Monday, April 11, 2011

Debt: A Crisis I Can't Make Sense Of.

There are several many things in life, in our society, that I don't even pretend to understand.  Our disrespect for our elders.  Our tendency to be workaholics.  Our willingness to cheapen so many experiences.  Our fear of death.  Even the ones I engage in I don't understand.

But this post is about debt.  I just don't get it.  We're a society driven by the stuff.  When I Google "Average debt in the Canadian household," the front page is full of articles on how Canada's average debt surpassed $100,000 this February.  One.  Hundred.  Thousand.  Dollars.  On average!  Americans are in even worse shape.

Why are we okay with this?

Back in the day if you wanted more land you went out and grew some wheat and if your crop succeeded you expanded.  If you didn't have a crop and you needed a new jacket you went out and harvested someone else's until you got paid and then you bought what you needed.  I'm sorry, but doesn't that make sense?

The worst part is we're not even over our heads in order to put food on our tables.  We're buying homes that are significantly larger then they were just a decade ago.  We're charging brand-new clothes and restaurant meals on credit cards that have interest rates to the tune of 20%.  Twenty.  Percent.  Is that annoying?  I can quit spelling it out like that.

I don't mean to be down on anyone who lost their job because of the downturn and can't find other work.  Or any American with unexpected medical expenses.  Or the single Mom, or someone reeling from a nasty divorce.  Or the student who got in over their head.  But where do we draw the line?

Some debt makes sense.  A mortgage on a basic home, for example (take into consideration, first, housing prices).  Also certain small business loans.  Let me put a disclaimer here:  I am not a gambler by nature and I will never treat my finances like I am.  Low risk, low reward.

I'm also not an economics expert.  I almost definitely make less money then you.  I don't fully understand credit scores or RRSPs.  I do have the advantage of not having to pay for a degree at a prestigious school.  I live in a small home with a room mate.  I drive a car from 1998 that I work on myself and sometimes I buy clothes from a thrift store.

But I live very comfortably.  Admittedly, I don't have children and I live in a low-cost part of the country (read: rural).  I prioritize.  I get a thrill out of saving.  I also travel extensively, but cheaply.  I choose to go through periods without steady employment.  I volunteer.  I market farm.

I know, I have the luxury.  I live in a prosperous society.  But I could live for years on what my fellow countrymen owe, on average.

I work and then I buy the things I want.

Doesn't that make sense?

3 comments:

kitkat said...

yea the debt problem in America is even worse. I dnt use credit cards or take govt loans for tuition jst to avoid running into a lot of debt. Then again i'm from Nigeria where purchasing stuff on credit isnt so popular.

Hatly said...

Debt is addictive. The stuff it gives you, allows you to do, and how it promotes your life style all add to the perpetuation of more debt. till it all comes crashing down! bankruptcy. gross. thats why i limit myself to one emergency credit card!

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