Coronavirus financial impacts

Causes

Those who have always saved money and borrowed little will have missed out on some pleasures they could not afford, but they will have savings to help tide them over much of the present crisis.

Those who have spent, not what they have saved, but by borrowing in anticipation of what they will earn in future, may have come unstuck. Foretelling the future is a risky business. Happy to help them get the finance they need in a way that does not mortgage their soul for life.

While some Australians struggle on the median wage of about $50,000 pa, some business executives and owners earn up to 200 times that and public companies earn billions after paying very little tax. A few are very generous with their money. Most are just sucking cash out of the economy like giant vacuum cleaners for their own use. Many are sending it offshore to avoid tax, laundering it through international call centres, banks, accountants and lawyers, thanks to generous politicians who pass the laws that allow them to do so.

Cures

Saving instead of borrowing is probably the most important cure. It is being in debt that creates a crisis out of any loss of income.

Using the credit card sparingly but to get through the crisis then paying it off. Using cash or paying the full card balance off every month is the wisest course of action to avoid risk.

Looking before you leap into a loan, with a good loan consultant like my GBAC at your side, is probably a good move. Know whether or not you can meet the loan terms. They all have to be paid back in the end.

Expert loan management enables the borrower instead of the bank to benefit most.

Poorer people than the ultra-rich control the vast majority of votes, so for them, taking a greater interest in government could earn them a lot more money than working two jobs.

That is one reason why, as well as helping small business and farmers get a fair go from their banks through GBAC, I run the FairGO Voterlobby and the Australian Voters Network. Free enterprise capitalism is a great system, but it does not have to involve greed and self-indulgence or political bias toward the donors who finance election campaigns. Voters own the votes. By wise use of votes they can vastly improve their lives.

Borrowing more from banks is a two edged sword. Today it has restored business life to normal. Tomorrow it might cut off your head.

The government, led by the Feds, have done a great thing by moving to stimulate the economy and put money into the hands of those worst affected. That is a great role for government. Of course later there will be a massive debt for us to all pay off, but if we work hard and share the tax load fairly we can all recover well. Let’s hope the strong take the weak with them. Take time if you can to thank your MP, because they will all be working hard on this corona-crisis. Ring your local MP or send a Votergram to every one of them.

The way to pay of business debt is to work hard, ensure profitability and schedule debt repayment as a top priority.

GBAC has played a strong role for over 30 years by negotiating debt repayment deals with banks on behalf of borrowers. There are many times when a bank will accept less than face value for a debt – always when it works well for the bank. GBAC has developed special skills in that area. A few months ago a bank wrote off the whole debt which was a great deal of money. Banks can be very decent when approached properly and they do have a bit of lee-way because they are so profitable.

People do deserve fair treatment, even from moneylenders. Make sure you get it.

Part of the cure is to take control of your finances and never let them go. Control the lender instead of letting the lender control you. That means understanding and honouring your own obligations before accepting any loan.