Are you MONEY BLIND?

In the United Kingdom we are bombarded with television advertisements designed to push us into spending money. Are you bewitched by those offers? Does the interest free, buy now, pay later idea appeal to you? Do you believe you are getting good value by buying the half price or buy one, get one free (BOGOFF) offers? Do you really believe that you are getting something for nothing from those gambling advertisements when they say pay £10 and play £50?

You do? Then you are definitely MONEY BLIND. Why?

Firstly, there is no such thing as getting something for nothing, unless someone gives you something for which you do not have to pay a single penny, now or in the future, or ever.

Secondly, any business needs to cover its cost. That is a fundamental rule in any business. There are expenses involved in running a business. Stock, warehousing, energy, staff, delivery, and clerical supplies and equipment needs all must be paid for (Do I really need to tell you that?). No business can provide these things at no cost, even family run businesses.

When you see a company offering buy one, get one free (BOGOFF – a very apt acronym in my opinion) they can only do this if the total cost of the two items are included in the price you pay. They are not giving you the second item for free. Why would they?

Let us take an example:
You are a double glazing retailer. You buy 100 windows at £100 each, total cost £10,000. In order to make a profit the cost of every window must exceed £100. In order to offer one free, the minimum that can be charged for the two windows is £200, but that would leave no profit for the retailer, so the total cost of the two windows must exceed £200, say £300 (or any figure above £200). In this case the retailer profits by at least £100 per window, before fitting costs are calculated.

The reality is that you have paid for the total cost of the two windows, i.e. you have received nothing for free at that stage. You would also be charged for fitting. Window fitters do not work for nothing. In order for the fitters to be paid for their services and make a profit, they need to charge the window retailer, who will in turn pass that cost on to you. If the fitters work for the retailer, their employment and travel costs will need to be met by the retailer. The retailer cannot afford to employ fitters for the sole service of free fitting. You will be asked to pay the total cost of the windows and fitting and that is what the retailer will advertise as a Buy one get one free deal. What have you received for free?

Now let us look at Buy now, pay later. A furniture retailer is offering 4 years interest free credit on its range of sofas in a half price sale. How can they afford to do that? The first thing to remember is that they are not doing you a service. Think of your payments as a savings scheme in a bank. You pay say £25 a month into a bank. That is a guaranteed income for the bank, or the retailer. Buying a sofa may be a lot more use to you than opening a bank account and saving £25 a month if you need a new sofa, or you just want one, but do not necessarily need one. The furniture retailer has you as a client for the next four years. Unless you pay off the balance early you cannot escape them.

This is a psychological trick which seems to work well. What they (perhaps) did was persuade you (with their hype) to buy a new sofa when you may not really have needed one, and tied up your finances with them for four long years in the hope that you will buy your next sofa from them. You will only benefit from this trick if you are on a low income and are not able to pay up front for a sofa. There is no disputing the benefit to the lower paid and I do not wish to discourage their use of such services.

The intention of the retailer is to keep their company name in the forefront of your mind on a monthly basis. Anyone who manages their finances or can afford to part with large sums of money as desired will know that it is better to save up the cost of a new sofa and then buy it. Whether or not you pay interest, if you take advantage of the interest free over four years option on your half price furniture, you will be in hock for the next four years. Do you really want that if you do not really need to do it?

Window shopping is great fun and the temptation to buy something in a sale which you do not need is very high when you think you are receiving a benefit, i.e. interest free credit. However, again, the retailer needs to profit from the sale so as you are paying back the cost of the sofa you buy over a four year period there is a price to be paid for this service and it will be added on somehow to the price you pay, though this may not be evident at the time.

Invariably the price tends to be lack of perceived quality of the goods you buy. A sofa advertised at £1,000 for 28 days and then reduced to £500 in a sale must be of good quality must it not? To make a profit which can be accounted for each month, as with the double glazed window retailer, the furniture retailer needs to add to the price of each sofa, the cost of the interest free service it is providing. The reality is that the sofa is only worth £500 (The retailer probably paid less in order to make a profit). In all reality if a sofa costs £1000 to make and this is what the retailer paid for it, it needs to be sold for at least £1000 in order for the retailer to break even.

