Debt 101: Session 4 - You can’t deny it!

September 4, 2008 by Lindsay
Filed under Debt

Last week we focused on how saving money is a conscience decision. The flip side of that is also true; spending money is a conscience decision. We are bombarded on a daily basis with decisions to buy things. It’s the American way to have great stuff and a lot of it. You walk into a mall and there are elaborate displays in the windows to get you to step inside and buy some things. You drive down the road and there’s a big, juicy cheeseburger staring back at you just calling your name. You’re not even safe on her own personal computer. There are constantly pop-ups advertising all the latest and greatest in the gadget world that you just “have to have”. With all of these advertisements surrounding us all day long we are left with a choice. Do we give in to them and purchase that tv, or do we resist the urge to have more stuff?

The amount of people that are in debt today is astounding. It’s a shame that people have forgotten the power of the word “no”. Things that people used to consider a luxury item are in today terms a “need”. For example, the number of cars per household. It used to be the norm for a family to have one car. Now the average is a car per person. Even for me just writing that out seems odd. Only one car? What if there were three drivers in a household? It is weird for us to think about life being like that but if you really do think about whether or not you actually need that second car, you’ll probably discover that you don’t. My husband and I actually went without a second car for a few months. Now it wasn’t any long period of time, but during that time we realized just how much of a luxury item the second car was. We managed just fine with only one car.

Now, just how in debt are we? Federal Reserve Board estimates that revolving consumer debt in the United States totals $975.2 billion (statistic taken from www.indexcreditcard.com). That is an extreme amount of money. And to think that is all caused by our inability to say “no” to unnecessary spending and always competing to stay on top. After doing a little research online I also discovered that, “Americans are among the world’s most cash-strapped people”. Also, “nearly a quarter (22%) of Americans have no money left one they’ve paid for their essential living expenses and spent their discretionary dollars. The average American household with at least one credit card has nearly $9,200 in credit card debt”(www.cnnmoney.com). Not only are we as a nation getting ourselves into more and more debt but but we are continually getting so strapped for cash that the only way out is to file bankruptcy. In fact, the “total bankruptcy filings jumped 31% in the second quarter [of 2008] compared to the year ago” (www.cardweb.com).

All of the aforementioned statistics were a real eye-opener for me. I knew there was a large number of people in debt but it seems to be getting out of control and is growing by the year. It really doesn’t matter how much debt you’re in; debt is debt. If you think that because you only owe $2,000 that you don’t count, you are incorrect. My husband and I only have a small amount of debt but it doesn’t mean that we can just ignore it and pretend that it will go away. Although you may think that it’s too insignificant to think about, whoever you owe will not forget. You can’t deny the fact that you are in debt if you are. It will only escalate into a bigger problem if you do. There is no way for that debt to just disappear. Not only will it not go away with “forgetting” it, it will grow with interest that accumulates.

If you are in debt, no matter how large or small, I challenge you to get a game plan together for how you are going to slowly hack away at it. I also encourage you to reconsider filing for bankruptcy if you are at that point. It completely ruins your credit and it will be extremely difficult to get any sort of loan in the future. It’s time to take responsibility for your actions and start repaying anyone that you owe. It may be helpful to look at all the types of debt that you have and start to repay the ones with the highest interests rates. Once you get your game plan and have set your goals, tell us about it in the comments below. We’d love to hear about it and encourage you throughout the process. Good luck!

Tags: Debt, goals, planning