PAYDAY LOANS AND THE DEBT SPIRAL

“It’s not just the weak that can end up in a debt spiral”, wrote Simon Read of The Independent (London) a couple of weeks ago. I was reassured to read that, because I had ended up in that very spiral in the late 90s and I didn’t want to think that I had been weak. Oh no, not me.

The article was topical. Payday loans had hit the headlines again when R3, the professional association that represents insolvency practitioners, warned that up to 3.5 million people in Britain are expected to take out a short-term loan to tide them over in the coming six months.

First, the good news …

Simon Read says of the loans: “if you need emergency cash and know you can pay it back within a few days, then paying £20-£30 for the privilege doesn’t seem too bad, especially bearing in mind how much the charges and interest can add up to if you go into the red at a bank.”

Then the bad news …

But as Read says, and I have written in these pages before, the obvious problem is that if you don’t repay the loan quickly then it mounts up: it spirals, in fact. What’s more, you could end up paying bank charges and interest anyway, as well as the interest to the loan company.

Wonga boss explains

The most interesting part of the piece was this. Because of the negative publicity, Wonga’s boss Errol Damelin got in touch with the Indy to offer a defence of his business methods. He said: “If things go wrong we charge a one-off default fee of £20 and then stop any further interest at a maximum of 60 days.”

That sounds fair and it’s the kind of responsible business practice that Simon Read, and in fact all of us, would like to see, though I’d like to know how Wonga defines “when things go wrong”, i.e. when does this kind of “interest cap” kick in?

The Independent would like to hear from anyone who’s had experiences (good or bad, I trust) with Wonga or other payday lenders who claim to operate fairly.

Author’s payday loan spiral

The article concluded by recommending a book by Steve Perry, entitled When Payday Loans Go Wrong. It describes the author’s “descent into debt hell”, which started innocently enough with a £250 loan for a weekend away but ended 18 months later with 64 loans from 12 different companies totalling £15,000.

My own debt experience was not caused by payday loans … but the result was similar. My business started to go wrong, so I started funding it with personal credit cards. I ended up owing a total of £65,000 to 23 separate  creditors and narrowly avoided bankruptcy. Different cause but the same spiral, which I described in my book “Back to the Black.”

WANT TO KNOW MORE?

For the full Simon Read article click here: http://www.independent.co.uk/money/spend-save/simon-read-its-not-just-the-weak-that-can-end-up-in-a-debt-spiral-6275149.html

For information about Steve Perry’s book “When Payday Loans Go Wrong”, click here: www.saynotopaydayloans.co.uk

For information about my book “Back to the Black”, click here: http://michaelmacmahon.com/books/back-to-the-black-how-to-become-debt-free-and-stay-that-way/

DOMESTIC RING-FENCING?

I heard an interesting discussion on the radio yesterday (BBC Radio 4 but I can’t recall which programme). The topic was the massive increases in retail prices for domestic energy, Scottish Power proudly leading the way with a planned 19% hike in domestic gas prices. (Have you ever heard of a 19% drop from any energy provider when wholesale gas prices are falling? Answers on a postcard, please.)

This news has led to predictions of widespread hardship next winter for those older people for whom energy costs are a major proportion of their budget; thus the discussion turned to the annual Winter Fuel Payment, which here in the UK will be £200 for winter 2011/12 (unless you are over 80, when it’ll be £300).

To put that allowance in perspective, the predicted energy price hike is expected to add around £175 to average annual bills for Scottish Power’s 2.4m customers; and up to £300 extra as a UK average, according to an industry commentator, when other energy companies follow suit.

Benefit used for its intended purpose? Discuss.

A contributor to the programme said “studies have shown” that in general the Winter Fuel Payment is in fact used to buy energy; 40% of recipients use it for the purpose intended. As this is the predominant use of the benefit, the measure is seen as appropriately targeted.

This made me wonder: “how do they know?” These days the payments will predominantly, if not totally, be by cheque or bank payment. So the money goes in to a bank account. It comes out to pay for … what? The concept of ring-fencing in domestic economy only means something for the minority of people who do regular and accurate budgets and cash-flow forecasts.

The alternative: they asked people through an opinion poll. Fine … but if you were in receipt of this fuel benefit and wanted to hold on to it; and then a pollster came to your door or your telephone and asked for what purpose you’d spent the money … would you admit it was for drink or drugs or gambling or going to football or a few dinners out?

