+++
title = "The Capitalist Pig-Dog Blog: Expenditure: Debt"
date = "2015-05-27"
tags = ["politics"]
categories = ["pig-dog"]
+++
Nick Thomas

#### Apologies

It's been a bit quiet recently because I've been collecting receipts all month.
Once I've got a month's worth, I can write a scintillating article about
shopping expenditure; until then, I'll just have to content myself with a short
piece on debt expenditure.

#### Time travel

I've got quite a few debts; modern capitalist economies really are predicated
on the notion that [debt is good](http://en.wikipedia.org/wiki/Fractional-reserve_banking).
Although this raises a [lot](http://wiki.mises.org/wiki/Criticism_of_fractional_reserve_banking)
[of](http://www.infowars.com/fractional-reserve-banking-government-and-moral-hazard/)
[hackles](https://www.youtube.com/watch?v=ELEwjVRxxGE), but it doesn't bother
me too much. If we're going to have money, it might as well have a high
[velocity](http://en.wikipedia.org/wiki/Velocity_of_money), and a lot of the
objections are from people I'm not predisposed to trust. Also, there's very little
I could do on a practical level except to stop using money entirely. Not impossible,
but very much on the outskirts of practical.

I will never link to Alex Jones again. I promise.

Anyway, the basic principle of debt is that you are leveraging your future earnings
to get something done *now*, goddamnit. As a child of New Labour, I was fortunate
enough to go to University, but in doing so, I got to experience this concept
for the first time in the form of
[student loans](http://en.wikipedia.org/wiki/Student_Loans_Company).
Fairly simple - the government lends me £12,000 over three years to go to university,
I pay it back with interest once I've got a decent job. I win, the government
wins twice (as it gets a higher-rate taxpayer out of it too), and society at large
wins as well. Certainly in theory.

Student loans aren't my only credit arrangement, of course; I've borrowed money
since for various reasons. I don't really have any objections in principle, it's
mostly a matter of [degree](http://en.wikipedia.org/wiki/Usury).

#### Analysis

So what does my current expenditure on loans look like? And where does it go?

<table>
  <tr>
    <th>Item</th>
    <th>Monthly payment</th>
    <th>Months left</th>
    <th>Provider</th>
  </tr>
  <tr>
    <td>Student loan</td>
    <td>£300</td>
    <td>3</td>
    <td>Student Loans Company</td>
  </tr>
  <tr>
    <td>Mortgage</td>
    <td>£780</td>
    <td>267</td>
    <td>Nationwide</td>
  </tr>
  <tr>
    <td>Personal loan</td>
    <td>£430</td>
    <td>22</td>
    <td>Nationwide</td>
  </tr>
    <td>Bathroom loan</td>
    <td>£100</td>
    <td>12</td>
    <td>Barclays Personal Finance</td>
  </tr>
  <tr>
    <td>Boiler loan</td>
    <td>£80</td>
    <td>36</td>
    <td>Hitachi Loans</td>
  </tr>
  <tr>
    <td>Car loan</td>
    <td>£300</td>
    <td>15</td>
    <td>Santander</td>
  </tr></tr>
  <tr><th>Total</th><td>£1990</td><td></td><td></td></tr>
</table>

It's not particularly pretty; even on my income, this is too much money on debt
repayments, any financial planner can tell you that (it's not even the end of the
story; there's also credit cards and an overdraft to consider, but I'll talk about
those separately). Just on common prudence grounds, it's imperative that I reduce
these payments; fortunately, the student loan is almost repaid and the mortgage
becomes much cheaper in the near future (new fixed-rate deal); that reduces the
total to around £1500, which is somewhat more sensible.

In terms of who gets the money, Nationwide - a building society - gets the biggest
single share, receiving over half of it. The Student Loans Company - a non-profit -
is another significant beneficiary, at least for now. "Just" a quarter of the current
total - £480/month - goes to Evil Private Companies.

A loan can be repaid at any time, so in theory I could shift that monthly expenditure
to Nationwide just by taking out a second loan; the amount of detriment to the losing
companies is precisely the interest they lose from my doing so, minus any early
repayment fees. The Hitachi one is worthwhile, so I'll look at that; the Barclays
one is not, but is nearly repaid.  The car is actually a
[PCP](http://en.wikipedia.org/wiki/Personal_contract_purchase#UK) with an interest
rate of 0% (I guess they make their money from the VAT dodge), so the point of moving
it within the term is more or less nil.

Future loans can certainly be taken out exclusively with mutual organisations.
Building societies are OK, but alternative models do exist;
[credit unions](http://en.wikipedia.org/wiki/Credit_union) are a better model,
but they aren't that popular in the UK, and my local one
[collapsed in 2012](http://www.bbc.co.uk/news/uk-england-york-north-yorkshire-20167650) -
I'd actually filled out the membership form the day before they went.

Interestingly, it seems SYCU have expanded to York; they have a branch in the city,
at least. I've emailed them to ask about membership. I'll see if I can move a
subset of my concerns there; although I'd be surprised if they can do mortgages!

The mortgage itself is an interesting thing; I'm paying it instead of rent, and
that in itself makes it great. I'll see if I can write more about the Evils Of
Renting later in the year.