Richer than you think? Who'd a thunk?

I had an interesting exchange with one of the contributors over at the Gigababy blog, recently revamped to emphasize its emphasis on targeting speeders, racers, drunk drivers and other purveyors of automotive jackassery.

Metoo wrote a post titled "You're NOT richer than you think!":

Rant time!

And if anyone would like to point out a different view with this type of ad, I'm all ears. So.

O.k. after the millionth time of seeing these stupid ScotiaBank commercials during hockey games, I've blown the gasket. And I can't believe institutions at the level of a national bank can get away with prattling this crap.

They are helping you find ways to stay in debt people!! The "richer than you think" means that they will help you restructure your loans so that you can buy more crap and spend more money. Then you can stay in deeper debt, for a longer time, all with one LOW MONTHLY PAYMENT! That's called wage slavery folks, you gotta keep suckin it up to the man, so that you can pay your dues.

This behaviour by ScotiaBank (and all of them of course, but here it's just egregiously advertised) is no better than those "Credit Card checks" you get in the mail. You know, the ones with the text that says, "Now you have the cash to buy: that surprise vacation, or new widescreen TV, or get that dream boat you've wanted".

It's NOT cash! This is simply the 'high end' of Payday loans. And I find it reprehensible, just different shades of loan sharking.

If you're not rich, then your not rich. Think about it!

---
In a follow-up comment, Metoo wrote:

... isn't it the worst kind of bamboozling? I mean, this sort of thing borders on confidence scams, and I fear that younger generations who will never have known a cash economy will get suckered without mercy. Sub-prime meltdown anyone?

I replied:

I've come to understand that most people really *are* richer than they think.

What gets you rich isn't the money you make ... it's the money you save.

If you can restructure your payments and cut your costs, and most of all, find ways to act your wage and spend less than you make, then save and invest the difference ... well, you can be a lot richer than you probably imagine.

Sure, a bank is going to try to sell you its products to get you there ... Scotiabank mutual funds, Scotiabank consolidation loans, Scotiabank low-interest credit cards or credit lines instead of the cards you may have with other banks ... what else are you going to do? Stuff your cash under a mattress and try to get rich that way? Odds are, you're going to deal with a financial institution at some point if you're serious about laying out your money in any productive way beyond money-in/bills-out.

Scotiabank wants to be the bank to open your eyes to those possibilities, then sell you the investment vehicles. I don't fault them for that.

Metoo:

I couldn't agree more. If one restructures debt to allow for quick paying of 'bad debt' (Credit cards, car loans), and manages 'good debt' (mortgage, and appreciating assets). Then yes, you *could* be richer than you think if you invest the difference.Sadly, I don't think people are as smart as you to proceed this way.

Me:

Well, hearing people complain loudly that they'd get themselves out of debt if only they could learn how to spend less than they make and take care of personal business is about as easy to tolerate as people complaining loudly that they wish they could learn how to spell Connecticut. Bottom line -- if you want to learn how to do it, learn how to do it, then do it ... the resources are right there.

If you're complaining that Scotiabank is playing on stupid people, go right ahead. You'll never go broke underestimating the intelligence of the average person.

If people aren't "as smart" as me to proceed in a way that gets their debt paid off so they can put more of their income -- their 'riches' -- into things that matter and/or work for them ... well, I can't blame the bank for that. The bank is there as a tool.

If people get suckered into buying houses they absolutely cannot afford by banks that use predatory lending practices and exotic financial products that are beyond the comprehension of even an educated buyer -- that's bad. I don't like that.

But if people willingly spend themselves into a big hole by devouring all the credit they can get, then cry foul because they were *given* the credit -- I don't rail at the bank. It's not the bank's job to protect you at every turn from outspending your earning capacity.

Metoo:

... on the topic of 'predatory' banks, suckers, and digging debt holes. I can't disagree with anything you say. "Victimhood" of borrowers is not what I implied by railing against ridiculously transparent bank ads. And I might add that the "richer than you think" ads are not selling your notion of consolidating debt, living within your means, and investing the difference. Watch them. They are flogging granite counter tops and breakfast nooks, a literal quote. (not sure if you get the same ad cycle on CBC during hockey games in NS).

By being "smart" I stand by the fact that indeed, generally people aren't as studied on the topic of finance as you are. In fact, vast swaths of the population are desperately innumerate (which is worse than the literacy problems we see from time to time, but that's another debate). People just don't get numbers. They avoid the math, and are happily sucked dry by organizations that know how to benefit from the math, and legal wording on contracts as well.

Ask 100 people to explain concepts of finance like amortization, compounding, loan payment calculations, leasing calculations, inflation, real rates of return, present values, etc. I bet very few will be versed to any depth sufficient to analyze their own finances competently.

Banks love this of course, so do other businesses (car dealers?!). Combine with relentless mind bending marketing... and wa-la, "you're richer than you think".

Me:

Ah, that's what I get for not watching commercials. Thanks to the home-brew PVR, the only commercials I see are during the 11-midnight news hour. (Or as we call it, the Lloyd Robertson Rehearsal Show.)

It sounds like you'd get a good "rah-rah!" kick out of a movie I saw on the weekend: In Debt We Trust. I wrote about it over at the bas-dot-com.

Granted, a lot of people can't do the fancy math or comprehend annuities and amortization and all that. Hell, I can't even do a convincing job of explaining short-selling to my coworkers.

But if you can't lay out a simple household budget that doesn't put you deeper in the hole each month -- seriously, don't blame the bank. The basic concepts of *spend less than you make* and *save for a rainy day* don't require a special calculator. If the numbers don't add up in your favour, you have two basic choices: spend less or make more. Adjust your lifestyle by sorting out wants from needs (you *need* a place to live, you *want* it to be a nice house) and adjust as necessary.

I can't blame the banks for making people poor any more than I can blame McDonald's for making people fat or "the media" for making people anorexic.

Advertising can be persuasive. Home improvement shows can skew your expectations. Keeping up with the Joneses is also persuasive. Carrying bad habits from your family of origin can lead you astray. Pride can jam up your urge to reach for help. Fear of math can tempt you to ignore reality.

But to flail your arms at the end of the month when you're in overdraft and facing maxed out credit cards and scream "I can't help it! The banks made me do it!" is a lie, an excuse, and a cop-out.

Wow, that's harsh.

Metoo:

Harsh? Truer words were ne'er spoken. And i'm not blaming anybody for making money from the uneducated. It's all within the law of course. But people CAN avoid being suckered.

---

Now, I'm no rich genius. And I may be talking out of my Big Ass with all of this, 'cuz in a few years, homeowners' debt and other life developments may have me screaming for financial mercy. Anything for any readers to add to this, or are we assaulting an expired equine?