Monday, April 29, 2013

Vol #2, Col #8: Gimme Some "Credit"

I once knew a musician who upon receiving his O.S.A.P. cheque in the mail ventured off to his local music store and blew the whole thing on a Pearl drumkit. As for school? Well I guess you could say he equally blew that as well. Now, it goes without saying that musicians typically aren’t the most savvy when it comes to managing their finances (a quick review of MC Hammer’s history will more than demonstrate what I mean). However, this phenomenon of frivolous and irresponsible spending, especially among the student-aged population, is not exclusive to us artistic types. Case and point: I was at the bank the other day meeting with a teller regarding some business concerns, and as she relayed to me, apparently having a bank account containing several thousand bones for someone my age is somewhat of an accomplishment (accordingly it entitles you to a whole slew of benefits from the elimination of bank fees on personal accounts and annual credit cards, to automatic credit approval etc. etc., but I’m not here to advertise my bank’s services).

Realistically-speaking though, a few K is really nothing – I mean maybe a few month’s rent or a really wild party, but after that, I’d be out on my ass in the street if I didn’t manage to bring in an income some way or another. Here in lines the problem: automatic credit approval and credit cards have not only made us completely lose sight of the true value of anything monetarily-speaking, but also have and will continue to lead to economic crisis. But…is it the banks’ fault? I’d argue NOT entirely.

Banks are money-making institutions. They approve you of credit, and the longer you take to pay off your expenses, the better the business is for them. Admittedly, in recent years, several institutions got greedy and handed out credit approvals far too easily. But, look where they are now - it’s not like they didn’t get their just desserts, too. 

On the other side of the equation however, I mean stories such as the one I opened this piece with, or others wherein people change their permanent residences and phone numbers to avoid the repo-men of one institution only to have their slates wiped clean by another, are FAR too common. While in these situations, it’d be easy to blame the banks for approving said individuals in the first place as extensive employment and credit checks are supposed to be run prior to being approved for loans/grants/mortgages etc., you cannot always predict who’s just gonna take a loan and run with it. Further, when you receive advanced monies from a financial institution, you are required to sign legal documents binding you to the responsibility of paying back the monies with interest, within a certain timeframe. Therefore, the people who are taking advantage of the credit system we have in place are not only spitting in the face of the banks, but also in the face of the entire legislative structure we’ve established…not to mention they’re making it increasingly difficult for those who truly need the startup capital (ie: small business owners, students, first time homeowners or car purchasers) to get approved.

Considering that employment opportunities are increasingly being offered on a temporary contractual basis, fewer companies (unless you’re lucky enough to become government employed) are granting their employees extensive benefits packages let alone pensions, and it’s difficult to obtain executive positions without being over-credentialized and paying your dues with a company for quite some time (partly because of the eradication of mandatory retirement), relying on plastic for everything (which by definition means putting off all expenses to a future time when you hope to have more money) is not a smart idea for anyone. Further, buying “toys” with money that could be put away for serious and meaningful expenses in the future (ie: your wedding) might be something you want to consider (even if you don’t believe you’ll ever get married. Fuck I didn’t for sure, and I’ve been made to eat those words!)

I mean this consumerism situation has gotten so out of hand that seeing engaged couples recruiting randoms via Kijiji ads to attend their Stag & Does just so they can raise enough money for their upcoming nuptials has become a regular thing! Really?! I don’t know about you but I frankly am rather uncomfortable with the idea of sharing anything related to my “special day” with strangers, not to mention I question what kind of individual(s) would attend the Stag & Do of a couple they’ve never met just to offer them money. People are generally pretty damn purse-clutching when it comes to their finances (especially these days), and that sort of altruism is rarely seen without some sort of underlying agenda (ie: maybe they need to launder their dollar bills? Just a thought.).

Maybe I’m at an advantage here because my pop’s an insurance advisor, but no matter what bad financial situation I’ve been in for the past several years, I’ve consistently put away $100-150 per month into a retirement savings plan for my future. When we were kids, and our parents bought us piggy banks, we seemed to have the right idea. We’d save, save and save until we had enough to purchase something really valuable to us, or better yet, we put it all into the bank for good. Somehow, as we grew older (and clearly NOT wiser), we decided instead that buying that video game or wasting all of our funds on getting trashed was sufficient for our futures. We could just plastic everything anyway and living in debt – well there’s certainly no longer a stigma attached to that as it’s become the norm.

But here’s the thing: you never know what the hell is going to happen in your life. You know that age-old expression, “even the best laid plans…” I don’t know about you, but I certainly don’t want to spend my entire existence chained to a desk. Perhaps you should all be asking yourselves very seriously, “how much money do I actually have in the bank?” If you’re bargaining on surviving on just a few grand (or less) come hell or high water, you’ve got another thing coming to ya. Start saving now. Start saving while you’re still young. According to recent statistics, the average Canadian is not safe financially (ie: living comfortably with all the amenities I’m sure ma and pa still provide for many of you free of charge) at retirement age unless they’ve got a few million (YES, YOU READ CORRECTLY).