Rewarding the reckless

@wwaycorrigan

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Wouldn't it be great if we could all (mis)manage our financial affairs in a similar way to many countries?

Spending is the new saving. 

That is, not only be in debt but continuously add to it, giving back only a fraction of the total by way of interest repayments, if even that. And do so in a rather carefree manner.

How the wasteful are winning

Perhaps this actually is the way the world's rich (just don't probe too much into their accounts) and powerful operate. It would explain a lot. If it works for governments, then why not for individuals?

You see, it seems that trying to be financially prudent these days is a penance suffered by a small few in the hard-pressed working and middle classes. If you're not in debt or at least a serial spender, you're not playing the game right. Or you're not playing the game at all, stupid.

With speculate-to-accumulate in mind, I do realise that people deliberately overstretch themselves with the goal of seeing their investments come good, and then some, at a future date. Thus, being in debt for a time might be both unavoidable and smart. (It's something I could be more open to; playing it safe doesn't mean invariable stability.)

In the past, lent monies were usually for the purchase of assets, investment in a business, educational enhancement or suchlike. Loan requests generally had to come with rigorous cost plans, with a borrower expected to repay the lender the full amount plus interest at a defined later stage.

Of late, however, it seems the reckless state-borrowing model has taken hold at large. Rather than reduce expenditure, people look for monetary support to maintain a certain quality of life.

Alongside this, the definition of loan appears to have morphed into gift for many. Or at least the idea of being frugal, or 'good with money' to put a more positive spin on it, is frowned upon.

'The analogy to Ireland: A frugal foreigner with some savings provides access to money on the cheap for the locals, most of whom are involved in the construction industry.'

OK, this 'spend what you have today, let tomorrow take care of itself' attitude can be viewed as positive. One should be relaxed enough to enjoy his/her (usually) hard-earned income in the here and now.

However, spending what you don't really have is another matter. Ireland Inc., to give but one example, saw how that can turn nasty back in 2008. Yet, the biggest borrowers, the most spendthrift, got away rather lightly compared to the small fry. Some, indeed, are just too important to fail.

Frugal fool

Now, what could be viewed as a microcosm of profligate Ireland is my financial dealings with a friend in my beloved Bogotá barrio, Santandercito. The analogy in a sentence: A frugal foreigner with some savings provides access to money on the cheap for the locals, most of whom are involved in the construction industry.

It can be hard to say no when somebody appears in desperate need.

More specifically, in The barrio banker, I wrote about how I'd given out interest-free loans to some friends in need over the last few years. These loan requests, from one acquaintance in particular, haven't stopped — give the dog a bone and all that. And I find it hard to say no.

The latest rather substantial loan does have a small interest rate attached to it. I'm toughening up — a little (although, compared to the current interest rates for Colombia's CDT savings accounts, I'm losing out. Be that as it may, the repayment date has now passed and my friend, so he says, doesn't have the funds.

Based on previous form, I trust the man. I have no other choice. If the friendship is ruptured, I have no real legal recourse to get what's owed me. What especially bugs me, particularly as somebody who by both nature and nurture is careful with money, is seeing this man be anything but that.

It's not like I've got endless revenue supplies. This is the hard-pressed asking the slightly less hard-pressed.

Nonetheless, as alluded to, I do like to help where possible, especially for somebody truly in a bad way. In this case, however, the behaviour of the borrower immediately after he got the loan suggested it wasn't a life-or-death situation. Unless "beering" the barrio is critical to his survival.

For the moment, I just have to sit tight and try not to let the negative emotions overcome me — completely avoidable negativity at that, too, if I'd just said no. Time shall tell if this was a foolish loan on my part.

Yet, perhaps my biggest act of foolery has been my attempts to put money aside for the future. 'Just spend, spend, spend, Brendan. Somebody else will pick up the tab.' Quite.
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