To Katri Manninen, part 2

Katri's answers to my previous post are here.

"Oh and when I say stuff that you don't need, I mean like buying a tv to EVERY room (including bathroom), clothes, shoes and purses that you don't use, home appliances that you don't use, knick-knacks you don't use... "

You see, that's my problem with the original article: you seem to believe that you know what everybody needs better than they do.

There are people who have use for a TV in every room, and there are people who derive some joy from owning some wearable stuff that they don't actually wear, or gadgets they don't actually use. I like owning a lot of earrings (I buy a pair during almost every vacation, and sometimes several at a time, in spite of the fact that I have only one pair of holes in my ears and don't even use those every day. I just like having a big box full of earrings, with full knowledge that some of those won't ever be worn), and I would probably like to have a TV in every room if I watched TV to begin with.

I also happen to value overseas vacations, high-end kitchen knives and expensive Belgian beer. I am sure for lot of people those are useless crap. My own category of "useless crap no one ever really needs" includes all manner of salmiak and licorice candy, all professional haircuts, motorcycles, all kinds of camping equipment and a lot of other things - except that I have long observed that a lot of people are quite willing to pay perfectly good money for all of the above, and concluded that this happens not because the evil advertisement has brainwashed them to buy totally useless crap, but because they find all that stuff useful or pleasant in the ways that are clearly beyond my ken.

"Vacations need more planning, that's why I would say they are rarely bought on whim and therefore are rarely unnecessary."

That's why I found it very strange when you used them as an example in your original article, especially since you seem to like them yourself. The other two examples you used were leather-upholstered furniture (is fabric-upholstered OK, or is all furniture useless crap?) and a new car (surely you must know that all the people who use cars on a regular basis must replace them every once in a while - so how do you know whether or not a car purchased by somebody else is useful or useless to them at the moment, and whether it was purchased because they think they need it "in order to be admired by other people"?).

"When you die, you can take your memories with you -- but not all that crap you bought."

Errr... when you die, you don't take anything with you, neither memories, nor material things. You can of course argue about the metaphysics of death and posit an afterlife where the person exists and has access to their earthly memories, but in this case you can just as well posit an afterlife when the people still have all their earthly property, or some astral projections thereof.

Unless, of course, you mean "take with you" as "erase from this life", in which case I fail to see why it should be considered a good thing. In fact my memories are quite useless after I die, whereas my ice cream maker can still be used by family or friends to make perfectly good ice cream. Wouldn't this rather make the case for buying stuff and opposed to paying for immaterial fun like vacations? But I digress...

"Do you ever use certain brand names? Why do you think you thought at the first place that they're better than some other stuff? And do you really think that they're so much better than any other (cheaper) brands?"

Yes, I do, quite often. The established and more expensive brands are often that way for a reason, and sometimes not, and sometimes this is the reason that I would pay the extra money for, and sometimes it isn't. For example shoes made by brands such as Ecco, Clarks, or Gabor tend to be much better than similar-looking cheaper equivalents. (Sometimes the cheaper equivalents are just as good, but you can only find that out by buying and wearing them, and with only one pair of 4 or 5 turning out just as good it's not worth it.) OTOH, I have never been able to detect much difference between expensive and cheap jeans, and therefore never buy expensive ones. While in shoes paying extra for a name brand to guarantee goodness makes sense (for me, anyway), in sparkling wines it doesn't: IMO the only reason to pay real champagne prices, as opposed to sparkling wine, is because you can be quite sure that champagne is drinkable, and the same cannot be said of all the other bubbly, but once you've tried sufficiently many and know what you like, this is not a factor. In general I'd say the more longevity and reliability is a factor, the more I am likely to stick with a brand that either has a good reputation for it, or I have a good experience with.

"Or maybe you just have to go to Walmart and see what people are putting in their shopping carts -- and then pay attention how they are paying for it. Yup, it's almost always "credit" not "debit"..."

