Debt – How You Got Into it and How You Can Get Out of It

If you’re in debt, I’m here to throw you a lifeline.

I’m about to show you why you’re in debt – and how you can start getting free.

And there’s nothing for sale here – other than some hope.

So how did this “Plague of Debt” begin – and how did you get ensnared in it?

The causes are:

• credit cards
• the dehumanizing of banks
• the ruthlessness of advertising
• the lack of any counter-balancing forces

Let’s look at each cause – and then we’ll examine how you can “stop the bleeding” and start getting out of debt.

Credit cards are an obvious cause and they are highly visible so they can be easily blamed as the demon. Studies have shown that people spend 25% more using credit cards than using cash. Why? The reason is that using cash forces people to connect the dots between the amount of money in the wallet versus the amount of money needed for the purchase. Unfortunately, the beauty of credit cards is also its curse.

Credit cards decouple you from the strong connection which there should be between how much money you have available and how much money you need for a specific purchase. Once decoupled, the excesses flow effortlessly. Even if people attempt to be responsible, they cannot. Why? Because a typical credit card user cannot keep in mind exactly how much has been spent; such work needs to be done on paper or on computer. Keeping track in the mind is doomed. Also, even if perfect track is kept, such tracking assumes that everything will go as planned. So, when any ’emergency’ occurs, there is a sudden ‘unexpected’ problem.

Now let’s look at banks. It used to be, decades ago, that a bank was a friendly loans officer who actually knew the borrower and indeed usually knew the borrower’s whole family and all the stories of that family. The loans officer cared. The loans officer was a member of the community who knew the borrower outside of the banking interaction. Today, such a caring connection is gone. A borrower is a number. A loans officer has quotas and rules. Indeed, ATM machines these days can actually process mortgage applications. With the caring guidance of a money-wise banking mentor absent, dire financial consequences ensue both to unaware borrowers and imprudent banks.

Next on our list: advertising. Advertising has become insidious, ruthless and ever-present. With data mining as an entire industry these days and with advertising hiding behind such new-age masquerades as “buzz marketing” and “social networking”, people have less and less ability to protect themselves against advertising. People now are bombarded with the lure of lots of bright shiny objects and are falling to such advertising attacks. If an advertising campaign does not lure enough people, it is scrapped. If an advertising campaign does work, it is NOT reused. Rather, it is “split-tested” meaning that it is reused partially and changed partially. Then the two slightly different ads are compared. If the slightly different ad works better, then the process continues, making the ads cleverer and cleverer and more and more irresistible.

Finally, and perhaps most importantly, there are no counter-balancing forces. There are no huge advertising campaigns encouraging prudence in spending. There are no giant media blitzes promoting wise savings. There is no funding for marketing extravaganzas to sell carrots – but there is lots of money to sell sugar-filled drinks, fried foods, expensive do-dads, name-brand this-and-that’s, etc. With billions cleverly spent to woo you to spend on what you may well not need and cannot afford and nothing spent on the other side, it is no surprise that you overspend and arrive into debt.

So what’s the cure for debt?

How do you get out of debt?

I intend to be writing more about this in the coming days, because I feel it is an epidemic and someone needs to do something to stop this tragedy now.

I can tell you this much: the answer is not in some “big government” solution or more regulation. The solution is much more personal, and it starts with harnessing your own Inner Consumer.

Before you can do that, you have to pass through several levels of awareness about your debt. More about that next time. For now, I’d love it if you would share your thoughts – and maybe your questions – about debt and how to get rid of it once and for all. Please share in the comment section below.