According to Thoma (1), the issue of debts has become a major menace in the country. It is indicated that the national debt has gone beyond the $ 16 trillion mark, which is described as a drain to the economy. This figure trickles down to the individuals where many people tend to be in great debts that are at times quiet hard to clear. There is the need to understand exactly where the problem lies and how it can be resolved. Below is a discussion on this issue, trying to find out who or what is to be blamed when individuals get into massive debts.
First of all, the individuals themselves are to blame. This is mainly because the individuals should be in a position to control their spending. Monetary planning and management is an individual efforts and everyone should have the skills such as knowing how and when to spend, spending within a budget, avoiding unnecessary expenditures, having an emergency fund and having the saving skills (Kaur 1). Having such a strategy ensures that individuals spend wisely. However, as Kaur (1) further observes, the availability of credit cards at times drives the people to spend much as they feel they can always pay back later. This pushes the people into debt even without their understanding. As such, the credit card and lending companies also have a share of the blame.
Stores always seek to advertise their wares. In doing so, they have to use nice, convincing and appealing language so as to attract more people. Eventually, this dries the people to use the credit cards and get the goods on credit (Clay 23). Furthermore, the advertising makes the people buy on impulse, thereby using their resources and ending up in debt. Taibbi (1) indicates that the situation becomes even worse when the people are not in a position to pay back. These individuals, driven by greed, tend to spend more than they can afford. As such, they end up having troubles paying back what they owe; hence they end up in the debt crisis.
Crow (45) has it that with the current economic status, the lending rates have become quite high. Whether in banks, insurance companies, mortgages or the lending companies, the lending interest rates have gone so high that individuals borrow a small amount of money but end up paying quite a lot, though spread over a long period of time. As such, it can be argued that the high interest rates are to blame for the debt crisis since the people borrow from these companies and have to keep borrowing in order to meet their daily needs. The more they borrow, the more the interest they gather and the more they sink into debt. Eventually, they get into a vicious cycle of borrowing.
In conclusion, this essay as looked at the various reasons as to why people have sunk into the debt crisis. Various factors have been discussed such as the individuals themselves, advertising, credit card and lending companies, the high interest rates as well as the inability of the individuals to pay back what they borrow. After the discussion of all these factors, it all comes back to the fact that the individuals are to bear the main blame. In as much as the economic times might be hard, yet the people have the ability to decide how well to manage their resources and stay out of debts.
Clay, Edward. The Dynamics of Trade. New York, NY: Cambridge University Press, 2010.
Crow, James W. Financial Management Strategies in Changing Economic Systems. Upper Saddle, NJ: John Wiley & Sons, 2009.
Kaur, Harleen. “High Rates of Credit Card Debts – Strategies to Stay Out of Debt.” The Dollar Times, Aug. 7, 2012. Web. 17th Nov. 2012, http://www.thedollartimes.com/credit-cards/high-rates-of-credit-card-debts-strategies-to-stay-out-of-debt-2-1695.html
Taibbi, Matt. “Greed and Debt: The True Story of Mitt Romney and Bain Capital.” Rolling Stone Politics, Aug. 29, 2012. Web. 17th Nov. 2012, http://www.rollingstone.com/politics/news/greed-and-debt-the-true-story-of-mitt-romney-and-bain-capital-20120829
Thoma, Mark. “National Debt Passes $16 Trillion: Should You Worry?” CBS News, Sept. 5, 2012. Web. 17th Nov. 2012, http://www.cbsnews.com/8301-505123_162-57506201/national-debt-passes-$16-trillion-should-you-worry/