Debt - How People Get Into Debt And Stay In Debt

Debt is the scourge of modern-day society. Millions of people are literally enslaved by debt.

The severity of our debt problem can be summed up by a quote from Jim Cooper:

"It took the first 204 years of our Nation's history to accumulate $1 trillion in debt. And now we are doing that every 2 or 3 years."

And the reason why debt is such a huge problem is that we are literally programmed to get into debt. Personal finance management is generally not taught at school and so when you're thrust into the real world there's still a huge learning curve to overcome with respect to money management.

When you come of age and provided you've passed your driver's license you may get the keys to the family car or, if you're lucky, you may get the keys to your own car. Similarly, credit card companies have been patiently waiting to give you your first credit card or license to spend.

The big difference is that while credit card companies encourage you to use credit cards, they don't teach you how to use the cards responsibly. They simply encourage you to spend. Advertising slogans are very effective at doing this and people are exposed to these slogans on television, at the cinema, in newspapers and magazines and on billboards. So if you live in a city, it's hard to escape slogans such as:

"Life flows better with Visa."

"There are some things money can't buy. For everything else there's Mastercard."

And they are very effective at programming your mind on a subliminal level to use credit cards. But, placing a credit card into the hands of someone who hasn't learnt great money management skills and who doesn't understand money will eventually end up in disaster.

Some individuals are very good at controlling their spending so that they don't spend more than they earn. For others, a credit card is too much of a temptation. After years of not-so-subtle programming it's all too easy to pile expenses onto a piece of plastic and relieve that need for instant gratification.

"Credit buying is much like being drunk. The buzz happens immediately, and it gives you a lift. The hangover comes the day after."
Dr Joyce Brothers

These individuals go from paying off the outstanding balance on their credit cards to making part payment and they keep on spending. Sooner or later the payments become harder and harder to maintain. They slip from making part-payment to paying just the minimum and eventually there may come a point when they're unable to make payments at all.

But credit cards are just part of the problem. People are encouraged to take out consumer loans to purchase items such as automobiles. People take out a mortgage to "buy" a home and then, of course they need to furnish their home. So in many cases items such as fridge freezers, cookers, washing machines, sofas, etc. are all purchased with some form of loan.

So people actually get comfortable being in debt and, to a large extent, they remain comfortable even when things start to go pear-shaped and they can no longer afford the monthly payments.

You see, you have a money blue-print which is determined by your mental conditioning. This money blueprint determines the amount of money you earn, the amount of money you save and the level of debt you can tolerate. Your spending and saving habits are hard-wired into you.