130 lines
5.2 KiB
Markdown
130 lines
5.2 KiB
Markdown
+++
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title = "The Capitalist Pig-Dog Blog: Expenditure: Debt"
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date = "2015-05-27"
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tags = ["politics"]
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categories = ["pig-dog"]
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+++
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Nick Thomas
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#### Apologies
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It's been a bit quiet recently because I've been collecting receipts all month.
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Once I've got a month's worth, I can write a scintillating article about
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shopping expenditure; until then, I'll just have to content myself with a short
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piece on debt expenditure.
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#### Time travel
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I've got quite a few debts; modern capitalist economies really are predicated
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on the notion that [debt is good](http://en.wikipedia.org/wiki/Fractional-reserve_banking).
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Although this raises a [lot](http://wiki.mises.org/wiki/Criticism_of_fractional_reserve_banking)
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[of](http://www.infowars.com/fractional-reserve-banking-government-and-moral-hazard/)
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[hackles](https://www.youtube.com/watch?v=ELEwjVRxxGE), but it doesn't bother
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me too much. If we're going to have money, it might as well have a high
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[velocity](http://en.wikipedia.org/wiki/Velocity_of_money), and a lot of the
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objections are from people I'm not predisposed to trust. Also, there's very little
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I could do on a practical level except to stop using money entirely. Not impossible,
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but very much on the outskirts of practical.
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I will never link to Alex Jones again. I promise.
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Anyway, the basic principle of debt is that you are leveraging your future earnings
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to get something done *now*, goddamnit. As a child of New Labour, I was fortunate
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enough to go to University, but in doing so, I got to experience this concept
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for the first time in the form of
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[student loans](http://en.wikipedia.org/wiki/Student_Loans_Company).
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Fairly simple - the government lends me £12,000 over three years to go to university,
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I pay it back with interest once I've got a decent job. I win, the government
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wins twice (as it gets a higher-rate taxpayer out of it too), and society at large
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wins as well. Certainly in theory.
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Student loans aren't my only credit arrangement, of course; I've borrowed money
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since for various reasons. I don't really have any objections in principle, it's
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mostly a matter of [degree](http://en.wikipedia.org/wiki/Usury).
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#### Analysis
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So what does my current expenditure on loans look like? And where does it go?
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<table>
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<tr>
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<th>Item</th>
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<th>Monthly payment</th>
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<th>Months left</th>
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<th>Provider</th>
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</tr>
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<tr>
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<td>Student loan</td>
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<td>£300</td>
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<td>3</td>
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<td>Student Loans Company</td>
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</tr>
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<tr>
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<td>Mortgage</td>
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<td>£780</td>
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<td>267</td>
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<td>Nationwide</td>
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</tr>
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<tr>
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<td>Personal loan</td>
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<td>£430</td>
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<td>22</td>
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<td>Nationwide</td>
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</tr>
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<td>Bathroom loan</td>
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<td>£100</td>
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<td>12</td>
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<td>Barclays Personal Finance</td>
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</tr>
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<tr>
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<td>Boiler loan</td>
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<td>£80</td>
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<td>36</td>
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<td>Hitachi Loans</td>
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</tr>
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<tr>
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<td>Car loan</td>
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<td>£300</td>
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<td>15</td>
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<td>Santander</td>
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</tr></tr>
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<tr><th>Total</th><td>£1990</td><td></td><td></td></tr>
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</table>
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It's not particularly pretty; even on my income, this is too much money on debt
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repayments, any financial planner can tell you that (it's not even the end of the
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story; there's also credit cards and an overdraft to consider, but I'll talk about
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those separately). Just on common prudence grounds, it's imperative that I reduce
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these payments; fortunately, the student loan is almost repaid and the mortgage
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becomes much cheaper in the near future (new fixed-rate deal); that reduces the
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total to around £1500, which is somewhat more sensible.
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In terms of who gets the money, Nationwide - a building society - gets the biggest
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single share, receiving over half of it. The Student Loans Company - a non-profit -
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is another significant beneficiary, at least for now. "Just" a quarter of the current
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total - £480/month - goes to Evil Private Companies.
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A loan can be repaid at any time, so in theory I could shift that monthly expenditure
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to Nationwide just by taking out a second loan; the amount of detriment to the losing
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companies is precisely the interest they lose from my doing so, minus any early
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repayment fees. The Hitachi one is worthwhile, so I'll look at that; the Barclays
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one is not, but is nearly repaid. The car is actually a
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[PCP](http://en.wikipedia.org/wiki/Personal_contract_purchase#UK) with an interest
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rate of 0% (I guess they make their money from the VAT dodge), so the point of moving
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it within the term is more or less nil.
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Future loans can certainly be taken out exclusively with mutual organisations.
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Building societies are OK, but alternative models do exist;
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[credit unions](http://en.wikipedia.org/wiki/Credit_union) are a better model,
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but they aren't that popular in the UK, and my local one
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[collapsed in 2012](http://www.bbc.co.uk/news/uk-england-york-north-yorkshire-20167650) -
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I'd actually filled out the membership form the day before they went.
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Interestingly, it seems SYCU have expanded to York; they have a branch in the city,
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at least. I've emailed them to ask about membership. I'll see if I can move a
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subset of my concerns there; although I'd be surprised if they can do mortgages!
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The mortgage itself is an interesting thing; I'm paying it instead of rent, and
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that in itself makes it great. I'll see if I can write more about the Evils Of
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Renting later in the year.
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