We live in a society where most people live beyond their means. My statement refers mainly referring to the middle class. The poorest of the poor generally have no choice in the matter but to borrow in order to have enough money for the basic necessities such as food and paraffin for the month. Middle class society is another scenario where citizens are drowning in unnecessary debt (generalisation).
People who think they are the only ones to desire expensive things piss me off. Everyone wants material goods. Everyone has expensive taste so to speak. If money was not an option we could all have designer clothes, cars and houses. It irritates me to no end when people refer to having expensive taste regarding items that they don’t have and can’t afford. The homeless man on the street then has expensive taste too! Just because you want it doesn’t mean you have a taste for it.
I think that there are many problems that lead to a cycle of debt, the ones that stand out for me are:
Problem 1: People cannot distinguish between a want and a need. Do you need a new tv/ipad/phone/car? You probably do not need it, but you certainly want it and you confuse this wanting with needing. Buying just the one small luxury item will not necessarily pose a problem but buying several and letting debt accumulate will. Advertising brainwashes us by leading us to believe that we need something. A belief that our lives would be better with it. Sometimes this is the case, but if you have a perfectly functioning item that serves the purpose that it is made for, do you need a newer shinier one? And more importantly can you afford a new one?
Problem 2: The façade of a dream lifestyle. People want to portray a certain image. This is a problem with young people that start working and spend more than what they earn to keep up an image. It is not sustainable, your parents might not always be able to bail you out and you could get blacklisted. Family units also tend to want to show off. They want to be better than everyone else. If people only want to associate with you if you have a certain image they are not the kind that is worth associating with.
Problem 3: Spending uncertain money you will get at some future time. So many people rely on bonuses and spend it before they actually know what it will be. If you have a guaranteed 13th cheque you know what you getting, if this is not the case you are then counting your chickens before they hatch.
They say the rule is that one should have 6 months of your salary saved up. I don’t think I know too many people that actually have this nest egg. If they have any sort of savings that is a miracle in itself. Retrenchment or unexpected expenses should be a concern. Income might dry up and bills still have to be paid. We have all heard the saying that you need money for that rainy day. Life is so unpredictable and you never know when you might be stuck in a serious financial situation.
Some people have the perspective that you only live once (ugh YOLO), rephrase: you have one life and you should live it and not care. I think that while this statement has some merit you should strive for a balance between the two. One should certainly enjoy your money but living in debt is enjoying money that isn’t strictly yours.
Debt is stressful especially if you let it spiral out of control. People get married and don’t have money for the wedding and the idea is that you will pay it off. What a horrible way to start a life together with the burden of debt. Paying said wedding off over a number of years means no deposit for a house or no honeymoon. Another scenario is renovations on your house that isn’t quite paid off yet and you are reaching retirement. These are just two exammples demonstrating the ugly cycle of unpurposeful debt.
I am not perfect nor am I judging the way you choose to live your life. Just merely trying to initiate some thinking on the topic from your part. I am by no means saying that people should purchase everything cash. Most of us have to take loans for cars and houses. What I refer to is the mountains of credit card debt and store debt that people accumulate. I am no stranger to wasting money on items I don’t need/don’t like/made an impulse purchase but it was always with money that I had available. Now when I buy something I consider whether I actually need it or not. Do I have a purpose for it?
One of the key lessons my mother taught me is when you have a bond always pay more than the bond repayment. Even if it’s an extra R100 it makes a difference. I certainly don’t live my life by counting pennies but I do think it’s important to consider the value of items in the grand scheme of things and relative to what you earn. Do you need a 5k pair of jeans that costs huge chunk of your salary when a R500 pair will suffice just as well?
If you are struggling with debt consider the ways you can get yourself out of it. Speak to a debt counsellor, pay extra money towards your debt, stay at home instead of going out, make a budget and stick to it. There are options available to you, don’t lose hope, you can still take control of your life.
I wish you long happy debt free years of living within your means.
Over and out,