Guide to Debt Problems

by : CD Mohatta

Pay what you owe, and you'll know what is your own. ~Benjamin Franklin. What a great quote to remember in a time when credit is at its highest. Credit is so easy to get, that many, especially young, people have gotten themselves into deep water with serious debt. There was a time in my life that I thought it was great to have anything that I wanted.

My father used to tell me that during the depression, people would only buy things that they could pay for because so many people were going bankrupt. He said that people were losing their houses because they couldn't even afford to pay the mortgages. His generation was raised in a time of extreme desolation and held onto the knowledge and values that if you really needed something, you saved for it.

He used to tell me, every time that I purchased something on credit, that I was paying for a "dead horse". I was enjoying something that I did not own but I was still making payments long after it'd become "OLD" and worthless. Some people today buy merchandise, for example furniture, with no money down, no interest and no payments until later. The problem with that is the furniture is getting worn out before the first payment is due, so it's like you're "riding a horse until it dies and then you have to begin to pay for it", thus PAYING FOR A DEAD HORSE.

I finally understood what my father meant when my wife and I were filling out a bank statement to buy a house. It asked us to list our total worth. When I added up what we owed, to banks and credit card companies, our debt was in black and white for me to see. However, when I added up what we actually owned and added our income, our financial situation was in the red. When you calculate your net worth, you can see that all the stuff that you are buying on credit doesn't count toward your financial worth, because you must take every creditor's amount of payment from your financial total.

It became very obvious and upsetting to realize we had so much debt. The boat, camper, new clothes and cars took all our income and we had nothing left to save for our future. It's because of this that we I decided to quit buying things we WANTED and focused on saving for things we NEEDED. We began paying off debts and consolidating loans. It took a few years to actually get our debt down to a manageable amount that we could handle without carrying credit card balances.

Then we started looking toward the future, saving our money, rather than looking back at all the things we bought and gone into debt to own. We had begun to learn to live within our means. It is so important for parents to explain this to their children as my father did with the analogy of credit card debt to "paying for a dead horse".

Many people today are in such great debt that bankruptcy is at its highest. Because many adult children want to immediately own what it took years for their parents to get, banks are making a fortune on the interest they make from loaning money. If bills can't be paid on time, then additional charges are added and the debt starts to spiral out of control.

If more people would invest their money in their futures rather than throwing it away on intangibles today, there would be less debt. If people would buy the things they need and not just anything they want, they would be able to actually know what they own. As Benjamin Franklin said, "Pay what you owe, and you'll know what is your own". People would buy what they could afford and needed and would know what they actually OWN.