Save. Spend. Splurge.

Greece: The Modern Personal Finance Fable of our Times

Someone correct me if I am wrong but I think I am missing something in this entire debacle.


Greece borrowed billions of dollars because they needed the money to keep the country going and operated in debt.

In the 6 years that they borrowed all that money, they made changes, but none that significant enough to cut dependencies on cash flowing into their bank accounts.

As a result, they need MORE money to sustain the country.

… but they just voted “No” to having more money handed to them because it would come with more restrictions and austerity measures.

Let’s see if I can explain this with a more relatable situation.


It is like a teenager who has gone off to college.

She / He takes all this money saved from the Bank of Mom & Dad to pay for school and let’s pretend in this fantasy scenario, that they knew they would graduate with NO debt at all.

They enjoyed going to the movies, ordering in some Pad Thai once in a while, going to the bars every weekend and buying some new shoes on occasion; but figured this was reasonable considering it was what was necessary to live.

After all, it was all free since Mom and Dad were paying for it and they’d graduate with $0 in debt and get this fantastic 6-figure job which would solve all their problems.

Or find a rich boyfriend / girlfriend to sponge off on.


However, after they graduated, they didn’t quite get the job that they had angled for, and earned way less than what it took to keep their lifestyle going…. but didn’t really care because they would eventually get a promotion to 6-figures one day, right?

In the meantime, that’s what credit cards are for.

Cue the maxing out of credit cards to sustain their lifestyle.

Inevitably, 3 years later everything crashed because banks will only give you so much money before they turn off the facuet.

Now, they’re pretty much TAPPED OUT of funds and unable to make their next rent payment and are literally on the brink of being evicted & thrown out.


Bank of Mom & Dad then said:

“Oh oui petit chou, do not fret.

We will step in with some supplementary loans until you get out of your credit card debt. We’ll just need to get you to start budgeting and tracking your expenses, cut back on going out every weekend, and buy shoes a lot less often. You need to start living within your means.”

Mom & Dad give a huge loan, they clear off their cards and everything is kosher….. until it’s not.

Sure, they ate a bit of ramen at home instead of Pad Thai, and they would go out to the bars on the weekend but only buy ONE BEER instead of their regular 2 and a side of chicken wings, but life didn’t really…. change.

Cue the second maxing out of credit cards, and running back to Mom & Dad.

Bank of Mom & Dad then said:

“No problem my dear child, I will give you MORE money to live on for now, but this weekend drinking, eating out and buying shoes is going to have to stop. Completely.

Not only that, you’ll probably have to pick up a side hustle or two for a few years until you pay us back and are able to be financially independent.

Actually, we’ll even go on a nice little loan repayment plan so that it’s easier on you, but you need to make some drastic changes to your lifestyle.”


Cue: Temper Tantrum, where New-but-Financially-Dependent-Underearning-College-Grad-says:

“NOPE. I refuse your terms and do not want to take your money under those conditions. I vote NO to MORE austerity measures.”

…all the while thinking: If I throw this temper tantrum it can only end well. A) I will set an example for the rest of my siblings in how to act towards the parental units and B) I will get my way. Or at least, not have to give up my weekend beers.

Bank of Mom & Dad:

” Not cool. Actually, this is irresponsible, childish, unacceptable behaviour.

If you think we’re going to bend to all of your whims when you are the one about to be thrown to the wolves and evicted, not to mention unable to eat a proper meal unless you turn into a freegan to scrounge in garbage dumps, you’ve got another thing coming.

The wallet is closing. You have a very short window to apologize and come groveling for money. The one who holds the purse strings, holds all the power.”

….Uh oh. Now what?


Have I about summed up the Greek situation? Am I missing something here?

The Greek banks are closed.

They’re going to RUN OUT OF MONEY.

LITERALLY RUN OUT OF MONEY in the next day or so.

… and they think voting “No” to austerity measures is going to give them MORE power, pride and show a good example for the rest of the countries in Europe to follow?

I don’t think so.

There is going to be some serious reality checks coming up in the next few weeks as Greece realizes that they need money to keep their economy going, they aren’t making enough money (GDP) and/or cutting back enough (austerity measures) to be able to sustain themselves independently.

… but isn’t this true of all countries, not just Greece?

Aren’t all the countries in the world save for a few in Northern Europe (Denmark?) and countries like Singapore and China in Asia operating in the red?

