“I can get no remedy against this consumption of the purse: borrowing only lingers and lingers it out, but the disease is incurable.” Shakespeare.
Borrowing money is for fools – incompetent suckers. In business, and at home, there is rarely a need to borrow. People borrow because they don’t have sufficient funds. They don’t have sufficient funds because they don’t save. If they can’t save, how can they repay a loan?
Loan payments sink businesses. They destroy families.
To borrow money is to incur debt. But it’s worse than that – to borrow is to incur an obligation far greater than the debt. It’s an obligation many people regret. It’s an obligation we can live without.
Sadly, few people see it this way. But consider this: it is estimated that the average family spends one hundred and fifteen percent of its income! Many business do similar. They do this by incurring debt. Debt that creeps up, slowly, like the tide, until before they know it, they are drowning in an ocean of misery.
We live in a society besieged by debt. Collectively, we owe billions of dollars. Our debt level far exceeds our savings level. The evidence of the misery debt causes is rarely discussed. When a person incurs too much debt, enormous efforts are made to hide this plight. The shame is too much.
‘Cash flow problems’ is the standard phrase to explain an inability to meet the obligations of debt. Cash flow problems simply mean too much debt.
Society has been conned. People believe borrowing money is smart. All sorts of phrases are used to justify this stupidity. Those who gain most from borrowing – the lenders, encourage these phrases. Look for the visual clues – which companies have the biggest buildings, which institutions show the biggest profits? Lending institutions! How do they become so profitable? It’s not by lending the money, it’s by receiving it back – plus interest, plus charges, plus penalties. Plus, plus, plus. These pluses add up to huge profits for lenders. For every plus, there is a minus. As the pluses add up to profits, so the minuses add up to losses – for one group, the borrowers.
Most borrowers are naive and very gullible. They are also decent, honest, hard working and dependable. That’s why lenders like them so much. It is considered an honour to have a good ‘credit rating’.
It takes no intelligence to borrow money. All you need is a fine character, a good job and perhaps an asset. People with bad characters are safe – lenders don’t want them. But the average person is prepared to commit to a lifetime of borrowing, of working day in and day out, to honour their obligation of debt.
Such people spend a lifetime enslaved to lenders.
Consider car loans. Before the loan is paid, the car needs replacing. The lender convinces the borrower that the payments are similar and a new car can be obtained (and won’t that look good!). Another ‘debt junkie’ is hooked again.
We are told interest payments are tax deductible. Losses are tax deductible. The more tax deductions, the lower the tax. Let’s turn this around. Let’s make some profits and pay some taxes!
The borrowing plague is a national disaster. It is a social disgrace when something that causes such misery is so universally tolerated. Leaders in government, in industry, in business, in social services, in education – leaders everywhere – need to acknowledge that debt is dangerous. It is bordering on ‘an evil’. There must be more publicity given to the danger of debt, to the ruinous effect it has on lives and businesses.
Debt warnings basically do not exist. It’s high time they did.
People worry constantly about their debts, the bills they have to pay. If people could see how bad the debt is in other people’s lives, they would be mortified. People won’t readily reveal what they owe. It’s not socially proper to be unable to meet debt obligations. And so, millions of people struggle on in silence, somehow hoping that one day all will be well.
It won’t. As one loan finishes, another begins. Debt is addictive, it is destructive and it must be discouraged. There are better alternatives. People need to be educated to find an alternative to borrowing.
One of them is saving, another is going without until you can afford to pay cash. There are few better feelings in life than to know there is no money owing to anyone, that all is paid, all is debt free. There are few worse feelings than knowing tomorrow all could be lost. That lender who smiled so sweetly, who told you in that supercilious fashion, “Congratulations. Your loan is approved“, can turn very nasty, very quickly. Try missing just one payment and see how you are treated!
Yes, the critics will come out with their ‘buts’ and their smarmy debt justifying sentences. They will show that borrowing is smart in some cases. They will say you need to ‘free up your capital’ (when you know you don’t have any). “We’ll pay for the cost of the loan out of the money we save,” says the debt junkie. Wrong. Save the money and then pay – that’s the right way.
As much as debt can be justified, it can also be vilified. As much as it is argued for, so it can be argued against.
The only real test is to look at those people who have achieved true happiness, the happiness of feeling at peace with themselves and the world. Few have big leases, big mortgages or big overdrafts. Most have no debt. It’s a wonderful feeling to have more money than you owe. In cash, that is.
Borrowing should never be an option.
Have the intelligence, the discipline and the wisdom to find another alternative.
Once you do this, once you learn to live without debt in your life, see how you feel, see which side of the fence you sit on. Interested?