Recently it was reported that the Credit Card Debt in Israel in 2011 was NIS 9.1 billion. Upon reading this I realized that I myself contributed NIS 20,000 to this ghastly amount. Imagine that! This realization immediately sent me into a frenzy of analyzing myself and the role I played in helping my bank achieve its magnanimous profits. Never have I been in such incredible debt that my net worth is now a negative 6 digit number!
After spending a few hours trying to rack my brain of all my purchases over the last year and to invent all the possible reasons why I bought the things I did I realized my debt was as a result of mainly one factor – my ignorance in understanding the financial system of my newly adopted country.
Like most young people I moved to Israel in my mid-20s and after a few years of testing out the work scene I found my “dream job” in a high tech company. I was on such a high that when I received my first paycheck I proudly went to the bank to open an account. I remembered thinking how friendly the bankers were offering me all these “presents”. I received 2 credit cards (an international card and a local card with a combined balance of NIS 30,000), a “gift” of NIS 24,000 for choosing their bank, which was in actuality a loan which I had to repay with a very low interest fee over 3 years, and some other little tidbits like notepads, pens, etc. Wow! I left feeling like a millionaire that day and had all these plans of how well I will manage my money and how much of it I will save!
Little did I know that all my plans were soon going to crumble…..
I found myself in shopping mall all too often. Actually I often boasted that it was my goal to visit every shopping mall in Israel even though I knew they basically all housed the same shops. It didn’t matter to me though, I went anyway and since I knew I had a “plan” and more importantly “self-control” I wouldn’t go overboard. I would give myself a limit each time and on one or two occasions if I saw something I really wanted then I would go over the limit. Well my bank account at the end of each month told a totally different story.
Sometimes I noticed I spent NIS 3000 in one day when my budget was only NIS 500. How did this happen? What did I buy? Two tops, a pair of boots some must have bath and body products from Sabon couldn’t have cost so much! So what did I buy? It’s a question that to this date I still cannot answer.
So for the next year the FANGA team has decided to spend some time unraveling the intricacies of debt and to understand how we can avoid falling in these carefully maneuvered traps that financial systems weave for us. We will especially focus on the case of new immigrants because it has been proven time and time again that usually this group of consumers are the most vulnerable and are carefully targeted by marketers in every country. However, as we can’t focus on every country the experiences written over the next few months will mainly be about the Israeli financial system but of course the main points can be applied to almost any country.
Our goal is to give you, our FANGA fans, the FANGA over your finances so by the end of 2012 you will be contributing to the surplus of your savings account instead of the surplus of the coffers of the banks!