Even Canada is in the red and we can’t seem to balance our books. The U.S. is worse.

Is the Emperor finally going to admit there aren’t any clothes?

I guess we’ll see. It just seems so incredibly clear that I can’t understand how these big brains up top can’t see what is going on.


  • Michelle

    I am hardly surprised by this debacle as Greece/Greeks have a long history of not paying taxes “en masse” it is an unspoken part of Greek economic life. Basically, taxes are a bit of a suggestion. That being said-this should not be a surprise to any of the other European countries as it’s a well known part of Greek economic life. It is my opinion that at this point the European union would be throwing good money after bad if they decide to bail them out again. In fact, I believe the Greeks were calling a “bluff” if you know what I mean? I would be shocked if they get any substantive deals after this and I personally would not bail them out-they can’t afford to pay the payments. And if they are loaned more money they still aren’t making the type of economic hard choices to make a long-term difference to their debt. Iceland also went bankrupt-sometimes that just has to happen to complete the “correction.”

    • save. spend. splurge.

      For me, they should stop throwing good money after bad.. but it’s a hard call because Italy and Spain would take a huge hit from Greece defaulting, and how fair is THAT!?

  • Irene

    I wonder what the political repercussions of a Grexit would be. Isolating Greece from the euro and economic eurozone is one thing, but what would happen politically. Would Greece strengthen it’s relationship with Russia? Will Spain be the next one to exit? What will eastern europe do, and will Poland still join? Will we see mass migration out of Greece before there is a border again? I think these repercussions could be more severe than austerity for 11 million Greeks. Besides, whether they default, exit, or not. There will be austerity and poverty.

  • Ellie

    Right on the money. ahem.

  • Jeff

    I think it got it partly right. Greece has a serious problem with entitlements. Being part of the West is associated with certain standards of living. When Greeks say they want to remain part of Europe, once you strip away all the European values talk, what they really mean is they don’t want to become part of Africa and live like Africans.

    The problem is that their economy simply is not competitive. Their productivity can not support a “European” standard of living. The only way they can be competitive economically is by deflating their standard of living to realistic levels. Thus far the analogy with the teenager is quite right. But a country is not like an individual, making changes as a country is far harder since you need to change a lot of minds to change a country. Convincing a whole country to adopt a far lower standard of living in order to make things sustainable is almost impossible.

    Remember Jimmy Carter when he told Americans that their level of consumption is unsustainable in the face of the oil crisis? He got thrown out of office. Even in China, where the government is not elected, they have trouble rebalancing the economy to a more sustainable model because it means temporarily slowing down the rate of economic growth. It’s easy to tell someone else to accept a lower standard of living because theirs is unsustainable. It is very hard when it comes to yourself once you have gotten used to a certain lifestyle.

    Another problem in the Greek case is that unlike the teenager who can change and has time on her side. A lot of the people who are suffering in Greece are pensioners. They are already retired with little earning power and depend on their pensions for living. Their pensions have already been cut by 40%, and with the high youth unemployment rate, they often have to support their kids and grandkids on those meager pensions. When 3 generations are living on 500 Euros a month, how much more can you cut before people simply die?

    One of the biggest problems with many developed countries is the high fixed costs that have been baked into the system by generations of prosperity. Individually you can cut back your spending, but the system as a whole can’t. If you lose your job you stop paying taxes and collect EI, but what if 25% of the population lose their jobs? Does the government stop paying the police? the courts? the military? the pensions? the schools? Does the government stop maintaining infrastructure or sell them off?

    • save. spend. splurge.

      Yes, I was being a little facetious in comparing Greece to a teenager. You are absolutely right in that it takes many minds to have to come to an agreement for something to change.. but the analogy, I am glad to hear, came out loud and clear.

      I would also agree that once you inflate your lifestyle it is very hard to deflate. I myself have gotten to a comfortable point of spending, and it would be hard for me to deflate.. but not impossible.

      I guess the key here for me, is that it is not IMPOSSIBLE. But culturally speaking, perhaps there is something to be said about cultures being unable to be disciplined enough as a whole collective community to step back and say: We need to band together and get this debt down and done.

      You also bring up another good point about the pensioners and supporting the younger kids. I’d like to give an example of the Philippines where they (rightly or wrongly) send many of their young womenfolk overseas (by their individual choice) to be nannies. They work, they save their cash, and send it back home.

