Credit Credit Crunch Money

For more than a year now, the news has been dominated by two words: credit crunch. Every mention of those words conjures up gloomy thoughts of bankruptcy, rocketing prices, and mass redundancies. It seems there’s no avoiding the huge media coverage of the recession, and the widespread panic that is consuming the nation. But is it really that bad? I certainly don’t think so.

Some of you are perhaps bemused at that last comment, but rest assured that I am not an imbecile, and am of reasonably sound mind. Worried as you may be that prices are going up, employment is going down, repossessions are going up, lending is going down, house prices are going nowhere special and the economy is going down the toilet, I don’t think average joe has seen any real impact on his quality of life.

Sure, redundancies have been plastered all over the news. And I’m sure it’d be devastating to be told not to come to work tomorrow. But remember, job losses don’t just happen in the credit crunch. They happen all the time. Only now, they’ve increased slightly, and the media have decided we need to be constantly bombarded by tales of factory workers facing the dole. And how many people do you know who have been made redundant? I don’t know any. It seems that only a small minority have lost their jobs due to the credit crunch, just a slightly larger small minority than usual. Meanwhile, average joe has been continuing to work as normal.

So long as average joe doesn’t need a loan. Lending is a media favourite at the moment, with constant stories of banks tightening up the criteria for getting cash. We’ve all heard that they’re refusing to lend not only to businesses and the public, but to each other. But what has this meant for the consumer? Well, in my opinion, (can you see a pattern here?) not much. People who want a loan – people who want to spend money they haven’t got – are being turned down. Shock. Horror. People will have to make do with spending their own money. As for mortgages, well, they’re harder to get and you need a larger deposit, so you’ll have to save up a bit before you spend a huge amount of the banks money. And with interest rates so low, your mortgage repayments will be less than they were before the credit crunch. So with low mortgage repayments, and house prices retreating slightly from the upper atmosphere, now seems as good a time as any to invest in property.

Moving on from property prices, we come to, erm, prices. We’re all aware that things aren’t as cheap as they used to be. Supermarkets are sneaking a few pence here and there, energy bills are going up, and things are just generally more expensive. It seems our wallets can’t hold on to our cash any more, and the even the slightest spot of shopping manages to set us back more than expected. This, I believe, is the only major effect of the credit crunch on average joe. With everything more expensive than it once was, people just have to get by with slightly less.

Is that such a bad thing? Perhaps you’ll have to give up a few luxuries, perhaps you might not have a lavish holiday abroad. You may instead have to stay at home and spend time with your family, and watch your two year old 42 inch tv, instead of a brand new 50 inch plasma. Life’s harsh….

So there you have it. My slightly idealistic view on the credit crunch: over-hyped, over-feared, and over here… still, it means we have to get by without the lavish excess that was once the norm. No more buying things you can’t afford on credit. But does the credit crunch, like all bad things, have a good side? Well it can bring a certain pleasure to those of us who have been slightly more financially savvy when we hear tales of extravagant spending followed by bankruptcy, but there is one serious upside to recession financial education. People everywhere are beginning to realise that they must be more financially responsible. They must learn to spend less than they earn, save, and not fall into a spiral of debt. The credit crunch, therefore, is not so bad at all.