The View From My Bicycle [COLUMN]

On Saturday I did my usual 70km+ cycle and heard from a friend when she got back (3 punctures later) that a 70 year old cyclist had made a snide remark while cycling to some guy on a motorbike. Not soon after 3 men had ripped him off his bicycle and beaten and bloodied the old timer's face.

When my friend, who was essentially in the broom wagon, offered to pick the guy up he simply got back on his bike (with 3 broken ribs) and rode on.

My own experience that day was somewhat milder. I'd pulled away from the C+ bunch fairly early and so found myself riding on my own for some time. Then, not far from the end of the ride I was forced to stop at an intersection. An African lady pulled up and was instantly preyed upon by a vagrant there asking for money. She clearly indicated that she couldn't help me, and he continued to pitch his demands, hovering ever closer at her window, glancing over her elbows at the contents of the passenger seat. The tension was palpable. Finally another car drew up and he walked along the side of the car to the next one. I saw her make a small glance in her side-mirror to see what he was doing. Meanwhile, 4 or 5 other vagrants loitered about.

It isn't hard to imagine the same scenario in a few months from now, when street posters will be filled with RECESSION HITS SOUTH AFRICA news, and it will seem as though every editor in the country is a Jeremiah taking pleasure in abject misery and bad news. The problem is, there won't be much good news to report: jobs lost, statistics plummeting, prospects for prosperity worsening each day. The result of all this will be a growing sense of hopeless, of despair. Cities all over the world will become the dark dystopian Gotham's of the Batman comics. It will first be despair that assails these urban populations, and soon after, conflict, violence and crime will follow.

What South Africans now encounter at intersections is relatively benign. Vagrants asking for handouts; when they're rejected they simply move along and ask someone else. Aspasia Karras refers to this as 'intersection guilt'. This [scenario] is likely to escalate as stressed motorists will notice not only more vagrants gathering on the roadside, but will be increasingly irritated and then fearful at the sight of them. And as they grow in number, they will become increasingly in-your-face, and increasingly belligerent in turn.


It is not hard for me to imagine Xenophobia flaring up during the winter months July/August in South Africa, but this time their fury is likely to spill over into the streets and the suburbs. Part of their anger will be directed at the government they elected that has somewhere not only failed to deliver, but allowed conditions to suddenly worsen. Governments in power now are likely to feel very unlucky, and are likely to bare the brunt of BLAME.

In South Africa, we are likely to see a period of anarchy. The government is obviously powerless to turn around a Recession/Depression, and initially workers won't believe this. It will take take for this to sink in, and while it does, conditions will worsen again. This will be in the form of increasing fuel and food prices when people - more and more - don't even have jobs. If you have a job, oil prices at $147 are pretty exorbitant, but one can still make do. With no job, $50 oil will feel unavoidable. Imagine having no job and you see prices slipping upwards of $100, then $150, and continuing upward?

How can this happen you say, when demand is so weak, when OPEC is mulling oversupply problems. Easy. There is no more capital to finance exploration, or for the upkeep of rigs and technology. As a result, we will see not only demand destruction but supply destruction working in contagion with depletion. As such, when prices begin to move upward, the market - what's left of it - will be caught utterly by surprise. This will be a supply crunch of energy that will translate in all its vicissitudes into everything else - a supply crunch of cash, of food, of jobs, and worst of all, of hope.

People will groan 'how could this happen' when months ago we appeared right as rain.
The reason this could happen is the same reason you will read this post, wonder about it for a few moments, and then continue to do what you tend to do every day, hoping reality won't catch up. Unfortunately, it always does.

Spend $10 Today, Be Out $100K Tomorrow

Little amounts can make a large difference to your finances.

As gasoline and food prices continue to rise, the squeeze to make family budgets balance each month becomes more of a struggle. After the big savings have been found and taken, smaller savings have to be found to make ends meet.

This can be frustrating as it can feel like everyone is being nickled and dimed to death. That's why it's important to realize how these small amounts can make a huge difference in your overall financial health.

You've likely heard about the little ways to save money a million times. Money-saving advice includes standards like packing your lunch instead of buying it at work, skipping the Starbucks and making your coffee at home and watching videos at home instead of going out to the movies. While you may have grown tired of hearing them, they are still as true as ever and even more important when the economy is struggling.

More from TheStreet.com: • Use Your Pantry to Pinch Pennies • Minimum Payments Cause Maximum Financial Pain • Ten Strategies to Fight Bank Fees

Saving small amounts of money is good advice for everyone, it's not as essential for people that are currently living well below their means. If you spend $5 on a cup of coffee each day, but you're still able to put away five times that amount toward your savings, that coffee splurge isn't going to hurt as much as for someone who isn't saving anything. For those that are barely making ends meet, spending small amounts of money can be the difference between deep debt and a nice retirement account.

When you are faced with a budget that isn't balancing, you have two main choices: earn more money or cut more expenses. Unfortunately, many turn to a third alternative. When they can't seem to make their budget balance, they decide that it's acceptable to place the difference onto a credit card. Even though the monthly shortfall in the budget is small, placing it onto credit cards is one of the worst financial moves that a person can make. The result will be a downward cycle that will not only keep you in debt, but also create a tremendous amount of stress.

There is often a false assumption that saving $10 and spending $10, although opposite, are relatively the same. For example, if a person saves $10 a day, after a month their account will have $300 while if a person spends $10 a day, that will result in a debt of $300. While on the surface this makes perfect sense, the problem lies in that these numbers fail to take into account the interest that can be gained or charged on this money. It is this failure to understand the concept of compound interest and the dramatic effect it can have that greatly changes these results.

It's important to understand that it takes very little to start sinking into debt. For most people, spending $10 a day would not be considered extravagant spending by any means, but $10 can result in tens of thousands of dollar of debt. It's simple to see when you compare the results of what happens when one person saves $10 a day while the other spends $10 a day that he doesn't have.

If a person were to save $300 a month (approx. $10 a day) and invest it to get a 5% yearly return, that person would have $20,402 in the bank after five years. On the other hand, if a person ends up spending $300 a month more than he has and puts it onto a credit card that he doesn't pay off over the same 5 year period, that person will owe $36,259, assuming a 26% credit card interest rate. After five years, the difference between saving $10 and spending $10 each day results in a $56,661 gap in net worth between the two.

Add another five years to the same patterns, and the results are even more dramatic. After 10 years, the person who saved $10 a day would have $46,585 in the bank, whereas the person who spent the $10 he didn't have would be $167,470 in debt, resulting in a net worth difference of over $210,000.

Of course, there are many other factors that could alter these calculations. The interest you can earn and what your credit card interest rates are will vary from this example. There is a minimum amount that the person would need to pay on a credit card each month. If debt to this extent began to occur, the person would have their credit cut off long before this amount accumulated and would likely need to declare bankruptcy. The point is that over time, small amounts added to debt can result in far more debt than most people realize.

Once you learn that saving a small amount and overspending a small amount aren't simple opposites, you understand the importance of having a budget and strictly sticking with it. If you are able to fight through the hard times and keep your budget balanced, then you set yourself to reap great financial rewards when the economy finally turns around.

by Jeffrey Strain

NVDL: Credit cards are just plain evil. But whether the economy will 'finally' turn around...I'm afraid we are not headed in that direction.