“Each of us is morally responsible and accountable for the obligations we accept freely. Personal debt is no different. Once you agree to borrow money and pay it off, those debts are yours unless a bankruptcy court releases you from them.” -David Eifrig
“So much of finance comes down to confidence and trust. And that’s because finance is about promises. Promises to pay or deliver something in the future in return for something now. Think about it. A stock is a piece of paper that’s nothing but a claim on a company’s future dividends and its value in a sale or a bankruptcy. A bond is a claim to money from a creditor in the future… and maybe some interest payments. Your bank account balance isn’t real cash. It’s just a bank’s promise to give you that amount of cash the next time you ask for it.” -Tom Dyson
“Far, far, far too much money – mind-boggling amounts – has been borrowed…. Students have borrowed $1 trillion for college.… Roughly 90% of GM car buyers finance their purchases. And as recently as 2014, 83% of their loan book was subprime, with a shocking amount categorized as ‘deep subprime’. Deep subprime is essentially people who don’t have a credit rating or people who are currently in bankruptcy.” -Porter Stansberry
It’s good to have nice things and to get an education, but these things must be done responsibly and according to need.
Do you want to be like everyone else? Are you one to follow the beaten path? Does conventional wisdom seem like the most comfortable place to be? Let’s take a peek at what others are doing before you give a final answer.
The news is filled with, what is to me, troubling discourse. Bloomberg News reported on March 9th that “global debt exceeds $100 trillion”. They explain this to be a 40% increase since 2007. Wow, that is a lot of money! “Governments have been the largest debt issuers,” according to the Bank for International Settlements. How long will it take to pay that off when governments have to borrow more money to cover their current expenses?!!
In a DailyFinance article from January 2, 2014, another bubble seems to be forming in automobile loans. They give an example of a gentleman who had just filed for bankruptcy, yet received a check in the mail from a finance company for $30,000 to purchase a car from any car dealer in the area. He went out and purchased a used BMW. They report that “88% of GM’s North American financial receivables are firmly in the subprime category”. With delinquencies on the rise, this cannot be a good sign.
What do these examples mean to you? Are you currently a part of the credit growth people and governments are experiencing? Can this discouraging news have any positive benefit for you personally? Well, that depends! Positive things can only happen if someone takes advantage of a situation. The only way it can benefit you is if you do something other than the majority.
You can be different from those treading in their own sea of debt. They are simply trying to meet their current expenses, paying interest but making no headway on their debt load. This may even be you. However, a simple yet willful defiance to increasing debt is the starting point. It takes a first choice to turn the negative compounding of interest payments into your own financial reservoir. Is it time to make a willful decision to be different?
“A credit card is a money tool, not a supplement to money. The failure to make this distinction has supplemented many a poor soul right into bankruptcy.” –Paula Nelson
“Capitalism is a system whereby profits and losses are private. Serving customers well leads to profits; failing to do so leads to losses or bankruptcy. Socializing the losses while keeping profits private encourages reckless risk taking and sloppy business management and causes “private” businesses to operate more like government bureaucracies.” –Thomas DiLorenzo
