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".

Colombia: A banker's paradise revisited

There are a lot of things that can irk expatriates here in Colombia. After a time, most come to learn that the best way to deal with them is to, well, not deal with them. Either grin and bear them or laugh them off. Trying to find solutions to whatever may be bothering you is generally a futile exercise.

Davivienda; nice little bank... (Image from Facebook.)

However, like it is for the opposite sex (whichever that is for you) and pretty much all over the world, the majority of us have found – usually to our annoyance – that we can’t live with or, more pertinently, without banks.

Thus, I find it a little more difficult to simply "let it go" when it comes to banking in Colombia. This is a topic I wrote about before; the fact that I still have a bank account here shows that I have learnt to take the punitive hits somewhat. Every now and again, though, the red mist descends in relation to this whole area.

You see I still don’t understand why my bank, Davivienda, charges me 9,500 COP (Colombian pesos, just slightly under four euro) per month to have what is quite erroneously termed a savings account. Or maybe the savings refers to what Davivienda makes with my hard-earned cash? The title makes a bit more sense if you look at it that way.

Whenever I question Davivienda employees about this, some of whom I have worked with in a freelance capacity, they explain the fee as the cost of managing my account, along with the peace of mind that my money is secure. Fair enough on the second point, but don’t they use my deposited money to lend to other people, generating handsome revenue for themselves?

As for the management of my account, heck they must be flat out there. For one, the last time I used my debit card to make a transaction was in April of this year. When it comes to making deposits, I’m the one that does it, in person, standing in ridiculously slow-moving queues to do so. It should be me asking for a fee (or interest as we call it for savings accounts in Ireland and the UK).

Now, in fairness, I do get sent a text message each time there is account activity; that includes when I go on line to view the status of things (alas, it’s not that great). So perhaps the random figure of 9,500 COP is used to put credit into Davivienda’s pay-as-you-go mobile phone. They must be damn expensive text messages at that. Just don’t forget to send me a birthday text guys; it will all have been worth it then.

To add further insult to injury, I was told that if I had a nominated account i.e. one in which an employer deposits my wages, I wouldn’t be charged anything. The snag here is that I don’t have a full-time employer. 

So it seems if you’re a freelancer, trying to make it on your own minus all the relative security and benefits of full-time work, you get even more screwed by the system here. Of course, there’s a fair chance I’m missing a trick or two; for if there is a simple way to avoid these fees, the banks will be the last ones to tell you.

It must be said that it’s not just Davivienda that’s at this – it’s basically the same with them all. It’s the way things operate here. The international banks must love it.

Plus, for many hard-pressed, working-class Colombians it’s not an issue. They either have the aforementioned nominated account or just don’t have an account at all. Under the mattress is best for the majority.

Indeed, it appears banking in Colombia is either for the very rich (who tend to get fees waived) or idiots. At the moment I fall into that latter category.

I suppose somebody’s got to contribute towards those semi-comical Davivienda advertisements (see video above). Wrong Way, always giving.