Living with debts

It is pleasant to lead a peaceful life with no encumbrances and without debts. In the modern world, debt has become a part of life like breath. In Sri Lankan society, it has not been the case and the practice before.

It has been a burden and a commitment for somebody to live in a house with a mortgage on the roof. That is the last thing that a villager would want. The village life was self-sufficient and life was simple; they lived with nature. Needs were limited, commitments were less. The people were extremely happy and contended.

 

Modern developments

Currently, with the advancement of life, living conditions have changed, needs have increased and life has become complicated and sophisticated. It is difficult for one to live within one’s means because there are attractions and offers for unlimited desires.

Desire of a human being is unlimited. It has become even more unlimited with current developments and advancements in IT and technology. There are offers for loans, credit cards and also investments, entertainment, holidays and spending sprees local and outside.

Ways of enjoyment have become open and unlimited. With the advancement of communication, it has become worse and quick. Money can be transferred quickly worldwide and people have access to the world with a click of a button.

Cost of living

There are complaints all over the world that the cost of living is increasing day by day. Cost of living is the living cost of an individual for a family unit which is computed systematically and technically through various gauges and measures. But in simple terms it is the expenditure of an individual or a family in relation to income.

It is obvious that one has to live within one’s means, if not he or she has to look for credit. Credit can be obtained either on personal basis or through banks. Banks are ever ready to grant loans to customers provided it is recoverable and profitable to them. They would want to help themselves, not the customers.

Banks look after the customers as long as the customer has the capacity to pay. The moment the customer’s capacity to pay ceases, the banks and the lending institutions will cease to be the friend of the customer.

Consumer items

The price of any consumer item is never static. The price of a loaf of bread or any other consumer item would have been very much less 30 years ago. It is the same with income and salary.

Salary is not necessarily the monthly salary derived by a Government servant or a person in the private sector. It is the combined income of a family or an extended unit. Currently due to economic growth there are avenues to earn money in various ways and sources.

For example, the head of the family who earns a salary will be assisted by family members who are employed and the wife or the extended family members who are in business or other sources of income. On the other hand, there are other various ways of engaging in business, professions and trades which bring income to the family and to the clusters.

When living conditions are difficult, the main target of the consumer is the Government in power and their regulatory bodies. They little realise that they themselves too are responsible for the mess of the cost of living. If one is prepared to go through a simple lifestyle, living with nature and basic resources like a typical villager, life is pleasant, simple and easy.

The Government has taken measures to activate regulatory bodies such as the Consumer Affairs Authority, Public Utilities Board, Telecommunications Regulatory Board and many other institutions to control and regulate prices of consumer items and services.

It is the duty of the consumers to get themselves organised and make use of the best out of these institutions. It is the duty of the Consumer Affairs Authority to organise and educate the consumer, industrialists and merchants. They must work hand in hand for the benefit of the consumer and the nation.

Regulatory bodies

One should know the basic theory in simple and healthy living: when to buy, where to buy, how to buy and what to buy. The consumer is always powerful and has the power to dictate terms to the industrialists and sellers.

They should be organised and realise that they are powerful and to impose it to the necessary parties. It is the duty of the regulator and the Government to protect and help the consumer and direct the regulators to perform their duties.

World Consumer Rights Day

World Consumer Rights Day is on 15 March every year. It is celebrated on varied topics. The topic last year was junk food, which was very appropriate considering the serious health factors of consuming junk food, mainly by children.

This time the theme is ‘Our Money and Our Rights,’ which is also very timely when considering the problems of Sri Lankan consumers due to malpractices of ill- or under-regulated financial institutions such as Sakvithi and a series of companies.

In theory all these companies should have been regulated by the Central Bank. Unfortunately greed of the people was so high that they fell into the attractions of high interest rates. The results were re disastrous and we do not know whether they have learnt a lesson because even at the moment we understand errant lending institutions are investing funds offering high interests. Therefore, part of the blame of unwise and improper investment goes to the consumers, who always point the finger at the Government for their own mistakes.

