Debt (by alaric)

At the time of writing, there is talk that the Cypriot banking system will "collapse under a mountain of debt" unless Something Is Done. In general, many financial institutions, governments, and people seem to be struggling to meet their debt repayments.

So I thought I'd talk a bit about what debt really means.

I assume we all know what debt is, but just to be sure, if you obtain something (such as money) in exchange for a promise that you'll give something back in future, then you're "in debt". Usually, you will agree to give more back than you gave, to make it worth while for the lender to do this; this is called interest.

This can be good news for the lender - if they had money lying around and didn't really want to spend it on anything, then rather than leaving it in a pile, they can lend it to somebody and get more back, by charging interest.

This can be bad news for the lender - you might disappear and not pay them back. Part of the interest they charge is to cover that risk. If you are a lender who makes millions of loans (such as a bank), some fraction of them won't pay you back; so you make sure you make enough on interest from those that do, to cover those losses, and still earn you a profit.

This can be bad news for you, too, as many people seem to be finding. You may find that you can't afford to repay your debt. Failing to repay usually has some negative consequences; you may be blacklisted from borrowing for some time, or your local legal system may offer a way for the lender to send people into your house to take your possessions to try and recoup their losses, or maybe even kick you out of your house so they can sell it. Or, in order to avoid those woes, you might repay the debt even though this leaves you too short of money to feed your family.

But let's not forget that it can be good news for you, too. Much has been said about how we've all ended up with too much debt, and it's probably true. But debt isn't just about greedy people wanting things now and not properly considering the consequences of those future repayments.

Debt is a form of time travel. If I have ten pounds spare a month, but want to buy something that costs a hundred pounds, I can wait ten months to save up the hundred pounds and then buy it.

But if I borrow a hundred pounds, in exchange for paying back ten pounds a month for ELEVEN months (the extra month being to pay interest on the loan), I can have that thing now. The difference is an extra month of not having my ten pounds to spend on anything else (which isn't a huge deal), but having my new thing now rather than in ten months (which is a big deal). By using debt, I'm teleporting the hundred pounds backwards in time by ten months. That's not just convenient and immediately gratifying - it can save me a tremendous amount of money.

What if the thing I want to spend a hundred pounds on is a tool, required for me to do my work and earn the money that covers my ten pounds a month spare in the first place?

If I don't have the tool, then I can't save up ten pounds a month to buy it.

What if it's to be spent on a domestic appliance such as a washing machine? If I don't have a washing machine, I'll have to go to a laundrette to clean my clothes, which will cost me more each month than the running costs of a washing machine. Buying the washing machine with borrowed money will cost me a bit of interest, but I will save more than that by not having to use a laundrette for the lifetime of the washing machine.

What if it's to be spent buying a house? If I have to rent while saving up to buy a house outright, then lots of my money will go on rent, and I won't have much to save up, so it'll take me longer to save up than I'm likely to live for. If I buy a house with a loan (that's what a mortgage is), then I'm spending money repaying that loan plus interest, and not having to pay rent. In twenty-five years I will have repaid that debt; I'd still be saving up by then if I was paying rent as well.

Now, I have a personal love/hate relationship with debt.

Once upon a time I had savings sufficient to pay the bills for several months, even if I wasn't working. This was great. But then we got married, funded partly from savings and partly from taking out a loan (as I wanted to keep some ready savings on hand). Then we had to move house in a hurry at the same time as we were expecting our first child, and then my wife was sick for the last third of the pregnancy and nearly died in labour, and I had to look after her and the new baby while setting up the new home; and as we were getting on top of recovering from all that, our house was catastrophically flooded and we had to find other places to live and work for nearly a year before it was habitable again.

This meant lots of extra expenses, and lots of time when I couldn't work for one reason or another. So the savings disappeared pretty quickly, and in order to keep my family fed, warm and dry, I had to borrow money in the form of buying things with credit cards. That's a terrible form of debt that charges lots of interest, but it was easy during a very hectic period of life. I never realised just how much I'd be needing to borrow; I somehow managed to delude myself that things would be back to normal soon, and it was only in hindsight that I realised I really should have just taken out a bank loan for ten thousand pounds or so up front. I converted the credit card debt to a straight loan once I'd taken stock, but by then I'd rattled up much more debt due to the interest payments.

I'll have finished paying that debt off at the end of this year, about eight years since it all started Going Pear Shaped. The amount I've been repaying has varied across that period, but it's currently five hundred pounds a month, and has been nearly a thousand pounds a month at times, during a horrid period when I was only just covering the minimum credit card payments, along with the payments on the loans we already had, but no banks wanted to lend any more to somebody in as risky a financial position as we were so I couldn't convert the credit card debt.

