Debt Management In Crisis – Guest Post
National debt in the US currently stands at over $14 trillion, after a dramatic rise across the last three decades. Since the financial crisis in particular US government spending has sky-rocketed pushing up the deficit, increasing national debt.
This national crisis has been mirrored by a very personal debt crisis for US citizens, with total consumer debt currently exceeding the $16 trillion mark. The US has steadily become a nation enthralled by loans, mortgages, and credit cards.
The US is suffering from an increasingly ingrained debt culture, and getting into debt has become the modus operandi for many of us. Building significant consumer debt has become normalised, while good debt management has often been left by the wayside with many struggling to repay borrowed funds.
So what does this have to do with the national debt crisis? The problem with acquiring debt, as we can see from the national deficit, arises when the consumer borrows beyond the means to repay. The US government has been borrowing at a rate faster than it can afford to repay, with far-reaching and devastating consequences for the economy, which we are likely to feel the repercussions of for some time to come. Unmanageable consumer debt can have similar consequences for the individual.
In times of increasing unemployment, when many more of us may be tempted to borrow in excess, having an excellent strategy for dealing with debt is paramount. Even in the face of great personal difficulty, inadequate debt planning or management will inevitably lead to a magnification of those difficulties, until our individual debt spirals out of control.
Borrowing can be beneficial to the economy and a form of investment in the future, and sensibly planned and managed it can be beneficial to both consumer and creditor. However, we would do well to remember that it can also easily leap out of control.
We should perhaps take the national debt crisis as a warning of what can happen when debt is inadequately managed, and view it as an opportunity to learn something about the importance of planning and foresight in our own debt management strategies.
This guest post was written by John Hughes who is the resident blogger at Independent Financial Advisor, a small UK based site that provides access to independent financial advisors as well as to debt advice charities for those struggling with their debts.