Half price does not mean that you are getting a good quality item for half the price it is worth. What it means is that you are paying above the value the retailer paid to the manufacturer or wholesaler, and the retailer still makes a profit. From a purely moral perspective, if retailers can afford to sell an item at half price in a sale, why advertise it at double the price in the weeks prior to the sale? Simple. The retailer wants you to THINK you are getting a bargain. You probably are not getting the good quality bargain you think you are!

The same principles apply to the gambling advertisement pay £10 and play with £50. Get real! Who gives away £40 for every £10 without wanting something in return?

The advertisement is just another psychological trick to persuade you to part with £10 and possibly become so hooked by gambling that you will become addicted and spend more than the £40 credit initially supplied to you. Especially if you actually win something before you have spent the extra £40 (which you will probably lose after you have gambled on to more than £50). Gambling sites warn you to play responsibly in their advertisement but if you are weak enough to believe the hype, you probably will not. They are in this business to make a profit, not to give away money. My advice to those who find themselves unable to resist the £10 play £50 offer is, play £50 and then STOP, if you can!

Are you MONEY BLIND?

© VWSelburn 2015

Do ‘they’ think we are fools?

In my retirement I now have the luxury of being able to view the television screen at anytime I chose during the day and evening. I do not spend too long in front of the box but I am horrified to see an all too familiar disaster looming!

“What is this disaster?” I hear you ask.

One word … GAMBLING!

Gambling is a business, not a charity. No matter what the enticements, the proprietors are out to make money, not give it away. It would not make for a viable business if everyone won all the time.

Advertisement after unrelenting advertisement appears during the programme daytime and evening breaks, and even worse… with familiar actors promoting this shocking habit.

The (sorry!) idiots, who believe they are likely to become rich overnight by linking via their 3G/4G, phones, tablets and computers to the games (rigged to earn the promoter the most profit, and the punter the least), really do not know what kind of a trap they are falling into. They are easily led, like sheep, and are betting away their food, energy, or mortgage money. Once their money has gone, it has gone!

Why do you think all these advertisements are being permitted at (seemingly) any time of day?

I think the Government, after losing the tax benefit provided by the ever reducing cigarette market (especially the black market, now that smoking is actually recognised as the dangerous habit it is) is now looking for another mechanism to raise a few pounds. They cannot very well start to promote alcohol again, can they? Why are they (or Brussels) not bringing out another law relegating gambling advertisements to the late, late hours, if we must have them at all? Politicians cannot fail to be aware that such an addiction is as bad for one’s health as smoking and alcohol. With typical short term perspective on the real world, they seem to be smugly saying, “Let’s deal with the fallout later, after we’ve filled the coffers. We have to pay off the national debt somehow!”

The less well-informed or those who are easily led, and therefore more prone to addiction, will drown in the ocean of advertisements that seem to follow every programme. Then they will start to tap into the links, and believe the hype about pay £10 and play with £50, not realising that this is how they are meant to be sucked into the gambling habit. That is the sort of persuasion the gambling marketeers rely on to pull in the unwary.

Children watch the advertisements too. For goodness sake, MacDonalds cannot advertise to children directly to sell them a burger, but Casinos can place advertisements that can be seen by children! They have school holidays (in case you politicians have forgotten!). Gambling is being promoted amid glitz, stars and glorious trumpets, like sweets, and it looks an exciting thing to do online, on their phone, and not tell their mum (they have access to your bank details, parents, unless you hide them away) and they are perfectly capable of lying about their age online, who checks?

After watching those advertisements, gambling appears almost as benign as Byker Grove, (following which, the UK’s child population grew into little monsters at the age of eight years and stopped believing in Santa Claus), because they often believe what they see on the TV. They do not always understand what lies behind what they see on the screen.

The three main addictions, (as we all know) for which clinics have been set up throughout the UK and the rest of the so called civilised world, are alcohol, drugs, and gambling.

Are we, as responsible adults going to stand for this onslaught of gambling advertisements? Are we going to put up with another epidemic of addiction that will further fuel the already intolerable drug pushers and violent crime in this country?

What can You do?

Please email your local MP, and ask for gambling advertising on the television to be stopped, before some family member falls prey to this addiction. People who enjoy gambling (and can afford it) will find a casino without all the hype on television.

Thank you for taking the time to read this blog. If you feel as strongly as I do about gambling (never done it myself, but I have seen the misery it can inflict on families), you will understand why I wrote it.