The Wise Investor
2.4 Borrowing and credit
John and Kate were refreshed, relaxing on the park bench
and eating icecream. Kate felt a little embarrassed. She felt
like a little girl being naughty, sitting on a park bench eating
icecream with her grandfather.
"I'm too old to be playing around like this, John," Kate
said with a sheepish look on her face. "Can you imagine
what my kids would say if they could see me now?"
"Rubbish," said John, smiling. "The moment you're too old
to eat icecream with me, you may as well pack it in. Michael
and Sarah are good kids, I'm sure they wouldn't tease you
for more than, say, a couple of months at most."
"Bastard!" said Kate again, almost spilling her icecream
into her lap. "You'll get me into trouble yet!"
"I sincerely hope so, my dear," John said with a twinkle in
his eye. "Now, where were we."
"Credit, I think," replied Kate. She wasn't looking forward
to this topic, as she was an offender herself. Still, If she
could reduce all the various repayments, it really would be a
major step forward. "Go on, John," she said between
"Now, the first point I want to make," said John as he
finished his icecream, "is that all forms of credit are simply
different ways of borrowing money. Personal loans, credit
cards, overdrafts, financing through stores, all these different
arrangements are simply different ways to borrow money.
In life, there's no such thing as a free lunch. If you want
to borrow something from a stranger, then you have to pay
for the privilege.
If you want to borrow someone's flat for a year, then you
pay rent. Rent is simply a charge for borrowing someone
else's building for a while.
If you wish to borrow a car from a car rental company,
then you will pay for each day that you have it. Money is no