Have I missed something? If not, I rest my case, m’lud.

CAMPAIGNING FOR BETTER RAIL SERVICES IN THE WEST

On Sunday I had my first introduction to an organisation I’d read about many times in the seven years since I moved to Bristol and started using the public transport here. The organisation’s full name is Friends of Suburban Bristol Railways; admittedly a bit of a mouthful, so they tend to be known by their initials FOSBR. (well, OK, acronym, as it could be a word)

Celebration

The occasion was a celebration of progress made in several of FOSBR’s campaigns and the location was a pub near Bristol’s Temple Meads station. Being fond of trains and pubs, I found it an easy decision to attend; I also found that FOSBR has even produced a guide to pubs along the Temple Meads / Severn Beach line, called FOSBEER of course.

Serious content

Enough of the fun side of it; the content of the meeting, even though billed as a celebration, was deadly serious, i.e. the possible / probable negative impact of the recent McNulty Report. I was impressed with the presentations by three local rail union officials (RMT, TSSA and ASLEF respectively); incisive and fact-filled.

Correction; I’d assumed they’d be local union officials but in fact two of them had national status: Alex Gordon is national President of the RMT and Manuel Cortes is Assistant General Secretary of TSSA.

They also had a local councillor speaking; importantly, he represents an area in North Somerset that could be served by rail once more if passenger services are restored to the (currently freight-only) Portbury branch and it’s extended a couple of miles to Portishead.

Subsidy five times higher since privatisation

I’ve often read, (e.g in The Economist) or heard it said verbally (Richard Wilson’s recent impassioned plea on behalf of harassed British rail users on Channel 4) that the level of public subsidy of our railways was now higher than it was pre-privatisation, despite our fares being the highest in Europe. However it was not made clear in either of those sources if the comparison was inflation-adjusted.

At this meeting, though, the guy from TSSA filled in the blanks; the subsidy is now five times higher; £5 bn, compared to £1 bn at today’s prices back then. How can that be? McNulty apparently thinks that staffing levels and pay costs are a big part of it, which concerns the unions, naturally, including the possibility of DOO (driver-only operation). Maybe his brief didn’t allow him to conclude that the fragmentary and thus potentially chaotic way the railways were privatised had a big impact on costs and that should be addressed first.

Loophole?

I learned some other interesting stuff, all of which I shall check out in the interests of balance; for example that First Group will be able to exploit a loophole and avoid large subsidy repayments by giving up the Great Western rail franchise three years early.

The feeling of the meeting was summed up for me by FOSBR member Mike: “McNulty is Beeching Mk 2”.

I’ve now joined this worthwhile and effective organisation and will be blogging about rail in the West, so watch this space.

WANT TO KNOW MORE?

On the McNulty Report:

http://www.togetherfortransport.org/content/what-surprises-will-mcnulty-come

On Driver-Only Operation (DOO):

http://www.scot-rail.co.uk/page/Driver+Only+Operation

On FOSBR: http://fosbr.org.uk/

PHILOSOPHERS I’D LIKE TO HAVE A DRINK WITH

Here in Bristol (the UK version, though I know there are Bristols in many other countries) we have a wonderful institution called the Bristol Festival of Ideas. It was founded, I think, by a great fellow called Andrew Kelly. (may his tribe increase)

The festival’s web address is www.ideasfestival.co.uk and you might have spotted that there is nothing about Bristol in that URL, so it is conveniently shorter than it might otherwise have been. When I first noticed that, I assumed that either we had the first such festival (being of a pioneering spirit, as this city usually is) or that the aforementioned Mr Kelly had been quicker off the mark than other organisers when it came to allocating domain names. So I Googled (as you do) the phrase “ideas festival”. I found that there is virtually no comparable festival anywhere else in the UK, except Cambridge. We’d be happy, I think, to be considered on a par with that city when it comes to ideas.

To be fair, I did that web search a couple of years ago; I can’t be bothered to do it again, in case we have by now lots of imitators.

Our festival has hundreds of informative and (generally) entertaining talks annually, by a fantastic variety of speakers, including but not restricted to scientists, historians, novelists, politicians … and philosophers. Wait a minute, I hear you cry. Entertaining talk by a philosopher? That’s surely an oxymoron?

