Sunday, 21 December 2008
How Do We Get Into Debt?
People in debt are sleep walkers
No doubt many of us are familiar with this famous quote from Charles Dickens:
"Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery." credit The Quotations Page
So how come something as blindingly obvious to so many people as how we get into debt still results in so many of us struggling to repay credit cards and the like? Have we all been really gullible? Are we really all that stupid? Are we all financially and arithmetically inept?
I guess in some ways we have to take some of the responsibility for getting into debt. I don't mean this is a direct sense though. I mean it in the sense that significant numbers of us have not put any effort into becoming more aware of the commercial techniques that are used to encourage us to part with our money which then leads us to getting into debt.
Much of our indebtedness is due to the manipulation of situation we find ourselves in when we shop. The places we go to buy things are engineered to lower or psychological defences. Our logical faculties are bypassed by appeals to emotional cues. Our conscious decision making is bypassed and our unconscious is spoken to.
Enter any retail environment, and, not withstanding the general societal norms that support 'acquiring things' (materialism and consumerism) we enter a world designed to take our money off us.
Walk through the door and you enter what is known as the 'decompression zone' that open 5 meters between the door and the goods. This zone is designed to ensure that you to change your mind state from an 'in control rational shopper' into a 'less rational consumer'. You are then more open minded to the sensory assault that confronts you, the music that not only implies you are in a different place (club, bar, home) but also something that 'distracts' your rational thought. You pay attention to the music and not to your rational faculties. In this undefended state you become far more open to the myriad of messages that are put to you on promotional material and carefully crafted sales assistant behaviour and messages.
The environment is then designed to 'take you away from stress and towards relaxation' and ultimately happiness. The happier you are the more endorphins your brain releases which are so addictive that you seek more pleasurable experiences, so you go and buy stuff you don't need because you want to look and feel good. Your sense of identity demands it.
So where do you go to get the money you need? The banks of course!. Well...guess what Banks are Retailers They use exactly the same methods as 'ordinary' retailers and so we have a debt fuelling system. The really deceptive aspect of this is that they convey the image that they are impartial advisers The latest UK Nat West Money Sense TV advert actually says that the people you meet are NOT salespeople! Really? dressed in corporate uniforms, meeting you on their premises which are full of sales messages? This is overt situation manipulation. These people cannot be impartial.
Read any basic text on Social Influence and it will explain that 're-framing' or giving a new name to something that makes a new association that disguises the real intent is as old as the hills. Sales people become consultants, become advisers, become 'your friend', who you trust and base your purchase decisions on!
Another 'wheeze' is the advice they give to re-finance loans. So many of us misunderstand debt and its repayment that we are tempted to extend loans. Don't do it! The initial element of re-payment is the interest which the banks make sure they get off you first. By asking you to extend the loan the 'clock' is re-set and you start paying interest again and so if you find you can pay the debt back earlier you are still in hock.
We are not taught 'retail and advertising psychology or financial management' at schools. We should be. The techniques are not 'difficult' they are simply 'off curriculum'
In our modern interconnected fast paced worlds we should be teaching our kids the rudiments of the commercial practices to which they are continually exposed. This is real education. So tell me...how will knowing "Ou est la Boulangerie" or "1066 was the Norman Invasion of Britain" help you in the modern world.
Try telling your credit card company "I know I'm in debt but I can conjugate a verb like the best of them!" I was in debt, I am in debt, I will be in debt, I have debted? I am debting? I will debt? How about a new verb 'debting', referring to the state of being entirely ignorant of the sophisticated commercial techniques applied to gullible consumers?
Remember banks are NOT services they are purveyors of financial products
you will know that talking in your sleep walking will lead to debt.