I don't know if you're like me, and devote part of every Sunday morning to making yourself feel sick. I like to do this by leafing through the Money section of the Sunday paper, taking in the articles with titles like Things You Should Have Done A Decade Ago Had You Wished To Avoid Retirement Penury, Though It's Far Too Late Now You Loser. I've always got the wrong mortgage with the wrong supplier, the worst performing ISA and the bank account only a fool would open. As to the (defined contribution, natch) pension scheme: re-arranging the words "toilet, down the, flushing, better off, your money, you'd be" is a pretty good guide to past performance (which had better not be a guide to future behaviour).
Last Sunday though, an article about Saving Money With Mark Oaten caused the toast and marmite to splutter from my lips with greater than normal violence. What's up, says the other half, looking up from the Plymouth Argyle match report (he has a final salary pension, natch, and can afford to while away the hours catching up on football, the latest from Strictly Come Dancing, and the Sheer Hell of Kerry Katona, while my eyes are glazing with fear and my head is numb from trying to multiply up annuity rates) and I'm like listen to this, just listen, and read out:
Mark and Belinda both have credit cards with Lloyds, each with a balance of about £10,000. They make only the minimum repayments every month, costing them £360 a month. At an interest rate of 23.9% and 24.9% respectively, it would take them as much as 249 years to clear their debts...
The Oatens have an interest-only mortgage with Abbey at 6%...
The Oatens have their current account with NatWest and since the onset of the credit crunch, their authorised overdraft has averaged £2,500 a month. The bank charges them 19.24%, or £440 a year.
Unsurprisingly, the Sunday Times was able to locate better deals for the Oatens (they'll be able to pay off their credit card debt in "only" 153 years if they follow the advice), but that wasn't what made the toast fly at Archer-Pannell mansions.
Only one of us had a calvinist Scots upbringing, but we're both fanatical at avoiding personal debt. We do without rather than get in the red, and any money left over after we've paid into the ISAs, and put as much as possible into the pensions, is used to reduce the mortgage. We've spent the last year worrying about the potential of all the things that could go wrong if we dared to extend the mortgage by a small amount (less than the Oatens' annual overdraft and credit card bills combined) to combine with our savings in order to buy a tiny second flat to generate some rental income and hopefully longterm capital appreciation (and we've still not committed to doing it).
OK so Mr K and I are probably overly-conservative in matters financial and I'm neither asking for government handouts nor claiming that we're not well off. But what on earth is an MP doing running up such huge levels of personal debt? On their salary? It was the almost cavalier disregard he displayed towards his debt, as though it was some unfortunate accident that had been done to him, not by him, which widened my eyes. Didn't it occur to anyone in LibDem HQ that by displaying such financial incontinence, they would generate a bit of a credibility gap when it comes to lecturing the rest of us on the importance of financial discipline? Is it a complete accident that the parties of the left, who've maxed out the country's credit card, should have a parliamentary cadre of people who replicate the behaviour in their private life?
As usual, Keith had the answer. It's because he's an MP. We probably pay his interest-only mortgage for him, and what does he care about thousands of pounds of credit card and current account debt? It'll all get paid off in a lump sum if he loses his seat. And then we'll pay him the sort of pension you can only dream about for the rest of his life.
True enough, no? I'm convinced that the quickest way to reduce the ludicrous level of public borrowing would be to force MPs off their final salary pension schemes and onto defined contribution ones instead. It might bring home to them the following points:
- Most of them have no idea about how angry we feel about their current pension arrangements.
- They have absolutely no idea about the financial considerations of families who lack access to final salary pensions.
- Pace Nick Clegg, people on the 40% income tax rate aren't necessarily "rich" and shouldn't be used as cashcows for more public spending splurges
- All government borrowing is taxation deferred, and the more taxation you dump on us, the less we can save for our old age. We're not fools, so stop pretending we don't notice this.
