Tuesday, September 13, 2011

The Manx Economy - For Simple People

I've been doing everything I can to avoid the local media in the run up to the Manx general election, there's only so many regurgitated press releases I can take. But now it's started to find its way into the national press I have caught a few bits and pieces and it amazes me how little understanding there actually is of the current situation on the Isle of Man. Here's my simple guide for simple people...like me. Think of the island as a home:-

In the good old days our home had a family income of £30,000 a year, this was very good, our little family was very happy. Of this £30k we spent about £27k on living and the rest went into a savings account. Aren't we good?

Then the world changed, we all had to take a pay cut and the family income dropped from £30,000 a year to about £20,000 a year. Bad? Yes. But not the end of the world because we could tighten our belts, we could reduce that £27,000 that we spend and besides we had £40,000 in our savings account. No need to panic, or so you'd think?

However when the times were good we weren't spending our money on one off things, like a nice big TV :) Instead we decided to commit our self to long term payments, we hired a cook, a cleaner and a gardener, it's not like a house our size really needed them but hell the money was there so why not? They were our friends and they needed jobs. We put them on generous contracts content that the world would never change. Whilst we were at it we decided to have an extension built and borrowed the money to do this. A bigger mortgage, no problem for us because the world would never change? In the end when all was added up of that £27,000 we were spending each year almost all of it was monthly direct debits that we just can't get out of easily. We are committed. OK so we might be coming up short but we STILL have our savings of £40,000 to see us through the tough times, who knows, maybe we'll get a pay rise in the next few years? Maybe.

Except, and this is the real bugger, we might have £40,000 in our savings account now but we also owe £60,000 on our mortgage. We forgot about that, and the interest rate on our mortgage means that the amount we owe is getting bigger each year!

So what do we do? Do we sack our friends and not only risk upsetting them but also being taken to court? Do we go to our boss and ask for a pay rise, in a competitive market where other people are prepared to do our jobs for less than us? We might find ourselves getting let go? There is no easy answer, just a massive fucking mess. It's not that we didn't save money, it's that we spent too much and that's a really horrible habit to break.


Michele R. Strub said...

even from way over here, feeling your pain...massive fucking messes...here's wishes you pull out safely!!

Mikey said...

Analogies are like new born chicks running round in the field. All yellow and chirpy. I like your analogy.