When Debt were Debt
Remember when debt was debt. Those were the days. When if you didn’t have the cash you didn’t buy anything. When there was a thing called “Saving up”. Remember that?
When I moved into my first rented flat in London I slept on a camp bed and sleeping bag until I could afford a bed. We had Honda c70 motorbikes to get around. They did hundreds of miles to the gallon. Economy over pride. We serviced them in the living room. Furniture was a luxury. Holidays were for toffs.
In my day you earned things. You budgeted. At university we had to live in the red light district of Southampton next to a brothel, it was all we could afford and we had to barter for life’s essentials. The girls next door got an emergency response team, we got our laundry done.
I managed for the whole of 1979 to budget on eleven pounds a week. Why? Because that was all I had. At the time a meat pie and chips in the refectory cost 55p. 65p with baked beans.
I had to “borrow” eight meals a week. It was in the budget. Getting drunk at the weekend would require an ultimately predictable but eminently ingenious bag of tricks including starvation and failing that, teasing drinks out of unsuspecting members of either sex. All in the budget.
My first car was paid for with cash I earned cutting cress in Whitwell for 10 hours a day, six days a week for 10 weeks in the summer. I had to stand or kneel all day in water, bending up and down. Health and safety at work was a thing of the future. The car was a Deux Chevaux 2CV6. It was all I could afford.
It was a rust bucket and within a year I had to personally remove the engine, in the street, re-weld the chassis forks and rebuild. When one of the bleed screw holes threaded on the brake drum I couldn’t afford a new one and consequently drove for a four week windsurfing holiday in Cornwall (very hilly) using the hand brake instead of the foot brake. On the holiday I took the drivers seats out, reversed them and slept in the car. If the weather was nice I rolled back the roof and those memories of watching the stars from the luxury of my 2CV as the waves rolled up Sennen beach are some of my most pleasurable and enduring.
Rich people were different. They didn’t service their own cars, they drank wine, went to restaurants, the cinema, didn’t use a Laundromat, had a vacuum cleaner, had a walkman, talked about skiing, belonged to a tennis club, had flown on aeroplanes and represented a minority we wrote off as toffs and wankers in a noble attempt to divert the interest of our girlfriends back to us.
I can’t quite remember when it all changed. I think it was when the big yank investment banks arrived in London in the early 1980s. When the stockbroker I worked for offered me a company car and a subsidised mortgage. They had discovered an access to credit we had previously known nothing about and they handed it on to us. I went straight from a ten year old Mark 4 Cortina (which I loved) to a brand new Black Ford XR31 with fat low profile tyres and racing stripes (still the best car I have ever had).
I didn’t know what a mortgage was, but with a 5% deposit they told us we could borrow three times our salary. So we did. I moved from Brixton to Clapham. The rat race had started.
That was about 1985. The year the world moved from “I want, I work” to “I want, I get” and "I want I get" has certainly been the experience since.
As long as there was equity in our house we have wanted for nothing. Our kids have wanted for nothing. Want an iPod...just pout. Shazam...iPod. This is the way. Spend don't save, want and you get. It is a glorious principle that we have instilled into the next generation.
Or have we?
Kids always do exactly the opposite of what you tell them and it seems to be working on the subject of debt. Where we saw it as a source of endless expenditure, my twenty plus year olds now see it as kryptonite. Something that will have to be paid off. Something that will burden them. Something that will limit their options. Something that will restrict their mobility. Something that is dumb not clever and something they do not want to inevitably have to spend their lives with as we did.
One of mine has even been heard to text "Sorry Dad but I can't afford it".
What! Don't they know I still have equity left in the house?
They do. But they don't want it, and after years of seeing us paying it back they don't want to put us on the hook for it again.
They are moving out now, and I am encouraged by what we've taught them. To do exactly the opposite of what we did. . And I thought they were stupid.
(I had trouble not breaking into Monty Python whilst writing this article...."You think you 'ad it bad. Luxury"..."We were stuck in wet paper bag in't middle of motorway"....and all that stuff).
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Marcus Padley founded Marcus Today in 1998 and leads the team of analysts and market commentators that publishes a daily stock market newsletter, presents four podcasts and runs an $80m Australian equity fund. He is passionate about educating and...
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