Maybe We Never Learn: Consumer Debt Grows!
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According to Business Insider, consumer credit balances rose by $26 billion in July. Yes, that is Billion! This was almost $9 billion more than economists expected. So, what does this actually mean? Well, apparently we haven’t learned our lesson; we continue to borrow and rack up consumer debt.
When the recession was in full swing, we started tightening our belts as a nation. Our consumer credit balances fell and they were doing that consistently. The reason for this was the insecurity everyone felt about their jobs and their money. Savings rates slowly increased and it looked like people might have finally realized the error of our ways. Nope!
Short-term Memory Loss
The infamous Great Recession only took place in 2009 with regards to meeting the definition of a recession. Either way, that was only five years ago and it appears we may have forgotten the financial chaos. I remember how scary it was back then for many people, but it appears we have slowly forgotten this.
When we hear the “economic recovery” is doing better, it appears we start spending again. Yes, it is good when we spend as that is a big driver of the economy. The biggest issue is we aren’t spending the money we have worked for, but borrowing money from our futures to fund the present. That is just setting us up for more problems down the road.
It amazes me that in such a short amount of time, we have switched from saving our money and reducing our consumer debt to spending it and borrowing more to buy more. When things are bad we save, but when things look better, we spend. That does make sense, but why are we back to our old ways of borrowing so much?
Consumer Debt Stifles
As a person who battled with consumer debt, I can tell you it stifles you. It disables your ability to do constructive things with your money. For example, I was able to grow my net worth by $140,000 in just two years after I paid off my consumer debt. No, I don’t make that much per year, but I do understand how to find assets which enable my money to make more money.
When my main focus was paying down my debt, that is where my money went. I funneled all my extra cash into credit card debt in an effort to break the chains. Once I did, I realized my options were limitless.
I could do what I wanted with my money and learn how to make more of it. I don’t plan on heading back into the consumer debt jail where I was a prisoner of my own actions. I have seen that the grass is greener on the other side and I like it.
Make a Change and Stick with It
As someone who tries to help others in debt, this news of increasing consumer debt irritates me. It seems so many have forgotten where we were just a few years ago. People were losing jobs left and right. Our financial security was lacking and we vowed to make a change.
Unfortunately, it appears not everyone was ready for that change. I have used my credit cards, ever since I paid them off, but I use them differently; now I always pay them off at the end of the month.
If you want to get out of debt and stay out of it, the requirement is sticking with a plan and making a change. You can’t change for just a year or two. You have to stick with it for life. This is not a diet, this is a lifestyle change.
If you want to get ahead, then switch your money mindset and change because you want to. Change because you need to. Every financial change is going to be hard, especially if you have been going in the wrong direction. It takes a lot of determination and discipline, but changes are possible. If you’re tempted to rack up debt buying things or experiences you can’t afford today, don’t get sucked into the hype that we need to spend more to help the economy. Don’t rob from your future to fund your present. Delay your gratification. I promise it is worth it.
What do you think of this news of increased consumer debt? Have you dug yourself out of consumer debt? If so, how did you do it? Why do you think our memory is so short when it comes to things like saving and spending?
Photo courtesy of: reynermedia