Russia continues to change from my previous visits here. Not everything changes for the good. I have mentioned before that prices here are a lot higher than they used to be. The cost of many things has gone up by 300% from what it was 5 years ago.
There must be a good explanation for this. Well I think I have stumbled on to at least part of the equation. Russians seem to be easy suckers for advertising. They also seem to be easy suckers for getting caught into the draw of materialism beyond their means.
I have often wondered why it is that people can afford things if they are so expensive, especially when you take into account that the average salary is $300 US a month or less.
People are getting caught up in the easy trap of credit. And the banks are giving it out so easily. After the term of their credit people often have not paid their loan off and so people are having to take second loans to pay the first one out.
Many people are taking credit so they can renovate their apartments. The land lady’s family got caught in this trap. They took a loan for 100 000 rubles ($5000 AUD) to do renovations on the apartment we are in. The people they hired to do the job started it but then ran off with the money. They did put in a new floor and some tiles in the kitchen and bathroom, but that is it.
Needless to say the land lady is keen to have us stay in this apartment as long as possible. At 10 000 rubles a month she should hopefully be able to pay off her debt in a year or so.
But at 25% or 26% interest that is a harsh penalty.
3 comments:
Surely the banks aren't giving credit to people who don't have jobs or some source of income?
I'm sure that is true. But they are not overly concerned if the people cannot pay their loan as they can always possess their flat. A flat could be used as collateral. many people own the place they live in.
Something I do agree with :-) Average Ivan Russian is headed for economic demise. Credit is all to easy to obtain.
There are already too many destitute people in Russia and I fear that the number will only grow as apartments are lost - all for the purchase of a mobile phone or a new sofa.
Actually, a lot of young people here are headed the same way, but at least we have a social welfare safety net. We have also been exposed to credit for longer to have had a chance to get used to its vices.
Scary...
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