Money: pounds 200,000 worth of trouble

George Snow's worst mistake was getting heavily into debt to equip a showpiece studio that soon became obsolete. He talked to Corinne Simcock

George Snow, 47, is an award-winning graphic designer, television director and video artist. After being expelled from Hornsey Art College in 1970 for striking the head of department, his career began working for Oz magazine and a number of other underground publications. Today he is a partner of the Society of Workers in the Incandescent Media (SWIM) - which designs Worldwide Web sites on the Internet.

In the 1980s my first computer was a little Sinclair which cost around pounds 100. I was so thrilled with my new toy and the fact that I could actually program it that within two months I had gone to my bank and asked for a pounds 4,000 loan to buy a bigger and better machine.

Before long I was totally obsessed with writing programs. I started buying all sorts of add-ons so that I could do colour graphics and pretty soon I was sufficiently good that no one could understand what I was doing.

At that point I decided to become a video director and put all my snazzy software ideas to good use. I was very fortunate in that I became successful very quickly. The more successful I became, the more money 1 was paid, and soon it was time to expand my working environment.

I bought more computers, more video machines, more sound equipment and so on. I was very comfortably off, the work was coming in thick and fast, and my reputation was getting better and better.

The total cost of the equipment was around pounds 200,000. I paid about a third of it from my profits and the rest was raised by increasing my mortgage and taking out bank loans and overdrafts.

But suddenly, in the early Nineties - almost as if somebody had switched off the lights - interest rates went through the roof and simultaneously my work just evaporated.

To cap it all, the wonderful working environment which I had created began to go wrong. The machines needed servicing; they became less and less functional as time went on, and by about 1994 I found myself with a studio full of obsolete equipment and a lot of heavy duty loans.

My accountant had told me I would get 10 per cent depreciation on capital expenditure over the year, but in fact both the Inland Revenue and accountant knew something I didn't, which was that all of that stuff goes out of date or loses value dramatically.

My broadcast video equipment actually depreciated by 50 per cent a year. I had a vision mixer which cost pounds 16,000 and an edit controller which cost pounds 12,000, but when I went along to second-hand equipment dealers they just laughed at me. "You can't be serious," said one. "Nobody wants that sort of stuff; you can't even sell it in Iran or Algeria."

It will take me until the year 2003 to pay for equipment which is now worse than useless, because I can't even give it away.

The first lesson to learn is that you should never buy what is known as a "turn-key" system, in other words, a system which only has one function: a vision mixer which only mixes vision images, or a sound console which only mixes sound.

Today, just one capable computer with the correct software can replace all of that dedicated hardware. So whenever I have to invest in more equipment, I make sure it can do a range of tasks.

In those days, there weren't so many choices. Everyone was terribly impressed when they saw my studio in the late Eighties, but if I had had more sense I would have hired its equipment rather than bought it.

It was all right to borrow as much as I liked on my rising income, but as soon as my income fell and my repayments rose dramatically, I was in big trouble. My mortgage alone had risen to pounds 2,700 a month, and for two people this is a hell of a lot of money to find, but on top of that I was paying pounds 875 a month for a business loan.

The upshot is that although interest rates eventually came down and my mortgage, dropped to pounds 1,700 a month, the only sensible thing to do was to sell the house in London and buy a flat elsewhere.

If I'd been sensible and sunk my money into the house, I would have had a much greater degree of security. On the other hand, that would have been boring. I can't honestly say I have any regrets, but I certainly wouldn't advise anyone else to make the same mistakes.