Why are so many people in debt?
Everyone seems to be deep in debt; governments and individuals alike. Debt is a form of slavery. In most cases debt works against prosperity and healthy living. The high level of indebtedness is a phenomenon that has been growing since the end of the Second World War. It started with housing, and then went into automobiles, then into student loans and everything else with the widespread use of credit cards. Who do we owe all the trillions to? That answer is for another blog. Time has come to stop living in denial and face our debts. Mortgaging our future to indulge in the present is not the way to live!
1) Financing growth through debt can be a disastrous proposition especially when there is a major shift in the economy; like what is going on right now. The fiscal cliff is real. The largest wealth transfer in history will occur during the next economic downturn. The loss of homes and cars is a real possibility during the upcoming economic contraction. There will be very few places to hide.
2) People get into debt because of ignorance, indulgence, and poor planning or poor thinking. People get into debt by over purchasing housing, cars, and failing to plan for predictable expenses like car/house maintenance.
3) Avoid accumulating long term debt. If you do so make sure you can service and repay your long term debts. Learn to face reality and develop and carry out a plan to pay off all debts. Faithfully pay all your creditors.
4) Never speculate with borrowed money especially during current times.
5) Never let the get-rich-quick mind set in. Understand the principles of wealth creation.
6) Accept responsibility for your life and live within a financial plan. Failing to plan is planning to fail.
7) If you cannot buy on cash, you have not earned it yet, meaning you do not deserve it. If you have to finance your entertainment and recreation, it is not time to play.
Only keep the level of debt you can service no matter your economic conditions or circumstances.
Be blessed and be a blessing to others
Carlos Fontana, President of Phalanx
Co-author of the book Follow to Lead (The 7 Principles to Being a Great Follower)
Author of the book PRICELESS (Sixty-Six Simple Stories of Reflection, Love, and Legacy)