If you’re not worried about your Growing Debt, you don’t understand the problem!
The greatest threat to the future prosperity of modern civilisation is the rampant growth of individual and national debt throughout the world. The debt bubble is bulging dangerously and unless the world does a swift about-turn on the current paradigm of ‘consumption by credit’, this bubble is going to burst… and things are going to get ugly.
The size of the problem in developed nations
Household debt levels are reaching epidemic proportions in almost all the developed countries where household-debt-to-income ratios far exceed 100% (e.g. US =134%, UK=157%). This means that many people in these countries use their entire monthly income to pay off debts and then have to borrow more money to buy even basic necessities each month… increasing their debt burden.
The extent of the problem in South Africa
In South Africa, the household-debt-to-income ratio is around 78% (more than double the banks’ allowed maximum of 36%), leaving an average of R22 out of every R100 that South Africans earn each month (after tax) to buy food, clothing, toiletries etc and pay for school fees, water and lights, insurance, entertainment, holidays etc… no wonder the rate of household saving has declined to virtually nothing.
While the situation in SA isn’t as bleak as the rest of the world… thanks to shrewd financial policy and the enforcement of the National Credit Act… South African families are still in crisis, with 60% of economically active people being unable to meet one or more of their debt obligations each month.
Why? Because they’ve been spending more than they earn.
Why? Because that’s what having access to credit allows them to do… and so they do.
Is credit the poisoned apple of modern society?
The world has gone mad and the virtue of foresight has become a relic of generations gone by. Access to credit together with society’s obsession with instant gratification, social climbing and excess has overwhelmed people’s sensibility and is leading entire nations to the brink of financial collapse… one citizen at a time.
Rather than using credit to buy assets that make them money, people are using credit to finance lifestyles they cannot afford and buy ‘things’ that cost them money. The use of credit has become an accepted way of life and has bred a culture of entitlement and excessive consumption… a lifestyle with painful future consequences.
For society in general, the temptation to satisfy consumption needs using credit is far stronger than people’s desire for financial security. Human weakness therefore, is the culprit behind the growing debt problems of individuals, families and nations… not credit.
The consequence of financing your lifestyle with credit
Every time people submit to the temptation to buy another luxury or non-essential item on credit, they reduce the amount of money they have available to spend or save each month.
If they keep doing this, eventually their entire income is swallowed up by debt repayments, leaving them scrounging for cash to pay for essentials and unable to afford any additional comforts or luxuries, i.e. they end up struggling to survive.
How much control do you have over your growing debt?
Many people blame the state of the economy, high taxes, the increased cost of living, interest rates, government corruption, banks, creditors and other external forces for their financial woes. Those who end up facing the agonising experience of being overwhelmed by debt, often blame credit itself.
However, these are all just scapegoats for the truth and excuses to avoid taking responsibility.
The truth is that none of these external factors ‘force’ people to; live in a better suburb or bigger home than they can afford, or drive a sexier car, eat out regularly, buy a bigger TV or trendier couch etc.
These and all buying decisions are decisions we choose to make… and proceed to justify and defend.
Each of us is responsible for our own financial successes and failures, which are the consequence of the choices we make when it comes to how we use our money and credit… and WE are in total control of the choices we make.
How can you avoid becoming a casualty of debt?
Just because the majority of people in South Africa and the rest of the world are getting deeper into debt, doesn’t mean you have to… because each individual is in control of their own spending and saving decisions.
When you acknowledge to yourself that being in debt is a choice that you make and have total control over, you will discover how much power you have over shaping your financial future… because if you can choose to get yourself into debt, that means you can also choose to get yourself out of debt!
If you want to avoid becoming a casualty of debt, you need to eliminate debts that are costing you money from your life… and start NOW.
A compelling alternative to living in debt
No-one likes being in debt, yet most people believe that the use of credit is essential to their survival, growth and success in the 21st century… but that’s really just a self-justifying excuse to continue buying things they can’t actually afford right now.
The alternative (living debt free) is not only possible, but also far more appealing, empowering and rewarding than watching your quality of life and personal security steadily deteriorate because of growing levels of debt.
To live debt free doesn’t mean that you stop using credit all together, it simply means that you change the way you use credit! You are debt free when your debts are making you more money than they are costing you, i.e. they are making you wealthier. This is far easier to achieve than people think.
I went from debt ridden to debt free in less than two years.
I lost everything I owned early in 2000 because I was doing what everyone else was doing… financing my lifestyle with credit. Following that agonising experience, I decided to only use credit to finance investments that made me money… and pay cash for everything else.
By changing the way I thought about and used money and credit, I turned my financial situation around completely and paid off over R1million in debt, cleared my credit record and became debt free within two years.
Today I have a healthy portfolio of investment properties and have the peace of mind that all the luxuries, comforts and essentials in my home are paid for. I now watch my Net Worth grow monthly rather than see myself getting deeper into debt and I enjoy a far better lifestyle than I ever did when I relied on credit… and you CAN too!
When we know there’s a problem, we tend to do something about it.
Most people who end up in financial distress are caught completely off guard because they didn’t recognise the signs that pointed to the growing problem in their life. Read my article “The top 10 signs that personal financial disaster is imminent” to see if any of these signs are present in your life.
We will only take action to solve a problem when we know there’s a problem in the first place. When we understand how severe the consequences are of failing to solve the problem, we become highly motivated to take immediate and consistent action.
Until next time… make the decision to live your life debt free and find out how other people have achieved this rewarding goal… you’ll be glad you did.
To your Wilde Success
CEO Wilde® Insights
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