Consumer Debt; A Serious Problem

by : Jim Kesel

According to the experts consumer debt is debt that is used to purchase consumable products and is not used to make investments. The fact is that consumer debt includes just about everything that is purchased on credit. Land, homes and other forms of real estate are considered investments so they are not included. No doubt that you are aware that the largest portion of today's consumer debt comes from the use of plastic money or credit cards. Many top economist and consumer advocates feel that the countries high consumer debt is a serious threat to our countries financial security.

Annually credit card companies earn more than 150 billion dollars. This is huge amount of money comes from the pockets of American citizens. Even more shocking is that more than 90 billion dollars in credit card company earnings come from late fees and penalties. It is pretty obvious that credit card companies are hoping that you will be late or miss a monthly payment as it is a major source of income. All of which increases the country's already massive consumer debt.

Some economists have argued that increasing consumer debt is necessary for a healthy economy. Ordinary common sense tells you that this just plain stupid. In the 1970's total US consumer debt equaled about $8 billion dollars however today's consumer debt is just short of $900 billion dollars. Depending on what expert you ask it has had a positive or negative effect on the country's economy and its people. There is little doubt about the effect of high debt has on the ordinary family.

Studies have shown that family disputes over money and consumer debt is the number one cause of divorce and is even linked to domestic abuse and violence. Money or the lack of it has caused a lot of family stress. Most people receive consumer credit offers each day in the mail. The credit card industry sends out more than 2 billion credit card offers each Year. Many of these offers end up in the hands of people who would not normally qualify for any other form of consumer debt. In fact some people have even received credit card offers for their pets.

Sadly bankruptcy is a common result of poor consumer debt management. Simply missing or being late for a single monthly payment can result in an increase in interest rates to more than 25%. In addition you will be facing late fees and penalties. Many people feel that the credit card companies act as predatory lenders by using these loan shark tactics.

Excessive consumer debt will make your life miserable. You must live at or below your means or you will end up in financial trouble. It is far wiser to live on a cash basis. If you must use plastic money then it would be far wiser to apply for a debit card. You can live very well without using credit cards. Develop a debt elimination plan, get rid of all your consumer debt and live debt free.