Spend less on what we don’t need, pay off debts so we’re not making obscene interest payments and hey presto we’re all better off. It’s been the message of money and debt management websites, books and TV programmes for years. Now, the government have got a hold of the idea and we are all living under ‘austerity measures’. So how do we apply it to our own lives?
No more debt
Makes sense doesn’t it. No more debt means no ridiculous interest payments to banks and other lenders. Especially if you’ve got a mortgage.
Of course if we all paid off all our debts the banks
wouldn’t be able to earn the interest we pay them and
there would be a big risk to the banking system,
possibly leading to collapse.
Wouldn’t it be great though. All that extra money to ourselves. Or perhaps we could work less hours as we wouldn’t need to earn so much, and spend the time with our families (rather like they do in more community based cultures such as in much of South America).
Actually, that was the vision at the beginning of the
technological era, that we could use technology to
give us more leisure time. Instead a consumerist
society has been created to replace that ideal.
And working less hours would mean paying less in
income tax and National Insurance contributions
to fund government services.
But in order to pay off all that debt we need to do something else first.
That’s not so easy if you are already on the breadline but let’s just humour the idea for now. After all, the present (Conservative) government believes we can live on less money (cuts to benefits including tax credits before the introduction of the new ‘living’ wage, sanctions and the six week wait for benefits proposed under the new Universal Credit). But, back to humouring the idea: spend less in order to put the money saved towards paying off those debts.
Apply the principles of Reduce, Reuse, Recycle, Repair, Remake. Got a closet full of clothes? You don’t really need to buy more from the big expensive High Street stores. There’s lots of alternatives: keep wearing what you’ve got, especially if it’s in good condition; hold a swap party and change your once loved gear for someone else’s once loved gear; got no family or friends for a swap party – check out the charity shops or boot fairs; get clever with your hands and learn to sew again. Waste not want not. Cut your coat according to your cloth. Etc.
Not only will you save money but this will reduce the
amount of taxes (VAT) you pay, which will reduce
the government’s revenue to pay for public services.
The High Street stores, many of whom are notorious
for not paying taxes on their profits, will lose money
and they might have to reduce the amount some
of them donate to the Conservative Party.
Get savvy with your neighbours and colleagues. Develop your community. Maybe you can share garden and household tools and equipment. Maybe you could barter a bit of labour in the garden in exchange for a cooked meal, help with the ironing, or a lift somewhere. Every little helps as a certain large store is keen to promote.
May undercut genuine small traders as well as big
stores but will also reduce the amount of money
changing hands and the amount of taxes being paid
into the government to provide for public services.
Give up what you don’t need. Don’t buy what you don’t need. Do you really need that new ornament or nik-nak, do you really need to replace that perfectly good item because you’d like a different colour. It’s just falling for the whims of the advertisers who aim to get more of your money out of you by promoting ‘fashions’. Before you buy something quickly calculate how many hours of work you will have to do to pay for it – base your figures on what you earn after tax and National Insurance, not before it – you might not want it so much after all.
Listen to the advertisers – spend your way to happiness, ignore
that feeling of being let down when the debts pile up, spend some
more, no matter that your stress will eventually cause other health
problems that put pressure on the public services – just make
sure you buy stuff on which you pay taxes. That makes up for
the taxes the big companies don’t pay on their profits.
There is a whole minimalist movement growing, all about how to live with less ‘stuff’ in our lives. All sorts of figures have been bandied around over the years but a common one is that we only wear 20% of our wardrobe 80% of the time. Recent stories suggest the same is true of children and the number of their toys they play with, reinforced by the current Ikea Christmas video (you can watch this at the end of this blog). We have yards and attics and garages bulging with ‘stuff’ we don’t use, but which all requires energy to maintain and store it, on top of the financial cost of bigger homes in which to store it, the money needed to buy it in the first place and the time cost of earning the money int he first place. Sell it, make space, don’t replace it, get somewhere smaller and cheaper to live. The best value is in quality not quantity.
Selling stuff on second hand generally doesn’t attract VAT
for the government to use on providing public services.
Some things we still need to spend money on. We still need to pay out to live somewhere, through rent if we’re not lucky enough to have paid off a mortgage or have some other rent free arrangement, as well as gas and electric for heating and cooking, council tax and water supplies. If we can reduce these costs all well and good, but not everyone can. Economies on food, toiletries and general household goods, are only realistic for those who are not already in poverty.
The government still stands to get a fair amount
from us in taxes from our rent, utilities and some foods,
which will help provide for public services.
If we’re going to help the government achieve their austerity goals to eliminate national debt, does that mean we will have to cash in all our Bonds – you know, all that money that’s ours that the government uses and gives us a bit of interest on?
Err, well yes, actually the government will need to give you
all your money back as technically it’s still debt to them.
As individuals it makes sense to cut back on our expenditure to pay off our debts, reduce our taxes, balance our budgets.
It makes sense for the government to ensure that the people
spend as much as possible, because that’s how they get their income,
through taxes. Taxes are needed to pay for all the ‘social’ services the
people demand: education, police, health, waste collections.
Government Austerity is about cutting expenditure to reduce the national debt. To do this they are reducing the amount paid to the poor in Benefits and the amount their own government departments can spend on providing public services. To help them do this suggestions come up from time to time, such as everyone having to buy insurance to cover for periods of sickness and unemployment, as well as retirement. The poorest, who are growing in number, still won’t be able to afford that and they will still need the government to step in and help or be left to starve. The poor will be poorer and sicker, the more they will need the services of the government. The more poor people there are the less they will have to spend, the less the government will receive in the taxes it needs to run public services. In the meantime big companies such as Google and Amazon, Boots and Starbucks, and many more are getting away with paying little or no taxes in the countries where they are operating and generating massive profits. Until that balance is redressed I have to ask the question:
Can we ever balance the national books this way?