So I have suffered under the burden of debt, and cursed it, for nearly a decade. And yet, without it, I'd have had to go bankrupt (or something similar). To be honest, I'm still not sure if that might have been for the better in the long run - at the time, having my home ransacked by bailiffs and being largely blacklisted for credit would have been harrowing, but it would all have been water under the bridge by now. At each of the myriad financial crisis points during those years, taking on a little more debt to tide us over rather than facing that was always a rational-seeming choice; it's only when I can consider trading all of those for a single shot of financial distress that it looks irrational. But it's only with hindsight that I know how many things were going to go wrong in that period! At the time, we always seemed to be just about coping with what had gone wrong so far, and could only hope that things would be a bit less bizarrely unlucky going forward. The run of bad luck finally ended a few years ago, and we've been steadily paying everything off while living frugally.

So I can't really say for sure whether taking the debt route rather than the bankruptcy route was good or bad for us - but it might have been the right thing, and it certainly would have been the right thing if the run of bad luck hadn't been so long and deep. So it's certainly the right option for many people.

Therefore, I assert that debt is a powerful tool; useful in many situations, downright lifesaving in some, but it has to be used wisely and with consideration - because it can be terrible if abused.

Bitcoin: better than a Euro bank? (by alaric)

Ah, Bitcoin. I've written about its security and regulation mechanisms before, invested in it just before the June 2011 bubble; as the bubble peaked I sold enough at the higher price to cover my meagre initial investment, so didn't feel too worried when the bubble burst - the bitcoins I held were, essentially, free.

I could have made more money if I'd known when it would burst (indeed, at the time, I wasn't sure if it would ever burst; that ramp could have been the start of a worldwide shift to bitcoin as the de-facto international currency, for all we knew); I could have sold all my bitcoins right before the drop, then used the proceeds of that to buy back at the very depths of the crash, and netted myself a heap of bitcoins that would be worth an astronomical amount right now.

Hindsight, eh? Read more »

We Love Sugru (by sarah)

We love Sugru which is a putty like stuff that you can form into shapes, sticks to just about everything and is flexible - it is basically a funky silicon rubber from my understanding. When we first heard about it we couldn't get hold of any and so had to wait as they had sold out but the wait was worth it!

Since then we have used it for tonnes of things from embedding electronics in hair pieces, making creatures for the visually impaired, fixing fridges, shoes, adding little feet and buffers to all things electronic, fixing broken mugs and making jewellery. I plan to fix my electric guitar with it though need to see how it reacts to having glitter added to it!

But it is more important to me than it's usefulness. To me Sugru represented something more, when it appeared I was struggling with both scientists and artists telling me that there was no cross over between the two areas. My tag line o twitter is that I am The Artist Scientist or Artistic Scientist and to see this product - the result of something an artist (ok design student) had produced, being so wonderful for science/tech and artistic endevours.

This was the sort of fusion of art and science that I was sure should exist but was being told didn't and my examples of how the modle builders of film dinosaurs had ended up solving the mystery of joints and movement that paleaontologists has been struggling with was falling on deaf ears.

So I turned up at The Cheltenham Science Festival debate on science verses art that year with my sugru bracelet and my ESA t-shirt I'd won for Celestial Montage and found that people didn't seem to really cae on either side of the divide, they have their opinions of the others and that is that. Stuck in the middle as all ways I gritted my teeth and looked for more science-art related things and found it under the title science communication.

Recently Sugru posted their life story so far and asked what inspired others, so I told them - they inspired me! They provided the evidence I needed that science and art can create wonderful productive and helpful things by learning from each other, they are an example of a dream that was followed and they provided the very material I had been trying to work out how to make myself - I was mucking around with resins casting, silicon mould making and fimo in order to get something like sugru and I was failing and could not make the projects I wanted. I hadn't even thought of applications beyond my own ends and there WOP! appeared sugru ready to go and so I went and so did Al and he has even written up one of his repairs/hacks for their website!

World Book Day :) (by sarah)

Thursday was world book day - it caught me slightly off guard as it was a day earlier than I'd put in the diary! But I'd known what Jean wanted to be for a while - a Dwarf, not just any dwarf but the one that carries Bilbo about in The Hobbit. So we dug out a knight outfit I picked up in a charity shop a few years ago and made a beard out of some fun fur we had laying around (left over from a dog costume I made for a halloween party right at the beginning of the dawn of this blog!).

Jean loves The Hobbit and after Alaric had read it too her read it herself and has been getting me to read bits of it too. She was grumpy that I wouldn't take her to see the film!

