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| Source: Wikipedia |
Back in the early days of MMORPGs, I tried my hand for a while at a game called Ultima Online. Although there were myriad dungeons and locales to explore, and many different skills to build, I found merchanting to be the most enjoyable use of my time. I belonged to a small guild of players with aspirations of growing to be both financially and numerically large and powerful. My friends and I spent hours and hours harvesting materials, crafting them into useful goods, and selling them on automated, player-owned vendors. Although there was a market for extremely rare decorative items, which we would sometimes attempt to find, the real money was to be made in real estate. Although we owned a few properties, I don't think we ever really had enough gold to be seriously buying and selling houses in prime locations. Our members were also an issue. If memory serves, each player could have several characters, but only one house (be it villa, tower, keep, castle, etc). We had such a small number of trustworthy, core members that holding houses for sale would have been an issue. Still, it was my first look at online video game markets driven by people just playing a game.
Similarly, when I played World of Warcraft I found the auction house to be one of those most interesting parts of the game. I was recently reminded of this reading one of Jake's articles over at Debt Sucks, "How Video Games Teach Money Management" (Man, this entry is just jam-packed full 'o links). My main character was a skinner and leatherworker, meaning that when I killed certain monsters or animals, I could take their skins (and sometimes scales) and craft them into armor patches or pieces of leather armor. I would often gather leather, either by skinning it myself or buying it at the auction house, and craft it into armor patches which I would then auction off for a profit. Sometimes the price of leather would jump and I'd make more money selling stockpiled leather than I would making and selling armor patches. It wasn't as profitable a trade as enchanting or smithing, but it was enjoyable for me. Sometimes I would also keep and eye on the prices of ingredients for other professions, and harvest and sell them if the price was high enough and I was capable of gathering them (for any WoW veterans reading this, I frequently farmed motes to make primals).
I find it rather interesting that these online, game economies can have so much real value. Although it would probably be rather difficult to make a living off of such toil, there are people who gather large sums of in-game gold and sell them in the real world for real money. Even independent of that, so many people (myself included) derive such a large amount of satisfaction from sitting around earning virtual money, which for 99% of people has no application outside of the game world.
To reign this rambling post in a little and come back to my original line of thought, although I'm not thrilled by the idea of working in the worlds of accounting or finance right now, there has always been a part of me that finds the workings of markets to be quite fascinating, and I can't deny the satisfaction I get out of making a nice-looking Excel spreadsheet. Perhaps I should think about becoming some sort of entrepreneur, despite the fact that I don't have a product or an idea for one at the moment...
Anyhow, lately I've been trying to renew my interest in money by reading some personal finance blogs. Two that I've come across and would like to recommend are Debt Sucks (previously mentioned) and Punch Debt in the Face. They both have some fascinating reading and a very personal feel, which I find appealing.
Allow me to segue once more. Reading and thinking about personal debt (of which I have a great deal in the form of student loans) brings one thing to mind for many people: credit cards. This got me thinking about one aspect of life in Japan that I have up until now been fairly critical of - the fact that Japan is a cash society. Credit cards are becoming slightly more common, and as such they're are being accepted in more and more places, yet still the norm remains to walk around with the equivalent of several hundred dollars in your wallet and pay in cash. Whipping out a 10,000 yen note (roughly $120 right now) at the convenience store to pay for that pack of gum isn't seen as dangerous or tacky - it's pretty damn normal.
Now Japan has its own financial problems. But perhaps this cash-carrying mentality has shielded them to some degree. I don't claim to be an expert on the topic, but I get the impression most Japanese individuals don't hold much credit card debt. Can't say the same for Americans, on average. I guess there are two sides to every coin.
I have gone through a similar change in mentality as you have. I was really frustrated when during my first New Year's here I couldn't get any money from an ATM.
ReplyDeleteNow that I've been here a while, I prefer cash even though I have a credit card.
Yeah. I mean, I still like the convenience of being able to use a card, but spending only cash prevents you from using money you don't have (though you can still spend more than you should).
ReplyDeleteI was obliviously settling right into cashless debit card life, and then Wikileaks came along, and the credit cards broke their neutrality to start bullying their own customers telling them who they can and can't give money to. I haven't and don't plan on actually donating to Wikileaks myself, but on principle, that's just F'd up. So, I'm switching entirely to cash.
ReplyDeleteWhen cards were new, that was a technologically less advanced time, and the companies were providing genuine value by making it possible to pay for stuff without lugging cash around. Now, with 2011 technology, it ought to be damn easy to pay. But the corporations got there first, and have established themselves as very efficient rent-seeking parasites. Considering the fees they take from merchants were designed in a day when the whole world wasn't already connected, they are now a complete drag on the economy in every way, middlemen whose entire infrastructure could be replaced at 1/100th the price in a week if it weren't for their existing monopoly and the politicians they've bought and paid for.
Xamuel,
ReplyDeleteYeah, I hear you. Some of the fees are ridiculous. But to play devil's advocate for a moment, do you think banks and credit cards should provide their service for free?
