Money, Explained

Part 1 of this series, ‘How to get rich quick’ talks about the bait laid out by super dupers to lure people into investing money to get more out of it without having to do anything much. How early, would you say, people began duping others? Documented evidence suggests 1821, when Gregor McGregor sold the promised land of Poyais to gullible people of London in exchange for Poyais dollars. If only Poyais did exist. Like me, if you have laughed out loud to imagine such scams happen even now, you would wonder why the people fall prey so often, even now. 

Fraudulent emails asking you to claim your prize, SMSes, schemes where you invest for some worthless product and pump its price until it starts trading at a higher price and people start buying it and exactly when you sell it. Multi Level Companies work on people’s herd mentality and their inherent desire to trust people unless someone can prove otherwise. 

Strangely, people willingly trust strangers when they see some profit in it and distrust their own kin if they warn them against. These scamsters use testimonials, rags to riches stories and bring forth other investors who have made a quick fortune to make you trust them. Especially during times of pandemics, post war eras when the morale of people is at its lowest, such schemes flourish because want hope. They want proof that everything is not lost. Yet. The trickiest part is that people who have been duped give up even without filing a complaint because they feel nothing can happen. But fraudsters are often apprehended only when someone complains. 

Who falls prey easily, is there any age for that? It appears that people of all ages are as gullible, young and old because fraudsters use the basic human tendency to trust others in areas they don’t know much about. Conning someone and falling prey to such con is all part of human psychology. It’s more about trust and ignorance. And people who know this play their part very well until it’s too late. 

Part 2, ‘Credit Cards’ speaks for itself because we all have experienced how credit actually works, again its Trust, backed by a liability to pay for money used. Started by Bank Amaricard using a plastic card mailed to some 60,000 people who were surprised. Four in ten Americans have credit card debt which few can come out of. What starts as a promise for the exciting life, soon spirals into a trap of interest and more debt. 

Credit card companies are actually giving you a loan the old fashioned way, without checking if you have the ability to earn, save and repay because they profit not when you repay in time but when you default. So those who pay back in time actually subsidize those who use along the way. What people overlook is the Annual Percentage Rate which is an average of about 16% and can go to even 23%. The film shows shocking statistics about the amount of interest paid by Americans alone, running into billions of dollars every year. Most people pay up regularly unless they run out of job, fall sick and can’t pay back. That’s when crisis hits. Not having savings leads to turning to credit cards even for the most basic and trivial of expenses like groceries, travels and entertainment. So many of us use credit cards as a savings card for expenses that could very well had been done through a Savings Bank Account and not on credit. 

This series enables viewers to stop being reckless about their credit cards. Following simple rules like keeping a tab on your statements, credit score, choosing the one with the lowest interest rates can help you stay in control of your finances and actually benefit from the credit card model. 

Part 3 in this series is based on student loans– something we all can relate as we have availed of one at some point in our lives. I know many friends who are repaying their student loans well into their married lives as well, some even with the help of their spouses. Student loans are supposed to help you get that coveted degree from college that will enable you get a high paying job. Just so that you can reach all of life’s milestones- the great job, a great marriage, kids, home, car/s and vacations. Millions of young men and women avail of student loans when their families are unable to fund their tuition which can be hard if you don’t qualify for full fee waiver with scholarship or your preferred college does not have one. 

So then why do so many people drown in student loans even a decade after their graduation? There are several reasons as explained. For one, the obsolete school education does not guarantee a decent job and so college education is a must. But when that Bachelor’s degree or Master’s degree also does not get you a job where you can repay your loans quickly by paying you decent salaries, the loan starts to pile up. Add to it the fact that this is the age when you get married, buy a house and have kids. So when priorities change, the student loan gets neglected and adds up to the interest payable. Nations the world over are encouraging its population to get higher education by offering public education facilities, scholarships and loans because an educated population becomes productive, there’s less crime, they marry late and have fewer kids, fall ill less frequently and are less dependent on welfare. But students loans, which are supposed to be the ladder to success must not turn to a cesspool for those who avail. 

Part 4 is about Gambling, the most dangerous of human pastimes or entertainment. It is one psychological hooks, an addiction that has more to do with human psyche than with the actual reward of money upon winning. It’s that feeling of being rich which everyone harbours as a dream. If it is fulfilled easily, it gives you a dopamine high. It’s all a game of probabilities. Gambling operators work on the probability theory of how many would possibly win against millions of odds at any given time. Anything from horse races, bull fights, betting on sports, online games or the real casino format, gambling is addictive because of its unpredictable nature. Luck feels like magic. The dopamine released between the time you place your gamble and the anticipated reward is the highest and the most addictive. You want to experience it again and again and feel you have control over the outcomes if you increased your odds. But the cost of this experience can be outrageously dangerous. People have lost everything at gambling, even their sanity. Many have been in rehab to come out of this addiction while many more have turned to crime to fund their gambling addiction. All for what? That feeling of experiencing the ‘chance’ that something big is about to happen? It’s never worth it anyways. 

Part 5 describes retirement, something the world is waking up to as at an alarming rates with many countries having more senior people than young productive ones. With cost of living escalating exponentially, retirement stares at us like a bleak picture where one could very well spiral from middle class to poverty in  a matter of a few years. The only way to avoid this is through savings and retirement planning. 

The three means of leading a comfortable retired life were: 

1. Personal Savings 
2. Pension 
3. Welfare

But really how many people can do that while they are productive during their earning years? Pensions help accomplish that to some extent but its only available to those in the organized sector. What about those who don’t belong? America devised the 401K where employees could defer a part of their salaries and the employer most of the times would match. This meant you ended up saving a part of your current salary into this account for your future. Many countries followed suit including the UK. The world is now realising that one way to defer taking responsibility of the elders is to allow them work well past the stipulated retirement age when they are still capable of work. Many people work well into their seventies. That reduces the burden on the system to some extent. But there’s another means to do this much better, something which was followed all along for ages across the globe- the fourth means- when families took care of the elders. Much needs to be done in this regards. But till then, retirement is not something to look forward to unless you’re sure you will live the same life as you’re doing while you earn. 

Here is a trailer of the fantastic docu series from Netflix:

https://www.youtube.com/watch?v=lJHu-KCY9Fc

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