Well, I have pleasure in informing you, dear reader, that it’s not an oxymoron when the speaker is Prof A C Grayling (Anthony to his chums), whom I had the pleasure of hearing last Friday evening, not for the first time, courtesy of the Festival of Ideas. Grayling was talking largely about the history behind the “making” (his word) of his new secular bible entitled “The Good Book”. I used the word “history” advisedly, by the way, because he reckoned the process of gestation lasted about 30 years.

Space does not permit me even to summarise the content of his talk, so I’ll restrict myself to one of his throwaway lines. He mentioned that he sometimes tells his students about the conversation overheard between two women on a Glasgow bus: “My dear, you must be philosophical about it; don’t give it another thought.”

(… or was it a Bristol bus? Discuss.)

As for the title of this post: I do very occasionally like to read some philosophy (or at least philosophy-lite) because I feel I ought to, but I couldn’t ever have imagined having a drink with a philosopher. However, having heard Prof Grayling and the self-deprecating way he talks about his profession and his work, I’d now go further. He’s high on my list of fantasy dinner guests.

DREAM SCHOOL: A RETHINK

I posted recently a piece entitled “Dream School and Real School”, about a radio interview I’d heard with one of Jamie Oliver’s “Dream School” pupils. I tweeted too: how cutting-edge am I?

Based on what seemed to be encouraging evidence of a turnaround in the attitudes and self-belief of this particular “problem pupil”, I thought that good old Jamie had found yet another successful formula; that’s why I wrote: “Dream School rules”.

I did however admit in my blog that I hadn’t yet seen any of the programmes. I have now corrected the omission, watching most of the last episode. That was enough to make me feel that my enthusiasm might have been misplaced.

A Coren summing-up

 

Victoria Coren, writing in The Observer last Sunday (17 April), summed the series up superbly and I could not improve on what she wrote. Admittedly, anyone with the surname Coren starts with a credit balance in my book, as I was and remain a massive fan of her dad’s writing. I’m glad to see that Alan Coren’s brilliant torch has been passed on safely.

Coren jr. ended her piece thusly: “The vaguely happy ending wasn’t enough to undo the message of the previous six weeks. Half the kids were still interrupting, swearing and self-justifying. The cleverest girl, who had won a science trip to Arizona, a further education scholarship and a tour of Cambridge University with an encouraging David Starkey, is now, we learned, ‘auditioning for TV dramas’. What sort of conclusion are we supposed to draw from that?

 

“… let’s strive to remember that it didn’t actually prove anything and was just a piece of weird entertainment.”

Alf Garnett stares back

Ms Coren clearly watched all six episodes but then she was paid to do so. I feel for her. Despite that fact that she was writing here in a newspaper that I’m sure would describe itself as left of centre, she said: “after each episode, I looked into the mirror and Alf Garnett stared back”.

(NB: If you are not a Brit, or not old enough to remember him, Alf Garnett was the fictional epitome of reactionary attitudes)

Want to know more?

To read Victoria Coren’s excellent article “Jamie’s dream was a nightmare”, go to: http://www.guardian.co.uk/commentisfree/2011/apr/17/victoria-coren-jamie-oliver-catherine-zeta-jones?INTCMP=SRCH

(That’s not just a suggestion: it’s an order!)

DREAM SCHOOL AND REAL SCHOOL

Jamie Oliver’s latest initiative, “Dream School”, sounds interesting, though I admit I haven’t seen any of the programmes yet. His personality, energy and high profile have ensured the involvement of all those “experts”: people with not only exceptional levels of knowledge but also the time to give the 1:1 attention that many “troubled” children inevitably lack at school.

Teenage nightmare rehabilitated?

A couple of days ago, I tweeted about an interview with former “problem pupil” Angelique Knight on Radio 4’s You and Yours. “Dream School rules”, was my conclusion. The findings were unsurprising to me but encouraging. Unless she was no more than an accomplished actor, Angelique had changed in a short time from a teenage nightmare to a motivated young person who now wants to go to university.

“So what?” you might say. Is this just a neat way to get TV ratings? A country mile from what can be achieved in a practical sense? Resource constraints will never allow this kind of thing, or anything like it? As the saying goes, “You might think that; I couldn’t possibly comment” although I do admit to being pretty impressed when I heard that interview with Angelique Knight.