      Right or wrong, I still think there’s also a cultural block in seeing that there’s an opportunity to leave Greece, work elsewhere, do something if there is no money, and send the money back. Many Chinese do this as well, they work in the big city in factories and send back money to support their families.

      I also see Portuguese people doing this, leaving Portugal where they have a high unemployment rate, and coming to Canada in droves to work. Irish men have been doing this as well, working in construction in Canada because they can’t find work in Ireland.

      Or move to a more agricultural-based living where you can live off the land and your work (harder for bigger cities to achieve this but not impossible if you leave and work somewhere else or go to the country and rent land from someone to work).

      You also do bring up good points about cutting the budget elsewhere, but for me, Greece is still small enough to make those changes. We aren’t saying the U.S. has to do this, but Greece is only twice as large as Denmark, and a fraction the size of the U.S. (population-wise), to be able to come together as a country.

      What bothered me the MOST about all of this, was how proud they were in their ignorance in saying “No” to the austerity measures. The PRIDE is what killed me, that they were so happy to have told the lenders “screw you”, when they’re the ones who need the money and borrowed it to begin with.

      I missed it in my post, but you bring up all the great points about the situation… I also think we missed the cultural aspect as well, that they may not be able to come together as a disciplined culture / country to make those changes.

      • Alice

        Your post is really intriguing. It’s sad to observe that you aren’t that well-informed. If only you knew how many young Greek highly-qualified professionals (scientists, doctors etc.)have emigrated to other European countries and North America, you wouldn’t talk about a cultural block. Needless to mention the cheap labour (Greek workers in German industries supporting their families and children back home). It is really offensive and unfair.
        There isn’t a matter of culture or choice, it’s a matter of surviving. You are blessed that you don’t experience it, believe me.

        • save. spend. splurge.

          Well I am not Greek nor European so I rely on polite commenters to give me constructive feedback on where I am missing out in information (e.g. Commenter Jeff is an excellent example whereas yours is sadly, not).

        • save. spend. splurge.

          And by the way I do appreciate your comment about it being unfair to say that about Greeks even if it was delivered rudely. I still think there is a culture-something-or-another for Greece to decide they will call the bluff, enjoy life and walk away from this scot-free. I cannot imagine Japan doing the same thing. Can you not at least acknowledge there is a cultural mindset at play here? To be proud to default on what you owe?

      • Jeff

        @save. spend. splurge.:
        I think you are still analogizing a country to an individual too much. Cutting back is far easier as an individual than as a country. When I used to be single, cutting back was super easy. If I spent too much money one month I can just stop spending money on anything other than necessities the next. Now that I’m married, it’s much much harder. Cutting budget now requires consensus, and that is really hard. If cutting budget even in a couple is so hard, I can only imagine that on the scale of a country it’s basically impossible.

        At a national level the only feasible solution is to print more money.

        As for pride, the Greeks have no money left, all they have is pride now. The Europeans have backed them into a corner. It’s really sad to watch that a once prosperous people only have pride now.

        • save. spend. splurge.

          All good points. I’d like to also point out something Michelle reminded me of — Greeks don’t pay their taxes and they don’t enforce the rules to collect on them. Perhaps if they collected what they said they would tax, they may be in a better position. Just saying.

  • Taylor Lee @ Engineer Cents

    Agreed with raluca. The big, tough problem is that many countries with their own sovereign currency (US and Canada included) can print more money to pay off their debts. This leads to inflation, which obviously devalues a currency. Greece can’t use this financial lever because it is on the Euro. Further, the strength of the Euro makes it hard for Greece to compete on the world market place since it’s goods and services remain expensive. And finally, as we’re seeing in other European nations right now, austerity measures restrict an economy. As we know, Greece spends more money than a lot of its brethren. They’d be going from a very lot to a very little, with the requisite economic burden to go with it.

    Of course, now that they’ve defaulted, there’s going to be a tightening of credit in Greece and so on which may lead to a catastrophic depression. Long term, though, I think this is probably the best route for the country to be going anyway since it’ll allow them to rebuild their economy independently of the troika.

    • save. spend. splurge.

      Greece is now saying they’ll go to the drachma again and print that… but that sounds to me like it is going to cause even more economic turmoil, more problems than right now.