Fuel prices

The fuel price hike has endangered and hit the entire world, including oil producing countries. Even oil producing countries such as Sudan, Iran, Nigeria and the Arab countries except for few stable oil rich countries are undergoing difficulties.

Oil prices are controlled by various factors mainly as a result of the volatility of the political situation. The political rifts among and between powerful countries have a direct and ripple effect on us. The only alternative for us is to be self-sufficient and to look for alternate energy. We have ample bio gas, sunshine, wind and other factors to generate renewable energy.

The United Arab Emirates is one of the oil rich countries which are giving preference to renewable energy and tourism. These are things we must learn for our own benefit, thinking of long-term. Oil prices will never be static. They have to go up and will go up. Therefore we have to be conscious and ready for future variation of oil prices.

UK an expensive town

London in the United Kingdom is an expensive place. It is one of the most expensive towns in the world. Still, if you know the basic principles of basic living, you can exist in London comfortably. There are places to buy the same apple of quality that you buy at Selfridges at Oxford Street, at a roadway small market nearby. The same applies to accommodation and other expenditure.

Therefore, if you apply the same principles, that if you are conscious what to buy, when to buy and where to buy and how to buy, it will be a guidance to cut down the cost of living. This is a classic example of comfortable living and way of life for peaceful living without always blaming the Government and the regulators. One should be conscious of one’s rights and duties.



Mobile and tuition

Most Sri Lankans spend enormously for telephones, mobiles and tuition for children. This is one of the main expenditures of a family. When the price of bread is increased by a few rupees, there is lot of resentment and agitation, but not when the mobile bill is up. This indicates that people have the capacity to withstand the increase of prices and what matters for the consumer are their priorities.

They have not understood their priorities; that the priority should be given to food, shelter, clothing and education. There are ways and means of spending money in every area. But if the expenditure is planned for weekly, monthly and future, you will face less cost of living problems.

Banking system

We have an excellent banking system in Sri Lanka which withstood the worst crisis recently where the entire West almost collapsed. Fortunately for Sri Lanka and South Asia, the banking system was well managed and supervised and we got over the difficulties with the least assistance.

It is very timely that the world consumer organisations have chosen the topic ‘Our Money and Our Rights’. In fact you have no say or control of your own money which is controlled by banks and private institutions. Therefore you must organise yourself to have control over your banking institutions. Once you are disciplined on money handling, you will be in a position to force your banking institutions to follow suit.

Credit card culture

The credit card culture has infested the entire West, thereby the entire economy is based on housing loans, credit cards and debts. Everybody is indebted to banks and lending institutions. It is very rarely that they handle cash. They handle only cards and papers.

They buy consumer items, houses, cars and all needs by cards, loans and papers so that they are indebted throughout the month and the year and everything goes back to the housing and the main loans. This is not satisfactory.

Once the Barclays Chairman was questioned on why he does not possess a credit card. Barclays is a leading bank in the world and the Chairman is one of the richest. His answer was that he does not carry a credit card because he knows what it is. His answer speaks thousands of words on this subject.

Society infested with credit card culture

It is unfortunate that in Sri Lanka too the credit card culture has infested society. One can observe people carrying a number of credit cards so that they are free to purchase and spend. The banks and companies offering credit cards have agents to attract customers. Their victims and targets among others are Government servants who are wage earners who are entitled to use credit cards.

The agents get a substantial commission and the unfortunate victims readily accept the cards to be a part of the credit card scam. They may use the credit card for few months and once they start receiving monthly bills promptly with the interest, it may be too late. Once they get into the habit, it is difficult to get out of it. It is still not too late for Sri Lankans to rethink, think back and try to be peaceful and happy. The best solution is to live a simple life and use cash for day-to-day expenditure without living on loans.

 (The writer, LL.M (London) Solicitor and Attorney-at-Law, is the Sri Lankan Ambassador to the United Arab Emirates and can be reached via [email protected].)