More Debt

Category: Finance, Personal Finance.

In my opinion based on first hand experience the majority of people who have large debts have sleep walked into them.

Some people might argue that it is the individual s responsibility to look after their own finances and I would agree but from a young age in the society we now live in we are all primed and conditioned to take on unnecessary consumer debt. I m not saying it s their fault but what I am saying is society is set up in such a way that it s hard not to incur large debts. Now don t think I m saying all this to be controversial but the simple fact of the matter is that most debt is by stealth. Let me explain. Debt by stealth. As we make our way through life there are certain expenses we need to incur to help us on our way and there are other smaller discretionary expenses that we don t need to but feel obliged to incur.

Mortgage Debt: Mortgage debt can be justified by the need for somewhere to live right? Let s first take a look at the bigger debts we face in our lives. I mean that s a no brainer. You bought because everyone else was buying right? Ok but think about it for a minute- the global property market has rocketed for the last 5 years. You had a family to support and the banks were literally throwing money at you. You were secure in the knowledge that we were all in it together .

Everyone else was doing it right? You took the plunge and things went your way. for a while. What the heck? The value of your house grew in double digits for a couple of years and you thought that you were on easy street. You thought, lets just drawn down some equity and go on a nice holiday. So off we go to the furniture store to rack up some more debt. Consumer Debt: So now you have the house- well wooden crates for tables just won t cut it.

The guy in the store seem to be offering a great deal with his low monthly repayment options on that sofa. On a lease plan of course. The 28 inch screen TV that you had looks a bit dated so you got one of the new 40 inch plasma screens. More debt! They don t seem to have much stealth but let s continue. So far the debts look fairly easy to spot. The debt bite: The house, the furniture, the TV- all funded with debt.

Now we are in a situation that most people with this lifestyle find themselves. Nothing new here you say. The monthly payments start to take a big bite out of your monthly take home pay. Here are some of the so called necessities of life- that new outfit, the morning decaffe latte, the nice gourmet sandwiches for lunch, the expensive two week holiday, the trendy trainers, the latest ipod and the list goes on. This added to the college loans you are still paying off leaves you with very little to spend on the necessities . If you sat down and analysed the outgoings on these necessities it would not be hard to see how they all add up to a whole pile of debt because the chances are that most of the items on the list( and a whole lot of other items) were paid for using your credit cards.

Looking at your expenditure on a single day basis the expenses don t seem to add up to much. Credit cards can be very useful if used properly but that s the focus of another article. True, on a daily basis these expenses look small and manageable but taken over the period of say a month then they don t look so small and manageable. So if you like you have the long term debt- i. e. debt that has a repayment schedule that is greater than one year for example mortgage, college loans etc, car loans. then these little necessities that add to your short term debt situation. What is even more telling is that these expenses are not taking into consideration the loan repayments. By being a drain on your daily finances these little things all add up to take a big chunk out of your monthly take home pay.

You end up either hitting your overdraft every month or adding any excess expenses on to your credit cards. If you compound this spending behaviour over a year then the real impact starts to show. Take this behaviour over a number of years and you have a problem situation. As you are probably beginning to see Debt by stealth is an ever present threat. The problem is that unless there is a shift in behaviour then there is serious trouble ahead. You turn on your 40 inch plasma screen TV and you see the adverts bombarding you with information and trying to seduce you into buying. Everything and everywhere there are debt threats.

On your way to work listening to the radio or checking out the billboard advertisements, same thing again they all want a piece of you or more accurately they all want a piece of your money. Western society is built on consumer spending, it s the keystone of capitalism. But wait a minute, who says that you have to overspend? Spend or die. Where is it written that we have to keep up with the Jonses? The loans needed repaying and as soon as you left college the pressure was on to find a nice stable job so that the banks could stake their rightful claim on your income. Student Loans: To get you through college you probably had to take out student loans.

I suppose at the time it made sense- a trade off between getting a good education and good job versus taking out a small student loan. The banks hope to get you into the borrowing habit at a young age so they have you as customers for life. If only it was that simple- yeah sure you needed the money at the time and college is very expensive but the problem is it sets the tone for the rest of your life. Pretty smart eh? Oh no not that tired and hackneyed phrase. Keeping up with the Jones. I m sick of hearing that- you say.

Instead of the Jones if we used the word peers or friends then I think you would appreciate the sentiment in the phrase. Well sure it is a tired phrase that people seem to throw about but it does hold a lot of truth. Too often we find ourselves forced into a race to keep up in monetary terms with our friends, neighbours and relatives. The neighbours have the latest car- we feel obliged to match them. It gets to the stage that we are running just to stand still. Our friends go away on a two week vacation to the Far East. Ultimately we end up in a competition that we just cannot win.

We have to go one better. We get stressed from the constant need to keep up, the need to maintain our social standing by spending. So what to do? Sure its nice to have nice things but where is the glory in having nice things yet being kept awake half the night worrying about how your going to make next months car payments? Wake up. Then one day they realise that the money they are making is no longer enough to cover the bills.

As I said at the start of this article, it is my opinion that the majority of people sleep walk into debt. What usually happens then is denial. If I ignore it, it will go away. It can t be that bad. And so the spiral continues, until they are, downwards faced with foreclosure and bankruptcy. It doesn t matter how bad your situation may seem, no matter how little income you currently have, no matter how many creditors are calling. There is another way.

There is another way out. Then WAKE UP! You want to solve your debt problems? I m serious its time that you WAKE UP and took a long hard look at your debt situation. Since this is the case then you need to take control of your finances and reign in your spending, look to pay off your loans early and maybe even consolidate your debt. No one else is going to help you but YOU! There are numerous strategies to eliminating debt but you have to first realise the hard cold facts about your current debt situation.

All that the likes of this website can do is to provide you with information, tools and guidance but it is up to you as you go about your daily business to make the small and eventually the big changes to your spending and saving habits. Its up to you- you are your only hope. So saddle up for the ride. Go on I dare you. http: //www. untildebtdouspart. com No its not going to be easy and yes it will take time but if you are will to change and are committed to the fight and are willing to learn and work hard then there is no reason why you will not be successful! !

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