This is just part of the culture and has nothing to do with whether they can afford the stuff they buy.

Credit cards are a much older phenomenon than debit cards in the US or at least my part of it (when I was young in MA, we did not have debit cards at all, just credit cards and ATM cards), and at least for a while after they appeared, they were not insured against theft, while the credit cards were. Therefore there was no reason whatsoever for a person to own a debit card, let alone use one. Even now after many years in Finland I have never found any use for those things, and would certainly never pay with a debit card anywhere I can pay with a credit card.

Your points about the kids from disadvantaged backgrounds having less opportunities to learn useful stuff at home are quite true, and also about good and bad example. But as for learning to be careful about credit, it's really pretty simple, well within every normal person's intuitive understanding: read the fine print, and don't spend more than you earn on the regular basis. There are some otherwise intelligent people who have trouble with the implementation of this, but after burning themselves once or twice they tend to avoid credit in the first place. I don't think I'd ever met a person, disadvantaged or otherwise, who'd have trouble with the very concept.

"If you ruin your credit, you're pretty much screwed here -- I've seen that happening around me. And it's scarily easy to ruin it."

If you ruin your credit, you're pretty much screwed here too, especially since there is no personal bancrupcy in Finland and there are a lot of strange places that refuse to sell stuff - for example insurance - to people with bad credit.

I disagree, however, that it is easy to ruin one's credit rating. It can sometimes happen to people through no fault of their own, or with a minimal fault of their own, through all kinds of emergencies: disease, death in the family, prolonged unemployment, business falling apart, freelance jobs suddenly being hard to come by, etc.). However, the scenario that you describe takes a staggering amount of irresponsibility, usually over a prolonged period of time:

"First you want to buy stuff, that you can't afford, so you get yourself some of those nice credit cards, that they advertise you in the mail -- all you have to do is to send back the preapproved application and voila -- you're on your way to buying stuff you don't need and too often also ruining your credit. You max them out -- your credit score goes down. You miss a payment, your credit score goes down even more. Your credit score goes down -- your interest rate goes up to 22% and more. Soon you'll struggle to stay behind the payments. But then you get luckily an offer for a new credit card -- with a smaller credit limit, and you use that to pay the other credit card -- except soon that new card is maxed out too and now your credit score goes down even more..."

That's a very bad thing to do. Jumping from a bridge, also very bad. :)

Seriously, I have several of those credit cards that you get through a pre-approved application (in the US), and several more that you get through an immediately-approved application here in Finland. I am not sure about how much credit they provide when put together, but it really doesn't take a rocket scientist to figure out that maxing them all out would be a bad idea.

I suspect that gross and continuous misuse of credit is some kind of psychological problem that some people have. It doesn't, however, make them slaves, and it certainly doesn't make the stores that sell stuff to them, the banks that extend credit to them, or the employers for whom they work to afford all this any kind of slavemasters.

"Or maybe you bought a house a year or two ago, when the prices were inflated -- and now you're struggling to make your mortgage payments."

Why? It's quite unpleasant to have negative equity, of course, but if you haven't lost your job or something like that you still have the same mortgage payments as before and still can make them as before. Unless you've taken one of those subprime ARMs that has a low initial interest that rises later, on the assumption that you refinance before the rate goes up, and now you can't refinance because of the negative equity. Which some people have surely done, but which is a risk they were willing to take.

"Or you really think you can "buy now, pay later", just to find out that you end up paying way more than you ever should have."

You can buy now and pay later, I do it all the time. Of course, if you want to buy now and pay much later, you have to pay extra for it.

In short (oh well, too late for that): credit that banks give to people is a valuable service that they provide to the consumers and that the consumers are willing to pay for. There are consumers that have trouble using it responsibly. A lot of them notice it (some, unfortunately, only after ruining their credit history) and then stop using credit. Some of them don't stop, which is quite unfortunate for the people in question, but which does not, IMO, make them slaves.