually don’t really need but feel compelled to buy, and these things are pretty worthless once paid for.

A car, loses 1/2 its value the minute it leaves the showroom. The clothes you buy, worth less that 1/2 price once you have worn them. And all too often the clothes are poorly made. Tech goods, XBox, LCD TV’s, Laptops and so on, all of which are going to be worthless very soon after that exciting purchase. I’m not saying don’t buy anything, just try and think very hard before you do. Back in the 40’s they had a “Make Do and Mend” thing going on, repair what you have, look after it. We don’t have that anymore, we have a “This is crap, buy a new one NOW!” attitude.

Everyone has a credit score, a way in which those offering credit are able to assess your ability to handle and repay any credit offered to you. But this doesn’t seem to be working. This is how it should work:

  • Example income: £25k annual
  • Standard expenditure to survive: Based on rent/mortgage/bills/necessary items.
  • Disposable income: What remains after your Standard Expenditure is gone.
  • Credit: This should be based on what you can pay back every month using Disposable Income ONLY.

Credit is offered on the premise that you already have credit, your job history, how much you earn and so on. Those who offer new credit to you never look at how much other credit you already have and they should. When a new store offers you credit and they check they database, while you hand around in the store waiting impatiently to get your shiny new item home to unwrap it. After a few minutes it spits out a report, yes! You can have another £2,999.99 worth of credit slumped over your back like a dead weight.

This is so wrong! Those databases, or programs or credit advisers should have a check on what you are currently paying out, how much credit you have right then. Because once you reach a certain limit you will be unable to continue paying as there will be no money to borrow from the credit card to pay for the monthly repayment on the new LDC TV, and your wage is going on interest payments alone, but you have to pay the bills and buy food and run the car and socialise with friends don’t you? Sure you do, because the media tell you to!

Listen up, cogs are important, without your spending other cogs with seize up. A few simple rules is all you need to make sure you’re not a victim of the CreditCrunch.

  • Ask yourself seriously why you are about to buy that item.
  • Do you NEED or WANT it.
  • If you NEED it then find a cheaper one if you can.
  • If you WANT it then make sure you truly can afford it, not with more credit, but with real cash.
  • Budget for things, save money!!
  • If you enter a city on the weekend, leave the wallet/purse at home, take limited cash with you, then when you run out you can’t impulse buy.
  • Heinz beans taste the same as Tesco beans but cost more then twice as much.
  • Look for offers, BOGOF is good only if you actually NEED 2!
  • You don’t have to spend money! It’s yours, try to make better choices on where/when you spend it. Realise that spending money on casual items is a habit, break that habit!
I’m not a money guru, I just think about where my money is going before I hand it over. Too many of us now have a “spending habit” without even knowing it. One last word on our supposed financial turmoil, I haven’t noticed shopping centres standing empty, or supermarkets without customers. I see people walking around with shopping bags just the same as always. The buzzword is like a virus, it spreads out amongst us, infecting everything possible, but at the end of all the arguments, debates and financial forecasts it is just a buzzword!
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