      The money or currency itself is not the problem in my eyes. Yes, you and raluca make a good point about the sovereign currency and having control, but money in the end, is just money. It’s just a way to barter without bartering and saying: one pig is worth 5 bushels of corn.

      It’s just a tool.

      I would agree that they need to get a reality check in what they can afford and not afford (GDP is too low to sustain the country), and perhaps this is the tough love wakeup call.

      • Taylor Lee @ Engineer Cents

        @save. spend. splurge.: Well the thing is complex financial tools like the devaluation of currency are yes, tools, but very important ones that most nations have available to them to stabilize their economies. Devaluing the drachma is pretty much inevitable unless creditors are going to forgive Greek debt and the Greeks go into turbo austerity mode immediately. Which, you know, I doubt it.

  • Kemi

    I agree with Raluca; whilst Greece has been massively irresponsible, the lenders bear some responsibility for this situation because they lent money to a country that has had 5 national defaults since its independence and was not the most viable of European economy in the past. It is not news for anyone who has ever studied European economies that Greece would mis-allocate any money given to it.

    • save. spend. splurge.

      Oh for sure I blame the lenders, particularly Germany for pushing this.

      Germany just wanted to export and sell more in an easy manner, and they had the most to gain from the euro. They are not exempt for having enabled all of this, particularly since in my example above, the parents (Germany) were the main contributors to such catastrophes.

      .. but even so. Even without those problems, had they stayed on the drachma, would they not have borrowed more and more?

  • raluca

    To be honest, the situation is a bit more complicated than that. Greece has been admitted in the Euro zone on what we now know to be “fixed” books. They should have never been admitted and because they have been admitted, they are now unable to debase their currency in order to pay their debts. On the other hand, Germany, the powerhouse of the euro zone, the country with the biggest positive trade balance (meaning they are in the black and have been for quite a lot of time), has benefited a lot from having an export market like Greece and a currency like the Euro that has lower parity than its own Deutsche mark. Basically, because of countries like Greece that are less competitive, the euro helped the exports of Germany and helped the country become the economic leader that is today. To give you an idea, only recently has China overtaken Germany in export value (not size or unit sold, but value, as a Mercedes can pay for 1000 tons of plastic toys).
    Your comparison is quite apt, but only if you look at the parents as well. They were the enablers. They have completely failed their child. They did not teach the kid how to money works while he was at home, they enabled him for a long, long time to live a unbalanced life and now they completely mystified that he has not grown up to be a responsible adult. Imagine that!
    It does not mean that the kid/Greece does not have his share of the blame and that the parents should keep supporting him. It simply means that he should not shoulder all the blame and the guilt should be appointed more towards 50-50 for the situation.

    • save. spend. splurge.

      Yes, the “fixed” books… although I wonder why they couldn’t have just thrown them out for being liars and made them switch back to the drachma.

      Germany was definitely an enabler. They got them used to a lifestyle and did it to benefit themselves, and now they have to pay the price!

  • Sarahn

    It seems to me the debt game is up! But if we all have debt to one another how does this merry go round work? I mean is it just pinching from Peter to pay Paul?

    • save. spend. splurge.

      I asked that to my partner last night. I can’t figure it out.. we’re just shifting money around and who in the end holds the bag? Germany and China?

      • raluca

        @save. spend. splurge.: The big banks hold the bag. No country is currently as powerful as Goldman Sacks:). You have to take into account that all money exists as debt:
        so unfortunately for us, if we stopped having debts, our current system would not work at all.

        • raluca

          @raluca: Also, when the banks fail, somebody has to bail them out. The too big to fail ones are paid for in higher taxes by the citizens of their country.
          This is a new type of capitalism in which profits are private and losses are spread around to the little people. An the rich are getting richer and the poor are getting poorer, by having their previous safety nets dismantled. You can read “Capital in the Twenty-First Century” to get an inkling of where we’re going with this.
          At a personal level, you can protect yourself by not carrying debt and investing in assets that will keep producing for you.
          At a society level, we would need a major restructuring of the current system in order to go towards a society that is not stacked against the poor and for the wealthy. What this major restructuring would be, I have no idea but if I were emperor of the world, I would tax inheritance a lot more and make sure that the chance for a better education is freely available for everyone on Earth.

        • save. spend. splurge.

          This is rather scary that a company can be so powerful… Although the company holds all the money but also for investors who invest with them as well.

Post a comment

Your email address will not be published. Required fields are marked *