I think she made a really good dwarf 🙂 You wouldn't believe how militant she was over exactly what colour and length and fit the beard had to be! But it was all accomplished without any actual sewing.

We love world book day here, my little girl picks who she wants to be and we make the costume together normally the weekend before as a family activity and she takes the book into school.

She enjoyed the dressing up but was a little disappointed this year as they have a supply teacher who didn't realise it was book day so did normal work and she had to show her friends her book at lunch time instead. She said everyone was sad about this.

So when I came across this BBC article I was annoyed and hacked off. So much so I posted a reply:

The idea of them picking a character from a film or TV tie-in book is actually a good thing. Those books are essential to getting reluctant readers reading. The kids get to play games and talk about their favourite books and share stories.

Then there are the vouchers which though under used are appreciated by many families and I myself bought my first reading book because of such a voucher.

I think this article misses the point of fun from books, gently encouraging the children into the realm of reading rather than making it inaccesible and academic.

There is also the issue of costumes - really they shouldn't be an issue - you have to spend time with your child anyway so if you don't want to spend loads of money make something out of what you have at home with your child. With Fabric glue and stick on velcro you don't even have to sew. Most children also now have some sort of dress up gear in the home if you get really stuck.

Also I am seeing a lot of reaction against making subjects fun for learning at the moment. This makes me sad as it is a way of getting those who are uninterested interesting - after all World Book Day isn't really that needed for kids like Jean - she loves reading, she adores books and so on. What they are for is the ones who are struggling or have given up or think they can't do it. That is where the magic lays and for the kids that aren't struggling - well these fun days give them social skills and good memories.

I've seen people saying that kids associate fun with 'a doss' but they don't - not really get bored if it is too easy. For the kids that want it to be easy maybe that's because they are actually struggling - now don't get me wrong we all no there are lazy oiks out there but they are a minority and who knows such events might even get them interested - sometimes they are the more intelligent ones anyway.

Especially at primary school age children learn through play, this doesn't mean the play can not be challenging and useful. Different children learn in different ways so have a good variety of techniques and methods is good at least for the younger end of the school age range.

This is How Stupid People Die (by sarah)

That moment when you've gone off to take one photograph and realise it is dusk, you are in a tumble down industrial area amongst broken glass and iron rods half exposed from crumbling concrete. You have £100 odd worth of camera around your neck, you've left your phone in the car along with you husband and kids, and worse you have no idea anymore which direction said car is in. Then just to add the icing to the cake a group of three 'youths' wonders into sight and you realise it was their shouting and the ring of a beer can football that pulled you out of the contemplative glaze of photo snapping bliss you had been in moments before.

You do not run as that is provocation, beside satistically you know that the middle aged man on his own that passed you at the beginning of this adventure is more likely to be a danger than three young men. Apart from some cat calls they are fine - you take another photo of graffiti and as you know they've seen the camera anyway and just keep walking, with confidence hoping it will come out to somewhere more populated by people. Maybe even somewhere you know.

And the monologue that is spinning in you brain is one of half remembered self defense techniques though you do not dwell on them as being afraid in the half light of urban decay is a sure way to draw attention to yourself in unwanted ways. Same goes for the crowded city streets and the apparently safe board room. You keep walking aware of your surroundings and potential escape routes, you do not avert your gaze nor do you linger.

You think, 'This is how stupid people die,' and then you snort with the realisation that you have nicked the quote from a TED talk you watched the night before. And that shunts your brain into thinking that it is thinking and what it is thinking about and the words Third Thoughts sneaks in and you're like damn! Now I am quoting Terry Pratchette in the almost fear - that fear you are not feeling, that fear you are keeping at bay.

The kids are gone, they went into a side alley and now you are in territory you recognise and daydreams of pirate days with real tall ships and Christmas Fayres with real snow filter in your brain and you think - I'm actually quiet a away from the car and the quickest way is back through those buildings that now seem to loom out of the dusk.

So you again consider how stupid people die, but now you have your bearings and know the way and this way is much shorter and there is an old couple out for a walk and they might be lost but they are walking into the corroded corridor of split wood and ripped metal.

You follow and storm your way home, reasoning that you are wearing big boots and a flappy coat and yes it's all purple and your over weight but it is probably dramatic or something.

And you still stop to take photos because things look different from this angle and hey wow that was a fantastic one of the birds flying away and it shall be called The Escape.

There is a world within worlds in this place you walk unwittingly, there are jungles and homes and hope.

And really it is only a few derilict buildings with seagulls roosting, slowly the industrial endevours of a previous centre are being consumed by the small of nature and you feel previlaged to see it all before it is ripped asunder and the new of this centery is put in it's place. Clicking the button on the camera you try and capture just a little bit of the awe.