Real-world school on show

I was even more impressed recently when I saw one small snapshot of what a difference good leadership can make in schools. I was staying overnight at a hall of residence at the London School of Economics (LSE, to us Brits) and when I went down to breakfast the dining hall was half-full of schoolchildren on a study trip; it was university vacation time, so they, and I, were taking advantage of the good-value accommodation such halls offer.

These kids were of primary school age; animated, not Ritalin-sedated, but so well-behaved that I admit to thinking (please forgive my former prejudices) that they must be from a fee-paying school. It’s a well-known fact that discipline is an issue / challenge (we don’t say problem anymore, do we?) in many British state-sector schools, even at primary level.

But not all schools. Suddenly I heard an adult voice raised, in a quietly authoritative tone: “Sit down! How dare you embarrass the school by your behaviour!” Silence reigned again. We random adults looked at each other and smiled; this took many of us back to our own schooldays.

Primary school rules

I went over to a table occupied by half a dozen teachers and congratulated them on the kids’ behaviour. One said: “well, these are pretty tired kids.” That’s when I found they were from a state-sector primary: Southill Primary School in Weymouth, Dorset, and I talked briefly to the Deputy Head, the man who had laid (or is it lain?) down the law.

After the kids had left (in an orderly fashion) I noticed the same guy going round and thanking all the dining-hall and kitchen staff. That impressed me too, as it seemed to be consistent: show respect to kids and to adults alike and with luck you get it back.

As I said before, it was only a snapshot; but it showed what can be done, even without Channel 4’s budget and the presence of TV cameras. I don’t know anything about the academic results of Southill Primary School but I’ll bet they are pretty good.

Ideal vs. real

In conclusion: hats off to Southill. It’s inspiring to find out what could be done in an ideal world, through projects like Dream School. It’s even better to see people who seem to be doing it in the real world.

Want to know more?

Southill Primary School: http://www.southill.dorset.sch.uk/index.html

Jamie Oliver’s “Dream School”: http://www.channel4.com/programmes/jamies-dream-school

TWO DAUGHTERS A RECIPE FOR HAPPINESS

I’ve just read in “The Week” (9 April) that it’s been claimed that having two daughters is the key to a happy life. According to research, ” … two daughters get on well with each other and with their parents …”

All I can add is that I hope they didn’t spend too much money on this research because I could have given them the information free of charge, based admittedly on a very small sample.

I am a very happy man. I have two daughters. QED.

My two daughters are quite different in temperament and talents and have followed qute different paths – one a junior doctor, one an actor and singer – but they not only get on well; each is the other’s biggest fan (biggest fan after me, that is).  I rest my case.

Beware of the croc

I recently spent a fun afternoon wearing my actor’s hat, filming a commercial here in Bristol. I was playing an “older gent” sitting in a retirement home in Fishponds (a very nice one, by the way; I’m putting my name down) and extolling to my “son” the virtues of a new auction website, through which I had just bought the large flat-screen TV on the wall behind me.

Suddenly I am attacked by a giant crocodile. That was to be expected, of course, as the auction site is called crocbids. I’m knocked backwards out of my chair and I end up underneath the crocodile, arms and legs waving feebly.

Of course I wasn’t really knocked out of my chair, because for the first time in my life I had a body-double. They could in fact have put a disclaimer on the advert: “no elderly gents, or actors playing elderly gents, were harmed during the making of this advert.”

The finished product will be shown on Sky channels soon but I’m not sure when. If you’d like to see the commercial, though, it’s called “Crocbids Vs Retirement” and it’s on YouTube, at http://www.youtube.com/watch?v=dYsNW9QRiSY

For the record, and for my thanks, I was cast by Kate Marshall of Room3 Agency and the production company was Lightworx.

BOOK LAUNCH: "BACK TO THE BLACK"


The free download version, containing Chapters 1 – 3, of my book “Back To The Black: how to become debt-free and stay that way” is now available as a .pdf file.

It’s on the social publishing site Scribd.

Click on this link, or copy and paste this URL into your browser:



http://www.scribd.com/michael_macmahon



It’ll also be available on other sites soon. Watch this space!