Rewarding the reckless

@wwaycorrigan

[For an audio version of this blog story click here.]

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.
__________________________________________________________
Listen to The Corrigan Cast podcast here.

Facebook: Wrong Way Corrigan — The Blog & IQuiz "The Bogotá Pub Quiz".

The barrio banker

@wwaycorrigan

[Listen to an audio version of this blog entry here.]

Strange as this may seem considering my current less-than-robust financial situation and lack of a steady income, but I have become the chief moneylender for one barrio friend over the last number of years.

Easy money — when it comes from the Wrong Way Bank, that is.

It breaks with a long-standing rule of mine to not give money to anyone here. 

Previous experience has taught me that while some may ask for a dig-out using the verb 'prestar', literally 'lend', what they usually have in mind is the more common Colombian word when looking for something: 'regalar', 'gift'. (I recall asking for a drink in the Spanish capital Madrid using 'regálame'. The barman's retort was that they didn't 'gift things' in that establishment.)

'I'm good for it'

Of course, it's just an expression. Few if any people who utter it on a daily basis here actually expect to get what they want for free. Rather wishful thinking if they do. 

It could be argued, however, that when addressing a native of a high-income country, the more literal meaning is very much in mind for some locals. 'These rich foreigners can easily afford to give things away.'

Whatever the case, actions speak louder than words. So whether my now regular client uses 'prestar' or 'regalar' when he comes looking for a loan matters little, it's his ability to pay back that counts.

Barrio banking: Money's too tight to mention.

The first time I agreed to lend him a relatively substantial sum of money, my thinking was that it would double up as a way to test the strength of the friendship. If he defaulted, well I'd have to take the hit but be somewhat comforted by the fact that I'd unmasked a false friend.

Not only did he not default but he paid back the amount in full ahead of the stated due date. Punctuality is a rarity in Colombia in all walks of life, never mind doing something ahead of schedule. I was both relieved and impressed.

So the next time he asked for financial assistance I was more relaxed when handing over the cash. And yes, these are real cash transactions — notes still dominate here for the masses, something I'm not at all averse to.

Now,  considering I've known him since 2016 and for at least the last four years I've rated him as a trustworthy friend, I view this money-lending akin to helping out family.

One must be very selective in this regard, even if those who seek handouts aren't in anyways shy in doing so. In fact, it never ceases to amaze me how people I barely know appear to have no reservations about asking for money.

'I'd soon be relieved of my money-lending duties if I were employed in the House of Rothschild. Interest-free, verbally agreed loans won't put one on the road to riches.'

OK, I've been fortunate enough in my life so far that I've never been in a terribly tight financial position but if I were to need emergency funds, it would most likely be family and/or really good, long-standing friends I'd ask first, not some person I hardly know.

The fact of the matter in most of Colombia is that other family members probably don't have the resources to help out so it's worth chancing the arm with the seemingly 'flush gringo'. Nothing to lose, really.

'Your fake notes are no good here.'

However, I'm certainly no Rothschild or, in a more sinister sense, Shylock, for better or for worse. I'd soon be relieved of my money-lending duties if I were employed in the House of Rothschild. Interest-free, verbally agreed loans won't put one on the road to riches. 

Although, I do get interest paid in-kind via the occasional meal or beer it must be said. Also, similar to those infamous Jewish moneylenders, I am an outsider in the barrio, no matter how much I feel — and am made feel — part of it.

A genuine fake

It is, somewhat paradoxically, these more substantial loans that have proved to be less risky. Getting back on-the-spot payments of up to 20,000 pesos can be next to impossible. And all those small amounts do soon add up.

There is also the issue of a fake-note swindle when dealing in cash, a fate I had the displeasure of suffering recently.

Having given a 20,000-peso note to a lad with whom I consider I have a decent relationship, he returned a few minutes later with the note ripped, telling me it was fake.

There are three possibilities here: I had a fake note of which I was unaware; my friend was tricked by the street vendor from whom he attempted to make a purchase; my friend pulled a fast one on me.

Weighing all these up and taking into account the reaction of others in the tienda bar where I gave this friend the money — including close family of his — the last seems the most likely.

That being so, no doubt many will ask how can I call this guy a friend? It basically comes down to his all-round behaviour. He may be unreliable when it comes to money yet on most other fronts he's a likeable "marica".

It's why, as the old saying goes, one shouldn't mix business with pleasure. And it's why my barrio banking isn't a business but more a case of helping out friends whose needs appear greater than mine.

I just hope I don't end up doing some similar, desperate asking in the future.  
_______________________________________________________________
Listen to Wrong Way's Colombia Cast podcast here.

Facebook: Wrong Way Corrigan — The Blog & IQuiz "The Bogotá Pub Quiz".