Vocal Voices

I have read an article saying that the end of January is the worst time for debt problems and that the incidences of suicide, attempted suicide and calls for anti-depressants all rise. People (mainly men) become so despondent because they can see no way out and the recent rise in overdrafts charges by the banking cartel, to 39.9% (40% but 39.9% sounds better just like £3.99 is way cheaper than £4), have not helped.

But I have a few Whys?

For instance why do people who are strapped for cash borrow money. I believe that one reason is that many people have poor math skills combined with a lack of money management training, and that is down to education / schools. The second is that they do not see 'buying things on credit' as being borrowing in the traditional sense - they are just another purchase. And thirdly the media pressure to have the latest, to upgrade, to look good, is relentless.

The next "Why" is why do banks and credit agencies allow people to borrow beyond their means when they know it will either cause the loanee problems or that they will not be paid back? The short answer is that they never lose. The interest they pay on deposits is a few %, if that. However, they can borrow at 0.75% (currently) and then lend it out at rates almost unhindered. Those that fail to pay back (who have already paid a huge chunk in interest) are well covered by the many paying the exorbitant loan rates - a win-win.

The first problem needs tackling immediately, but it will take a lot of hard work to turn that situation around - so that's probably why it will not be done any time soon. The second needs tougher legislation, but with banks being so influential that is also unlikely to happen.

Miserable January looks like it is here to stay.

I think divorce can throw a lot of men into debt, through no fault of their own. To begin with, a displaced father has to rehouse himself, including furnishing his accommodation and all that it entails. Solicitors fees for the divorce follow on from this and then, if there are differences between the two parents with regard to child issues, the inevitable court appearances at the Family Courts and all the legal costs that ensue from there. Eventually if they manage to get through the stress of that, and although many dads are fortunate enough to have shared care of the children, this will inevitably have very costly implications. Last but certainly not least, the majority of dads even with shared care still have CSA to pay to their ex-wife/partners. This is a ruthless organisation with a fixed set of rules and a one size fits all mentality, and will pursue a struggling father relentless over periods for up to 20 years, often leaving them with below the national living wage. Some dads can't take the pressure.

The next "Why" is why do banks and credit agencies allow people to borrow beyond their means when they know it will either cause the loanee problems or that they will not be paid back? The short answer is that they never lose.

You mention the re-jigging of overdraft arrangements by banks so that there is a "base" overdraft rate of 40% pa. The cynic in me notes that the HSBC revised their agreed overdraft limits a few months prior to that - in some cases nearly halving them.