Credit Card Debt
There is no doubt that credit card debt is a major problem in the Western world. It is in the US and UK that the problem is at its most widespread and intense. In those countries credit card acquisition and usage is an addiction, whether or not those obtaining the credit cards can afford to borrow and, more importantly, pay back each month at the contracted level.
The level of the social problem with credit card debt is reflected in UK figures from earlier this year. In the UK credit card debt in February 2005 totalled £54.3 billion, that is almost £1 billion per million of population. Furthermore, it is estimated that 10% of adults have trouble with keeping up with their debts; in other words, they are sinking deeper into debt as each month passes, as they cannot pay the full amount due.
On average, each adult in the UK now has 3.5 credit cards. Why is there a need for so many credit cards? The answer is, there is no need. Visa and Mastercard are now so widespread, that having just one of those should suffice, or maybe one of each at most. An average of 3.5 suggests there are millions of people around with 5 or more credit cards.
Such a high number of credit cards is clearly not necessary. It is like an addictive drug; once the first credit card injection takes place, usually at a young age, a large percentage of people are hooked. They are reeled ashore like helpless fish to a land where credit is easy and savings are unheard of. Debt becomes a way of life that steadily erodes the fabric of their financial welfare.
Instead of accumulating sufficient wealth to make later years more comfortable, millions of people are sucked into a way of life where their hard earned money will be leeched from them, £ by £, $ by $, through paying way over the odds in interest. In many cases, as the debtor gets deeper into trouble, extra costs will diminish their assets as they seek counselling or are tempted by the offers of debt reduction experts.
Is There A Solution To The Problem of Credit Card Debt?
This is a very simple question, to which the answer is equally simple: "No." At least, as a social problem in the UK and US, credit card debt has passed the point of no return long ago.
However, there is hope for individuals. People who recognise the insanity of perpetual personal debt, and the high cost of servicing it, can fend off, or undo, the social brainwashing that has caused the problem in the first place. Those individuals can take control of their own lives, and especially their money, but educating themselves in the negative impact of credit cards.
This process of re-education, for the millions who need it, may be supported in some ways by governments and voluntary counselling services, but in the end it is down to individuals. Individuals who really want to overcome this insidious debt problem need to:
1. Recognize that credit cards are very expensive;
2. Understand that credit cards are unnecessary;
3. Think positively about generating and hanging on to hard earned wealth, not allow it to wash away to a corporate bank vault through high interest debt;
4. Learn to think "save and invest" instead of "spend more than I can afford, and give loads of cash every month to the bank."
5. Become addicted to buying for cash, out of savings, instead of credit card; worried about carrying cash? Use a debit card.
6. Be prepared to be different to your peers, many of whom are living beyond their means, are going down the pan financially, and will one day retire with nothing, as son many do.
7. Enjoy the wonderful feeling as you wriggle free from the constriction of the credit card boa, stand on your own two feet, and live a stress free life without the constant drain of debt problems.
Does that sound possible to you? Well, if you are a strong individual, it is. If you are prone to be dragged along like a social lemming, then it will be tough; very tough.