Sunday 16 July 2006

Pic of the day: Wrath of the piggy bank! Don't make yours come back to haunt you!

Bills on a Sunday

Today I paid my bills for this month. Yeah, it's a day later than usual, but it doesn't really matter. While I can pay bills on Saturdays and Sundays through the wonder that is the Internet, they won't actually be transferred until Monday. Or at least I think so. I have not heard anything to the contrary, and it made sense until just recently, when some banks had Internet service and some not. Now they all have, I think. It is kinda unimaginable these days that you should run a bank and not have Internet banking. In fact, my main bank (and one growing ever more popular by the month) is a pure Net bank, and there are more and more of these. It is how banking is done, these days. Although there are still some old folks who wander down to the old brick castle to pay their bills, but fewer and fewer for each passing year.

Anyway, it's not like the computers go to church. And neither do I, strangely enough, but that's for an entirely different entry. Suffice it to say, I paid bills for roughly NOK 15000, or $2400, slightly more than my after-tax income this month. This, one would be excused for thinking, cannot be a good thing.

***

One of the things that is important to tell young people is that bills vary from month to month, seemingly chaotically. There is normally a pattern actually, but once you live your own life, you are engaged in so many different economic activities that intuition may not be enough to keep track of them. There is the phone bill, the utility bill, perhaps a separate Internet bill, insurance, loans, rent or mortgage, membership fees and subscriptions. Few of these are monthly, although rent usually is for us who don't own our own homes. The others vary from each other in frequency and size, and some of them may also vary over time. The net result is that the sum total of bills for any one month will vary, seemingly chaotically.

This is in fact the engine behind that wonder of modern capitalism, consumer-driven growth. It works like this: When there is a lull or trough in the bills, where most of them are absent, suddenly cash is lying around. This causes the restless human mind to come up with various ways spend it, either on consumption (usually) or investment. Fitting action to thought, the happy citizen manages to spend or at least sign away the money while the good times are still rolling. And then the natural variation in bills create a month like this one was for me. Suddenly there is this mountain of bills, or more like giant wave bearing down on you. Now what will you do? You already spent your money. In fact, you quite likely took on some new running expense as well. Time to use your large brain and think of some way to earn more money. And so, the hamster wheel of modern capitalism has run another turn and is ready to do it all over again.

Knowing this, I set aside a goodly portion of last month's pay, which was twice as much as my bills. That took care of this month, effortlessly. Although I still have some credit card debt. It may seem like a bad idea to have credit card debt (which there is a high interest on) and at the same time have spare money (which there is very little interest on). That's true, and if your economy is pinched, I would not recommend it. But on the other hand, most credit cards charge a hefty fee for using them for anything but purchases. So if you want to pay your bills with your credit card, you first have to make a withdrawal, paying a substantial fee. This may or may not negate the benefit of paying it down the month before. Use your calculator as needed. In my case, there is also a conceptual reason. I have chosen to use my credit card as a buffer. Basically I buy more sometimes and less sometimes, but I pay the same monthly amount on the credit card each month. This makes it easier to know how much money I actually have. A feeling of economic stability is what protects me from the serfdom of the consumer hamster wheel.

Of course it would be better to have a slush fund (I think that's what it's called) of surplus money rather than a credit card. Cards are notoriously expensive unless you pay them all the way down each month (or 45 days, in this case). And indeed, many consumers (perhaps most) have a hard time keeping track of card or cash. Having spent less than one's limit on the card is like having cash in the pocket. It burnssss! Luckily a detached, meditative lifestyle helps somewhat. And there have in fact been times in my past when I have paid off the credit card. It feels kinda strange, but rarely lasts for long since I tend to buy a new computer each year. This time around, however, there is also the move.

As my friends will know, I moved to this house in February after a very eventful few months. I had to move out of my rented apartment of more than 20 years as the house was being sold. Knowing this beforehand, I had prepared by finding another apartment, and paid double rent there for a few months while moving things over and generally getting accustomed to the new situation. Then a couple days before I had to be out of the old apartment, I was told that I could not move into the new. So I had to scramble to get something else, which happened to be this beautiful little house in the countryside. But the cost of the months of "double" rent, and repairs, and moving, and deposit for the new place (which I did not have before)... it added up to quite a lot of money, far more than I had lying around for extra bills. So, I had to borrow quite a bit. Each month I pay off some of this, but I try to also live a normal life.

***

I see that the bank I use as my Net bank, the one that is cheaper than the rest, have just now started to offer credit cards as well. I stopped to consider switching to them, but realized that they probably won't accept me as a credit card customer right now, when I already have unsecured debt elsewhere. I wish there was an easy way to simply transfer the debt from one provider to another, but currently there isn't. If I were them, I would certainly not lend to someone who already had this much short-term, unsecured credit. I guess I could try, but I'm not sure if that would set a precedent for later applications.

But it is not a problem as is either. I'm wasting a little money, but I have all I need and then some. I am not looking to build a fortune, now or ever. Just to not be a burden to others, and hopefully help a friend a little now and then.