Living With Credit Card Debt and Other Consumer Debt - A Society in Crisis
Mike Killian, November 20, 2005
|Living With Credit Card Debt and Other Consumer Debt- A Society
in Crisis || || || |
Mike Killian |
|Sunday, 20 November 2005 |
| By Mike Killian, CardRatings.com
How I love this job. It constantly allows interaction
with the most informative, intelligent and influential people and materials. My newest assignment was no less an event as I was able to review an
incredible report, Living With Debt. The work was commissioned by Lending Tree and authored by Dr. Robert D. Manning. Besides hosting his own site, Credit Card Nation, Dr Manning is the author of CREDIT CARD NATION: The Consequences of
America's Addiction to
Credit (Basic Books, 2000) and heads the Department of Finance at Rochester Institute of Technology. I was able to interview Dr. Manning.
He suggested that we have become a society of abundance, which dramatically reduces our ability to be motivated. Older generations
dealt with the scarcities of the depression and World War II. It created within that generation a deep rooted desire to help their children and
grandchildren to have a better life. And that generation succeeded to the point that our society wants for nothing today.
But there has been a
price for this affluence and it is spelled out in the referenced study which every consumer should read. Its predictive message is not only powerful
and insightful, but alarmingly accurate as it depicts the trends and values of 6 life stages: College Students, Singles, Young
Families, Maturing Families, Empty Nesters, and Senior Citizens.
Some of the findings of the study
Dr Manning endorses the concept that credit is far more accessible today on
multiple levels thanks to a multitude of financial products.
- Living with significant levels of debt has become an acceptable part of everyday life.
- Many people attribute
their willingness to go into debt to a dramatic increase in spending on children and grandchildren.
- Attitudes toward home ownership
have changed dramatically from simply providing shelter to becoming the perfect investment.
- Financial literacy, particularly
about borrowing, credit and debt, is extremely lacking.
Dr. Manning also referenced the phrase
credit crunch, stating that rising home values have temporarily distracted from our
society's credit problems. In his study he states, "We are living with increasingly higher levels of debt, which has become an accepted and normal
state of affairs."
"Financing a product today is more profitable than producing it."
Elsewhere in the report he poignantly claims that "much of the traditional social and cultural views of good debt versus
bad debt have been influenced by mass marketing to Baby Boomers and their children and grandchildren, many of whom expect or feel pressured to pursue
immediate gratification over traditional values like 'saving for a rainy day'".
The opposing forces of an increased "credit crunch" and our society's negative
savings rate have led to a very strong potential for crisis. Just how far can the rubber band stretch?
Dr Manning feels very
strongly that we need to empower ourselves by becoming more literate as to good debt versus bad debt. There are hundreds of financial products
available today and
we as consumers must educate ourselves about these products and discipline ourselves. We must become a more savvy financial consumer. We must
also diversify our investments so that we do not depend on real estate as our only source of future wealth.
The commissioning agency, Lending Tree, offered a very appropriate summary of the strong need for financial literacy today:
We welcome your comments about debt and investing issues in our
popular credit forum!
"Changes in the lending environment, coupled with
changes in the bankruptcy law, means it has never been more important for Americans to develop their financial literacy skills."
Click here for the
LendingTree Guide to Smart Borrowing.
Mike Killian has been writing about credit and debt management issues that are of importance to consumers for over 8 years. He
formerly served as the Guide to About's credit site, which was recognized by Forbes Magazine's "Best of the Web" for 5 of the last 6 years. Mike has
also offered debt elimination seminars to businesses and community colleges for many years.
Mike offers free consumer advice on the CardRatings.com Credit Forum as well as on his own site, FreeMoneyTraining.com. While at his site, you can view additional articles as well as his
schedule of upcoming seminars.
|Last Updated ( Sunday, 20 November 2005 ) |
This story ran on
on November 20, 2005.