Banks @#$% Up And Your Next Step

Every working day in the past few weeks, many people have been glued to TV screens or the Internet watching the stock market do its rounds on the rollercoaster of economic turmoil. Banks seems to be in the forefront of all the chaos, collapsing left right centre.

Those not familiar with why this is happening, let me put things into a simple terms. Banks make money by charging interest on loans. I loan you a $1 and charge you 5% interest. So you pay back $1.05. I make 5 cents. Same principle on your credit card - they loan you the money to buy stuff and you better pay back in a month. Else it's bloody 24%. DON'T EVER MISS YOUR CREDIT CARD PAYMENTS. Seriously.

Anyway, the problem with these banks is that:
- 1. they loaned money to people who they thought could pay back (as per schedule). In this climate, people may have lost jobs or simply don't earn enough to meet payments. Ordinary people on the street with loans they can't pay back caused the biggest banks in the world to collapse.
- 2. they loaned other banks and financial institutions money so that these other banks/institutions could lend money to anyone who asked without checking on their credit history. That's how the 'sub-prime' came about.

When banks go down, everyone wants to withdraw their deposits and make banks go bankrupt even quicker. (Bankrupt, wonder how that word came about?). When that happens, every other business owner panics because he/she may not have enough moolah to make his/her business work. Creditors start chasing for payments. Markets start to collapse. The kanjiongness makes gold goes up, oil prices come down. Blah, blah, downward spiral to hell and all that...

You know all those letters you get giving you loans at 6.88% for you to 'fulfill your dreams' or 'go on that vacation you always wanted' etc etc? Be careful, those are ones that got American public in debt in the first place.

The best thing you can do now is SAVE MONEY. Check your phone bills and compare plans, save $10 a month. Stop eating out so much. One less beer saves you $9 at happy hour. Use less hot water in the shower. Less aircon, more fan. No money, don't spend. I got a friend who says he won't give to charities no more because 'we all need to fend for ourselves'.

I dunno, maybe I am over-reacting. But the newspapers are getting more expensive and price of electricity is going to send bills 10-30% higher. Maybe I'm not over-reacting, over-eating maybe. So SAVE MONEY. Monkeys too.