The Average Person Doesn’t Know Shit About Money

Written by The Landlord on 25 Jan 2008

I went out last night to a seedy club in Chelmsford (Essex) to celebrate my mate’s 25th. The place smelt like feet. Literally, stunk of cheesy feet. I think it was years of bad odours trapped in the carpets. They should really do something about that odour, it can’t be good for bizzznaz or the human body. I’m pretty sure the place is actually renowned for being a cheese-fest. If anyone from the Chelmsford area is reading this, I’m sure you’ll know which club i’m referring to. Anyways, this is ridiculously discoursed from the point of the article, but I just needed to express the whole cheesiness thing because it was THAT cheesy.

At one point during the night I got into a discussion about money with a close friend of mine (yes, the club was that bad). He was explaining to me that the average person doesn’t know shit about money. Well, beyond the fact that we work to get money and money buys commodities. I didn’t think he was giving us enough credit. I mean, I consider myself an average schmuck when it comes to money. I’m not an expert, but I know enough to get by.

He then told me about a conversation he had prior that week with a 33yr old work colleague of his. My friend’s name is Eric, and i’m told the conversation went a little something like this:

Work Colleague: Eric, I’m going to give you some wise tips on how money works. You should remember this tip for the rest of your life
Eric: Right, ok…
Work Colleague: Don’t ever get a loan
Eric: What do you mean?
Work Colleague: Last year I purchased a car for 5k, which I got a loan out for. For that 5k loan I ended up paying back 7.5k.
Eric: *pause*
Work Colleague: i had to pay back 2.5k for borrowing 5k
Eric: *pause*
Work Colleague: Can you believe we have to pay for borrowing money? I couldn’t believe it. Lesson learned.
Eric: *pause*
Eric: *pause*
Eric: errr…no, man, that’s really fucked up. Thanks for the tip.

While Eric’s colleague thought he was dishing out golden nuggets for tips, Eric was sitting there failing to comprehend the fact that this 33yr old chump was such a complete dumbass. Since Eric is such a jovial individual he didn’t want to seem patronizing, so he just agreed with him and thanked him for wasting his fucking time the tip.

I told Eric I didn’t think that guy was an accurate representative of the average person, but more realistically just one deeply inadequate individual. But it did get me thinking- perhaps the average person doesn’t know shit about money, for other reasons. We drifted onto the topic of the credit crunch and how the nation is in so much debt. How can so many people spend so carelessly?

I think the underlying problem is, besides from careless spending, a lot of people don’t actually understand the fundamentals of borrowing. It’s the bread and butter aspects of borrowing like the basics of interest rates and how they affect the amount we pay back, that really confuse some people.

Currently there’s a massive problem with people overusing the plastic. Credit card debt is out of hand- people have bills flying out of their butts (anyone else forming a pretty humourous mental image?). Why? Largely because people don’t understand how they work. Oh, and because some idiots are using credit cards to pay their mortgages. I suspect they’re the same people that piss in the wind and eat yellow snow. People just want credit; they don’t care how they get it, just as long as they get it. The problem is credit cards are easily available and everyone has one, so people tend to trust them. The mentality is, “if Joe has a credit card, it can’t be that bad. I’ll get one”. Without even considering other avenues like low interest rate loans from a bank, people will naturally apply for a credit card. Again, it boils down to the fact that people don’t understand interest rates, they only understand “easy money”

A savvy credit card user can juggle 0% interest free credit cards without paying interest on purchases. The average person monkey is still getting credit cards with 9% new purchase deals. I personally wouldn’t play around with a bomb unless I understood how they worked, so it’s probably a good idea not to use credit cards until understanding how credit cards work. I don’t think there is any shame in lacking knowledge when it comes to loans, credit cards or interest rates, I just think there’s a problem when lacking knowledge and then using a related service.

What do you guys think? Do you think we are partially in so much debt as a nation because people don’t know enough about money? I certainly do. People should make it their responsibility to know how money works. If money buys you food, clothing and shelter, then you should get to know how your money works. It’s a fair trade- Eye for an eye, and a banana for a banana for all you monkeys out there.

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