How quickly things change! With lightening speed, words enter our language and trip off the tongue while others are discarded, just as rapidly. The Oxford English Dictionary grants official status to new words with every edition. The British press wait eagerly, for the list of what is in and what is out. I really wonder how they can continue to keep up now. This isn’t just the language of the street we’re talking about either.

Six months ago, if someone had asked you what credit crunch meant, what would you have said? I thought a lot about this. I’m sure I would have thought it was an exotic breakfast cereal, perhaps including some freeze dried strawberries that counted as one of my 5 a day…

Now we all know exactly what it means. It means people have spent more money than they had. The money was lent to them by banks who had already lent money to US banks so they could give out “sub-prime” mortgages (sub-prime means people who can’t afford mortgages in the first place but, hey, it was worth a punt). Now those poor “sub-prime” people are living in tent camps outside LA and can’t pay, so the banks can’t pay the other banks, they borrowed from, some in other countries. This means that banks overextended themselves and the odd one has had to be rescued by the government on behalf of… well the people who borrowed the money they couldn’t afford in the first place, but we can’t blame them because the bank said they could.

Now, no-one has any money to spend and none to lend (where on Earth did it all go?) so we’re all getting crunched in the credits. When we go to the supermarket, apparently, we don’t want two for the price of one any more - oh no. We don’t want more stuff, we want to spend less money. So, the supermarkets tell us, we want discounts instead of Buy One Get One Free. So now, they give us a third off instead (??!). No, this is nothing to do with their profit margins, they are just giving us what we want.

Back to language then, the net result of all this means sub-prime and credit crunch are in, while a dear friend suddenly finds itself out in the cold. Bogof, must sadly, bog off.

This article appears in The Carnival of Personal Finance No. 152 at Money Under Thirty.