How does it happen? Why to everyday normal, sensible people find themselves sinking further and further into personal debt?
The answer is not a simple one but here are a few common reasons:
- Australian money culture has changed its money psyche from saving to spending
- Because cash is largely absent from the purchase transaction, we have forgotten the old fashioned art of saving
- The credit card is the new emergency fund and it seems that everything is an emergency
- We are bombarded by so much choice of ‘stuff’ to buy
- Addictions divert money away from wealth building to create debt
- Handing over hard-earned cash has now been replaced by a mere click, tap or wave of a card or smart phone
- Instant credit is so easy to get and comes as plastic or a phone app
- Most people do not understand how a credit card actually works (e.g. rate, interest free days, billing cycle, what minimum payment means)
Because most people don’t do a budget or plan ahead with their money, they don’t realise that they are drifting off track with spending until it is too late.
The answer of course lies in a basic understanding of managing money. Whilst earning is the source of all personal wealth, it is saving that is the foundation of prosperity.
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