The need and demand for credit has been with us since the whole concept of money was first introduced. And over time the vast majority of us will have to bear some form of debt. Whether it’s a mortgage, one of the biggest debts, you could ever have and then you have all the other miscellaneous debts such as credit cards, unsecured loans etc.
But the debts which tend to get us into debt are sometimes those that start off with us from an early age and get us into the debt cycle and which we can’t shake off for a very long time or may even be with us for a lifetime.
For example, we hear every day about student debt. This is due to the increasing cost of education and funding students through university years. Although in a lot of cases the parents do fund their kids a lot of students take out student loans to help cover their education.
After leaving university, and laden with debt, a student then becomes par of the working mass where the introduction to ‘free’ credit becomes a daily tease. Credit card companies bombard us with adverts on TV and junk mail through the post. It is just so easy to get your hands on multiple credit cards, all offering at least £5,000 credit limit, and some offering twice that amount, simply by filling in a short application.
The debt starts to mount even more and before you know it you are deeper in debt and your salary starts to increase too, so you feel able to keep up with repayments. This can lead to a false sense of security while you continue to spend, and mainly outside of your limits.
You then realise that your debts are out of control and what do we do? We then take out a debt consolidation loan to ‘take care’ of all the debts and this in turn commits even further to the lenders. And don’t forget that we may also have a mortgage running alongside our debt consolidation loan giving us two major ‘debt’ commitments. And the inability to keep up with repayments on both could result in the loss of our house.
So how do we avoid this whole cycle of debt? It’s easier said than done but to me it’s the same as when asked how to lose weight. Easy! East less and exercise more. Simple!
The same is true of avoiding the whole cycle of debt.
At the start of your working life make sure that you pay off all student debt before you think of taking on additional credit, whether it’s through credit cards or even over-drafts at your bank.
If you can’t afford to go out and buy all those expensive toys that all your friends seem to have then don’t buy them.
The bottom line is ‘live within your means’. It’s a simple concept that the vast majority seems to have forgotten over time as we have become seduced by the whole image of keeping up with the neighbours and the ease to which we can get our hands of credit.
Yes, the credit card companies have to take some of the blame but our lack of self-control is the biggest problem. So, we really only have ourselves to blame.
Simple money management is all that’s required to avoid falling into the debt cycle and the sooner we realise this the sooner we can start living and understanding how to use money wisely and too our advantage rather than seeing it as a noose around our necks.
Paul Hockney is a debt advisor who provides
debt help information and tips at several online debt help sites.
