Diva Zone ™ Magazine Diva Zone January February 2018 Printer File | Page 12

12
Debt Factors That Enslave
by Jay Brunson
1. Easy Credit
Since the bridging years of
the new millennium, it was
easy for consumers to obtain access
to credit. It wasn’t that long ago when
a slew of 0% interest credit card off ers
were being sent to the mailboxes of
many Americans. Credit was so easy
to get. Many consumers learned how
to leverage their credit card rewards as
well as balance transfer cards in order
to make money.
During the period of easy credit,
many Americans played the credit
card arbitrage game by taking cash
advances and balance transfers from
their credit cards, then invested the
money into a then rising bull stock
market.
The fi rst decade of the new millennium
consumer debt ballooned due to
subprime loans, jumbo mortgages and
other forms of costly debt. These high-
risk fi nancial tools were used by many
Americans consumers, often with dire
results.
2. I want It Now
As a nation, we’re impatient. We want
immediate gratifi cation of having the
stuff of life, even if we can’t aff ord
it. We live in a highly consumerist
society that encourages materialism.
Overindulgence is the norm. It’s all
about more, more, more right now!
Money that should be funneled into
high interest savings accounts or into
high yield savings are instead being
used to keep up with the Joneses, a
syndrome that many of us embrace,
and which has caused many a
household to become enslaved to
consumer debt.
of
3. Lack
Financial
Education
Many of us didn’t learn about
fi nance while in school and
instead are picking it up a little
bit at a time through trial and
error. Unfortunately, this lack
of understanding and awareness
about money management has many
individuals vulnerable to making many
fi nancial mistakes, which tends to land
them squarely into the depths of debt.
It’s time that Americans stop blaming
the system for their lack of fi nancial
education. It’s time to take it upon
ourselves to learn the fi nancial ropes.
We live in a country where information
is all around us. There is no reason any
American should be fi nancially illiterate
when you can become informed and
educated for free.
There are the libraries and the internet
for fi nancial material and resources
such as money management tools,
budgeting tools and investment
software that are available at no cost.
Lack of
4. Accountability
We’re not accountable for our actions.
Many Americans procrastinate when it
comes to their fi nances, go into denial,
or sweep things under the rug when
they get into fi nancial trouble.
It’s easy to blame the government or
the fi nancial industry for causing the
rifts in our economy, but we’re just
as guilty about causing the crisis as
they are. Both lenders and borrowers
contributed to the subprime lending
boom, subsequent bust and credit
crisis, but guess who’s getting the lion’s
share of the blame?
Debt As A
5. Cultural
Phenomenon
In other cultures, debt is profoundly
frowned upon and is only cautiously
used by households.
But in America, debt is socially
acceptable and embedded into our way
of life; it carries no stigma. If bankruptcy,
foreclosure, debt and being broke are
things we easily accept in our culture
and way of life, then these aren’t things
we’d readily condemn (or worry about)
until too late or until we’re forced to
face the painful consequences.
When the fi nancial house of cards came
crashing down last year, it prompted
the government to start making some
changes; they’ve since introduced
policies that help regulate the fi nancial
industry to some degree (e.g. credit
card rules) but in many respects, it’s still
pretty much „business as usual.”
Instead of worrying about what the Fed
or White House is going to do next, we
should focus on the things we have
control over, and take responsibility for
our own fi nancial freedom.