The Debt Trap |
Posted: May 30, 2018 |
Until people fall into the debt trap, they feel they have made informed financial choices. Consumerism has played a central role in driving people into unmanageable debt, but that is just part of the story. One effective strategy in dealing with a debt problem is getting debt advice through a debt management plan. Help from a trained professional can help most people take control of their finances and get out of debt. The best lesson to learn is to avoid falling into debt traps to begin with. Faulty financial decisions in the beginning stages lead to accumulation of significant debt. A perceived smart financial move may end up being smoke and mirrors. Brands and even peer pressure can be responsible for money being spent on things which aren’t needed. But the bottom line is no one is accountable for your financial health other than you. It can be easy to fall for the ubiquitous ads which are meant to separate you from your money. With social media increasingly being a part of daily life, it’s hard to ignore the latest offers for the newest shiny object. Falling into debt is not your fault — at least in the beginning. Advertising, sales strategies, and marketing are geared to making people spend money. No matter how smart a person believes he is, these are sophisticated sales tactics and pierce even the thickest of skin. The debt trap can be defined as a vast cost broken into smaller, more affordable pieces. For example, not many can afford to put in a quarter-million on a house, but almost everyone can afford several hundred a month. This is where falling into debt begins. All the seller has to do is polish the situation and what was scary isn’t frightening. That dream car which costs $35,000 is now an easy $300 a month — just sign here. The Blame Game Convincing yourself that the ‘tiny’ monthly payment is affordable is where your brain has tricked you. Once the car is in your driveway, you see the idea of paying for it for years may be a burden. Suddenly the cost seems unbearable. The truth is, you couldn’t afford the bigger price then and you can’t afford a small price now. The pertinent question is simple. Did you need that car? Or did you want it? The answer is easy. You compared your situation with that of your friends. If others can drive a new car and be happy, why can’t you? Your wants have become your needs and, yes, you’re in the trap and failing miserably. It was more than just the car which got you into debt. When you got what you wanted, you started seeking other things to gratify some needs and provide a sense of accomplishment. Wash. Rinse. Repeat. The Takeaway When you are finally unable to handle the situation, you turn to debt advice from the experts. One of the first things they will tell you is to understand the difference between ‘wants’ and ‘needs.’ Once you get a grasp on the difference, you can learn how to avoid the debt trap the next time you encounter it. George Carlin, the American comedian, said that this is the reason for debt:
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