Some people wonder what is debt and how can it affect you. Basically debt is the amount of money that is owed to financial institutions, business and individuals. In 1973 the total consumer debt owed by the American people totaled about 8 billion dollars today the total US consumer debt is approaching 900 billion dollars. The largest portion of this debt is in the form of credit card debt. Each year credit card companies earn approximately 150 billion dollars as a result of this debt. Almost 90 billion of these earnings come from late fees and penalties.
The consequences of all this debt is staggering to the financial security of our nation. Credit card companies have replaced the local sleazy corner loan shark in dispensing pain and suffering to the American family. What is debt? The Bible states in proverbs that “the borrower is the slave to the lender” If you have consumer debt especially credit card debt then you are a slave to these institutions. Credit card companies have invented the FICO or credit score to encourage you to increase your debt. The more debt you have the higher your score. It is interesting that several millionaires and one billionaire that we know have credit scores of 0 that’s right Zero.
So what is debt doing to the American family? At this time of recession and the mortgage crisis many families are using their credit cards to get by and even buying groceries with this plastic money. Eventually they cannot meet the monthly payments. This is just what the credit card and consumer credit companies want. A late or missed payment and the interest rate on a credit card can rise to over 30%. Remember all the money credit card companies make each year in the form of late fees and penalties?
The number one cause of divorce is money or better yet the lack of it. Excessive credit card debt is tearing families apart and is linked to domestic abuse and violence. What is debt? Debt destroys families and threatens to undermine the financial security of our country. Basically as one of my friends who recently became a millionaire stated “the best way to become wealthy is to stay out of debt”.
The only way to protect yourself is to develop a debt elimination plan and stick to it. You may need the assistance of financial counseling service to set up your plan. Step one of the plan is stop borrowing money. That means that you cut up all your credit cards and you live on a cash basis. This is hard for many people who have used credit cards all their life and have never lived at or below their means. But the system really does work and in many cases a family will be totally out of debt in less than 3 years. It is simple and very effective if you love your family and have the discipline to stick to the plan.