Yesterday I watched ‘Property Ladder’. Yes, I know! However I was quite shocked. It featured a couple in their early 20s who had debts totalling £50k. This included credit card debts, students loans etc. That’s a lot of debt!
Their way out was to take out another loan of £60k to buy and renovate a house to sell and try and make some money to pay off part of these debts. A risky strategy no doubt! But how may other options did they have?
As I was talking to various close friends about how much personal debt most people carry, phrases such as “living within your means” and giving children “pocket money” in order to learn to budget came up. Personally I agree that including something on mortgages and interest rates on the same part of the school curriculum as learning about society would be useful. But I don’t believe that some of the underlying problems are something that any government can really legislate on.
This is about personal responsibility: mortgages and student loans are now the ‘norm’. Admittedly we’d all rather not have them, but to most people they are a necessary part of life. However, is ‘maxing out’ your credit card for the latest designer hand bag a similar essential? We live in a society where debt is much more accepted, but why?
The endless stream of debt people are acquiring is completely unsustainable. It means that the economy is built on consumption rather than production. Clearly there are two types of debt, unavoidable debt, and extravagant debt. (Yes, maybe some grey areas in between). Whatever the type of debt, interest rate rises will hit people hard but even more so if they have lots of debts, especially at the penal rates of credit and store cards, as opposed to one big debt such as a mortgage.
Finally, how can anyone ever save for a pension, as it looks as if we’ll all need to, if you’re up to the eyeballs in debt? This seems to be a problem that can only escalate until we start learning to look at our financial situation more seriously. Perhaps living a life we can afford to as opposed to living the life we aspire to, before we have the means to do so.
Please don’t misunderstand me, there is nothing wrong with aspiration or ambition, quite the opposite in fact, but we need to be able to afford the Ferrari before we buy it!
Posted by Administrator on behalf of Midlander’