I just heard about an indie computer game called Recettear, which was released in Japan years ago, and just reached our shores. It reminded me of this post. It's a JRPG where you play the role of the item shop clerk instead of the typical adventurers out to save the world. You have a shop, set prices, haggle, and occasionally venture out to obtain goods to sell. Seems like it might be right up your alley; read up on it if you've got some time to kill.
ReplyDeleteOh man, thanks Shadow! I'll definitely look into that. There are some interesting looking games over here. I saw one where you run a convenience store, but I don't think they have a version for the DS (or if they do I haven't been able to find it).
ReplyDeleteI got my first Japanese credit card a couple months ago. I'm not sure if all Japanese credit cards work this way, but this is completely different from my American credit cards. This card automatically deducts what I owe from my bank account every month. This way there's no way to rack up debt since I have to have that money in my account when they deduct it or, well, I don't know what would happen. Fines I assume.
ReplyDeleteI've always been very careful with credit cards and have never had credit card debt before. But recently I had to make a rather large purchase and the only way to pay for it was to put it on my card. It cost more than I make in a month so I had difficulty even paying for it with a credit card, since they default to automatically deducting the full amount. Before purchasing, I had to specify how many payments I wanted automatically deducted. The more payments, the less I paid per month, but the higher the interest rate would be.
I'm on my last payment of my first time in credit card debt and have to say I think it's a pretty awesome system. If all Japanese cards work like this, no wonder no one is in debt.
It seems American cards are designed to get you in debt whereas Japanese cards are designed to get their money as quickly as possible. I wonder which way makes the companies more money.
The Japanese way does seem a little less risky for both parties, but that's because it's harsher. Though I think that's better than people spending beyond their means.
ReplyDeleteI'll go you one better: don't carry a credit card, and only carry cash that you have budgeted and planned in advance to spend. If you just carry a wallet full of "in case I need to buy something" money, you'll always be able to find something you "need" to buy, even if you don't actually need to buy anything. If you budget your spending in advance and only carry the cash you actually need to spend, you spend less.
ReplyDelete(There are some things you have to keep just-in-case money for, of course. I keep a small sum in my desk at work for unexpected "we're all chipping in for a thus-and-such for so-and-so's birthday/retirement" events. But that money is designated for that purpose specifically; I don't spend it on junk I don't need to spend it on.)
> to play devil's advocate for a moment,
> do you think banks and credit cards should
> provide their service for free?
I'll tell you what I think. I think if the credit card companies charge the retailers a fee for the privilege of letting people pay with credit cards, then the retailers should be required to pass that fee along, in its entirety, to the people who use credit cards, and ONLY the people who use credit cards. The prices that the rest of us pay shouldn't be jacked up to help cover it. Then maybe people would have some idea how much they're paying for the service.
> This card automatically
ReplyDelete> deducts what I owe from
> my bank account
In America we call that a "debit card". They're fairly popular in some of the more conservative areas, where more people are more inclined to be somewhat concerned about the prospect of being too deep in debt.
Of course, some banks have the nerve to charge you a per-use fee every time you use a debit card, as a way of encouraging more people to use regular credit cards. You would think such an obvious ploy would tip their hand and alert people to fact that they're *deliberately* trying to get people deeper into debt, but American society seems to be completely blind to this.
> It seems American cards are designed to get you
ReplyDelete> in debt whereas Japanese cards are designed to get their
> money as quickly as possible. I wonder which
> way makes the companies more money.
It depends.
The Japanese way gets the company their money quicker, so then they can reinvest it, which has the advantage of keeping them more liquid in the short term.
However, the American way allows the company to build up a base of long-term customers who must continue to pay. Ideally you get them to their credit limit, which you set at a strategic point so that *most* of the money they're spending is on interest (i.e., income for you, the lender). Most but not all, because you want them to still be able to buy a little bit of new stuff, lest they wake up and catch on that their money is all going straight into your pocket.
If they ever get to the point where they can never afford to buy anything, they'll probably declare bankruptcy, and then where will you be? That's no good. So you set their limit at a point that leaves them a little bit of spending money, and you set their minimum payment just a little higher than the amount of interest, so they can charge a little something new on the card every month, so they still feel like they're using the credit card to buy things they couldn't otherwise afford.
(In reality, of course, the amount they can actually buy per month is much lower than if they didn't have any credit cards and paid for everything in cash. But to understand that they'd need to do some gradeschool-level arithmetic, so it's pretty easy to keep most Americans completely blind to it.)
There are advantages (for the lender, I mean) to either approach. It's the difference between putting your money in short-term versus long-term investments. Long-term investments ultimately pay off better, but they also tie your money up for longer. The short-term investments leave you flexible to reinvest as you like, so you can take advantages of things like changing bond rates, changes in the stock market, changes in the prime rate, etc.
Man, it makes my head spin. No wonder I got a C+ in Finance.
ReplyDeleteInteresting post! I actually just got rid of my credit cards last year...I have no self control what-so-ever. lol.
ReplyDeleteNot everyone uses credit cards, even if they have them, because there are still many places that don't accept them. And the law just became more strict about how much debt you can have according to your income just recently. But I can't imagine any American without a credit card :-D
Hey Kaori! Yeah, I can't imagine not having one. They're kind of necessary for a lot of big purchases, though I prefer to have enough cash in my bank account.
ReplyDelete