SNOW Syndrome

· 3 min read

It’s been called “SNOW” Syndrome. “SOON” Syndrome. Some people call it “STEW”, and others call it “SWET”. Some call it “SAPS”. But it’s the same thing. And all due to the “IWIN” syndrome.

“SPEND NOW, OWE WHATEVER”.   “SPEND OCTOBER, OWE NOVEMBER”.   “SPEND WEDNESDAY, EARN THURSDAY”.   “SPEND TUESDAY, EARN WEDNESDAY”.   “SPEND AUGUST, PAY SEPTEMBER”.

All due to the “I WANT IT NOW” syndrome.

It’s the practice of spending before you earn because you want something right now. Or more specifically, buying on credit today, knowing, or at least believing, that you have the future capability to repay the debt.

SNOW and SAPS

The best description combination is probably SNOW and SAPS, because the debt often “snowballs” into something large and eventually unmanageable. It becomes unmanageable as the requirement to meet everyday living expenses plus the inevitable “unforeseen”, means there’s now not enough money to pay for both today’s and yesterday’s purchases. As a result, your financial situation saps your energy and your focus, and can limit your ability to earn and now service and repay the debt.  It can jeopardise your credit rating, and potentially jeopardise your career and personal relationships.

Before going on, it must be said that not all purchases made using credit are bad, and not all debt is bad. The purchase of property and other investments with debt finance can be the most effective way, and for most people, the only way, to make those purchases.  But get independent qualified advice before you make those big purchases.

Expenses on Credit

But when living expenses, holidays, and things that effectively have no tangible value are purchased on credit  – a consume now, pay later regime – it can be safely said that the credit does not represent “good” debt.  That is especially so when practised regularly, and over a long period of time; you’ll end up with a big pile of expensive debt, likely heading towards a poor credit rating.

A good test to see if credit is “good” credit or “bad” credit is to ask yourself whether you think a bank would lend you the money for the purchase. Or whether you would lend yourself the money.  Or would you lend a friend the money.

A bank will assess your application based upon your ability to service and repay the loan, including the ability of the purchase to contribute towards paying for itself. It will also assess the security offered.

A Holiday Won’t Pay Back a Loan

A holiday won’t contribute towards repaying a loan (although the break might help you work harder). It will generate memories for you, but because your memories just don’t have the same value for anybody else as they do for you, the bank won’t accept those memories as security. Nobody would buy your memories if the bank had to foreclose because you couldn’t service the loan.

It’s a better idea to save for the holiday, and take it when you can pay for it before you go. When you get back, you’ll have only memories of the holiday and not the monthly reminder of the need to pay for it while you’re covering today’s living expenses, and any other debts you may have.

Save Your Credit Rating

As a bonus, a bank will be impressed that you saved for the holiday, and didn’t take it until you could pay for it. That will work in your favour when the time comes to borrow for something more permanent. They’ll look closely at your spending and saving history.

More than ever, to be able to establish and maintain a good credit rating, you need a sensible spending history, a strong saving history, and an impeccable borrowing repayment history.  You have to ensure that “IWIN” syndrome doesn’t lead you into a position where you are stewing or sweating about a blot on your credit record that will haunt you for potentially years after.

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