Thursday, 5 February 2009

A kick in the slats for the fiscally prudent.........

Today's drop in interest rates to a paltry 1% blatantly cocks a snook at those of us who follow the prescribed principles of fiscal prudence.

To put it bluntly, anyone with savings would be as well to take it all out in cash and stash it under the mattress, or use it to insulate a thermal vest, which would be a damn sight more useful than leaving it in the bank earning zilch.

I'm from a generation who believed saving was good and credit was bad. I grew up in a solidly working class mining community, where being in debt was considered as dirty as the coal that coated my grandfather, father, uncles and male cousins when they came home from their shift at the pit every day.

As a very young child I had a Post Office savings account into which I dutifully paid every penny. Each year I would make a special pilgrimage to the village post office to have the interest calculated and carefully entered in my little cardboard passbook. It was then that I began a lifelong love affair with the mysteries of compound interest.

If I wanted something for myself I had to save for it, earning pennies by doing odd jobs, running errands......whatever I could. And I didn't get my heart's desire until I had enough cold, hard cash in my hot little hand.

Fast forward forty years. We now live in an age of over 100% mortgages, umpteem maxed out credit cards as the norm, loans for holidays, cars, kitchens and conservatories. The whole concept of saving for anything is regarded as archaic and the headlong scramble for cheap money has become a way of life for millions.

Not only that, banks have been happy to lend indiscriminately:

Borrower: "Oy you, gimme some dosh."

Toadying Banker: "Certainly sir. Just let me, poor credit record, defaults on existing loan problem sir. How much would you like?"

So the fiscally prudent who religiously pay off their credit card bills in full every month, owe not a penny to a living soul, and who have consistently saved for a rainy day can all go hang as their savings are now worth f**k all.

Let's reward all the poor sods who have borrowed too much, spent wildly and indiscriminately on credit, saved bugger all and are now reeling from the effects of the recession. Awww... bless.

I am sooooooo disenchanted I could spit.


depesando said...

you and me both.

I have a mortgage that's fixed for 10 years ( 8 to go ) at 5.5% - at the time it was a brilliant choice and I did loads of careful research, the cheapest on the market and very secure, and I can't afford to take risks - I'm not complaining, one of the most important things about being self employed is stability in your outgoings...just a pity we can't see into the future ever now and then.

Debbie said...

Hear, Hear Sandra. I am very lucky that I don't have a mortgage, or any credit cards. Everything I have has been brought and paid for. But as for the money we have invested for the Rainy Day, well need I say any more, hardly any capital growth at all..Totally worthless..
P.S. I still have my Post Office Savings Book from when I was little, wonder how much interest I've earned on that???

Sandra Morris said...

Richard, don't even get me started on the raw deal the self employed get across the board.
It galls me even more to see the banks, who are mainly responsible for the financial meltdown, being baled out with OUR money! If my business goes to the wall no one is going to step in to help with cash handouts.

rosanna said...

My goodness, it is really the same all over the world.Genoese are known to be mean ( worst than Scots, excuse me Sandra) but I prefer to say that we are frugal. Well I've been raised with the same idea of saving for rainy days, not have debts etc etc and now what I've got?... I've lost 46% of my savings, up to now, I'm afraid of thinking at future. I've saved for my son's University and to be able to help him when he will grow up and I hold a storm of lies.Sometimes I'm really worried but since I'm patologically hoptimistic I keep hoping like a fool. MIni hugs to you and PP

shannonc60 said...

Oh thank goodness my partner and I are not alone!! I hate that the Australian government has these stimulus packages that they think will stop us going into recession... Aren't we already there??? And worst of all, they're handing it to some who have made an absolute KILLING financially over the last 6 or so years by charging exorbitant prices for their services and are now upset that they are no longer getting so much work/income - construction workers. What happened to squirrelling money away when things are good so that you have money when things go bad??? I believe savers are penalised no matter what happens. It sucks. Why even bother? I should spend every cent I earn and make the government help me out when I need it.

Sandra Morris said...

Shannon, I don't know whether to feel reassured or appalled that the same pattern is being repeated on the other side of the planet.
The whole thing makes me want to turn my back on the principles of a lifetime and just, as you say, spend every penny and rely on the state to help me out when I need it :-(
Incidentally, lovely blog.... I really love your French shop and hope you have a wonderful time in La Belle France :-)