We All Have Debts

We all have debts of one sort or another. For some they are big debts that are beyond our ability to cope while for others they are more manageable. If you are one of the lucky ones, or one of the wise people who saw the debt crisis coming, you have a manageable debt that causes you no great distress but almost certainly it will cost you money in interest and other charges.

Debt became a way of life throughout the 1990′s and early 2000′s. Everybody succumbed to the desire to buy stuff and we used the credit cards that the banks and financial institutions were offering us like confetti. Every day when you checked your post it seemed there was yet another offer of a loan or a credit car.

No fee, low interest rate charges, 0% interst transfers, free this and free that offers when you signed up. It seemed everyone could borrow more money to spend and go on doing it forever. Well, of course it couldn’t go on like that. Some of us saw it coming but even those of us who did were transfixed by the flow of easy money and the enormous gains in value we were told we were making on our homes. How could we go wrong by borrowing a bit more money?

Well, all it took was a housing market stumble and suddenly we were not worth as much as we thought we were. Suddenly our debts were a much more significant percentage of our supposed wealth and in some cases much more than the value in our homes. We were facing up to a debt crisis.

It doesn’t take all that much to take you from a credit worthy consumer to a debt ridden low credit score person. Most of us live according to our income and it wouldn’t take much to move us over the line from comfortable to struggling with debt. In many cases it can happen without any warning or intent on the person it happens to.

One significant financial event or expense can tip you over the edge. Medical bills, significant home repairs, divorce or being laid off can turn your life around and take you from being the happy go lucky person who enjoys a comfortable life to a person who worries every time the phone rings. Someone who finds it difficult to open the mail because you know the bills will be bigger than the money available to pay them and it makes you sick with worry.

Most of us do not want to become a bad debt statistic. Most of us are honest people who want to repay our debts and wouldn’t dream of defaulting yet invariably the finance companies treat all debtors like they are scum who are trying to avoid their debts.

The world looks like a different place when viewed through the eyes of someone with little money and large debts. Suddenly you find yourself checking the price of every item you buy in the food store. You compare prices to check you are getting the best value you can. No longer do you simply place things in your basket because they look interesting without even looking at the price. Now, the price is the most important thing about the product.

There is light at the end of the tunnel. There are always solutions to debt problems. The solution may be a struggle and may involve sacrifices you would rather not make but being honest with yourself about your situation is an important first step on the road to debt recovery.

Start by understanding your situation. What is your income, what are your essential expenses and what is the difference. We will look at how to go about doing that in another article.