May 14, 2009

Get Out of Debt Slavery

"Too many people spend money they haven't earned, to buy things they don't want, to impress people they don't like." - Will Rogers

Credit has its place in our modern world because some things are worth borrowing for (an education), and for convenience. Somewhere along the line of the debt train, though, we have been demoted from being valued passengers in cushy coaches to shoveling in the coal car. Now the whole system has run out of steam.

Garth Turner
points out, "Canadian household debt has red-lined. The country’s accountants have just warned that families now owe $1.3 trillion, most personal debt on credit cards and LOCs. Sadly, 85% of us have unpaid credit card bills. Worse, a third of all families could not handle an unexpected $5,000 expense. Even worse, one in ten families could not pay a $500 bill."

The big banks are now expecting billions of dollars worth of write-offs as customers default on credit card balances. This will do nothing for economic recovery, nor will it reduce the suffering of those who were sucked into the illusion of wealth. Now they may be without work, and without access to money. When you are buying groceries with your credit card this spells trouble.

If you can not afford to pay your balance in full at the end of the month you have fallen into the trap. Before long you are like a small developing country with insurmountable IMF responsibilities . Unable to ever repay the principal, you are reduced to working just to make interest payments. In this situation we often turn to risky behaviour as the only possible way of ever retiring the balance.

Desperation follows, a willingness to sell your life, to do anything to get out of the hole. Individuals turn to crime, and countries open their borders to foreign exploitation. At the very least you have to take a job that you do not enjoy, if you can even find one these days. In BC welfare rolls have swelled by nearly 50% over this time last year. It is impossible to get out of debt without a job.

If you have a credit card pay off your balance in full every month. If you do have a large balance do all you can to pay it off as soon as you can. Then cut your credit card in tiny pieces and cancel your account.

The credit train deserves to be derailed. Quit shoveling coal for the top 10%'s benefit. All your stuff loses its lustre, anyway, when you sit down to calculate the interest paid, the stress experienced, and the work that must be done to acquire it. Debt free is the way to be.

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