Mortgages, car loans, student loans, and having children, are all situations that can drive families to the overwhelming doom of debt. Debt is mostly overlooked for the simple reason that it may be considered normal. Certain types of debt like car and mortgage payments are almost expected. Debt is sometimes very difficult to evade, especially if money is not managed sensibly. Many families accumulate debt due to overspending, medical bills, and unemployment.
Credit companies and banks make it very easy for families to spend money they do not have. For instance, credit cards are commonly accepted in stores, restaurants, and many other establishments. Parents sometimes feel that they need to buy their children everything they want, regardless if the money is not in their wallets. They also live such busy lives, making it hard to cook a meal at home. Parents find it more convenient to go through a drive-thru or to dine out instead because it saves time. On the other hand, they are spending extra money they do not have. Families also like to go on vacations that they cannot afford. Charge vacation trips it all on credit cards. Meanwhile, only able to make the minimum payments on them. They probably do not consider the interest rates that these credit cards have. Another situation is when one of the parents decide to buy a car without having a down payment. Financing cars paying loans with massive interest rates. Sometimes this occurs when they see someone they know buy a brand new car, so they think that they need one too. This is known as competing with the Joneses. Many parents and children want what everyone else around them has. However, the parents may believe they can afford it, but in reality all the overspending adds up an...
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...nd started to pay off the debt. Unemployment is difficult on families, but it is especially problematic on a single parent, since they usually only have one source of income.
Families accrue large amount of debt carelessly. Accumulating debt does not happen overnight. They fall in debt by not paying attention to where their money is going due and by their disproportionate spending. Families may also have an expensive life threatening health emergency, forcing them into financial struggle. However, life happens. Parents also get laid off their jobs and it takes months to find another one, so they depend on credit cards and loans to survive with their youngsters. Parents may not recognized the dangers the situation of being in debt. Nonetheless, if they are able to recognize the process of how the get in of debt, they might be able to avoid this stressful situation.
At some point in life, I will need to buy a car, house, or other commodity. There also is a large possibility that I will have a credit card in the near future. Knowing and learning more about this “debt trap” that other Americans are falling into, can help prevent me from making the same mistakes. Also, knowing about this problem can help us as a society be more understanding to people who are lower class. People could be victims of some of these traps and without knowing how someone got to the social status they are, we cannot make assumptions and put the blame all onto them.
I chose to do my book review on Brad and Ted Klontz’s “Mind Over Money: Overcoming the Money Disorders That Threaten Our Financial Health” because I have observed, and participated in, bad financial decisions that have greatly impacted my family for decades. I’ve taken many personal steps to attempt to break the cycle of destruction that ended my parents’ marriage, and to raise my children in a debt free environment. Unfortunately, it has not been an easy task. I have read many financial self help books and attended seminars on the subject. This book caught my attention when it said that simply learning how to budget and pay off debt isn’t enough, that one has to first understand our psychological relationship to money, and then move beyond the financial constraints we put on upon ourselves. For years I had struggled with debt and money management. I had always assumed it was my lack of education that held me from moving forward. Reading this book has been a welcome eye-opener.
For debt, it begins with a simple late or missed payment. These missed payments allow companies to punish card owners without discretion. With this, lenders hike up interest and payments on their customers for negligence, regardless of what their reason may be. Whether it was a tough month for the family or someone died and expenses had to be payed, lenders do not care one bit. From 2013 alone, student debt was at 1.21 trillion dollars, and mortgage standing at a whopping 7.9 trillion (Miller, R. K., & Washington, K. (2014). These loans also feed into why we as a country are in debt, which currently stands at seventeen trillion. These missed payments also greatly affect interest rates from lender companies. Companies wait for payments to come late, which allows them to impose fees and hidden charges that must be paid along with the delinquent payment. With increased rates comes...
Unemployment can affect families drastically from suicidal tendencies, marriage breakdowns, alcohol and drug abuse and even family violence (Broman, Hamilton & Hoffman, 1996; House of Representatives Standing Committee on Employment, Education and Workplace Relations, 2000). For many individuals work provides them with a place to social network and it gives them self-esteem and the loss of both when unemployment hits, creates isolation which happens quickly. However, unemployment does not just affect the individual famil...
Generation Debt by Anya Kamenetz discusses how people in my generation and below are born into debt. Kamenetz is a yale graduate who is having trouble finding a job after graduation. She mentions that “debt is inevitable” in our generation with college prices raising. She made her way through by her parent’s rules of spending no more than you earn and paying off the one credit card she owns. She also elaborates on the stigma that comes with being a young adult. How our generation is branded “immature” and “lazy” without a second look at our actual personalities. Also taking the time to point out that we work hard to get by and try to make ends meet without drowning in our inevitable debt.
As college students now, we know how important it is to know about how to avoid debts because many of us are or will rely on student loans to get through our higher education. Champlain College’s Center for Financial Literacy used national data to grade each state in the United States on how much effort is put into providing financial literacy for their high school students. Based on the information gathered in 2015 only 5 states obtained a letter A grade on their financial literary education; these states are Utah, Missouri, Tennessee, Alabama, and Virginia. These states require their students to take between half a year to a whole year of a either general financial literacy or personal finance. It is unclear how the student achievement is measured after taking these courses, but the resources to learn about what to expect are provided and are required to be able to graduate from high school, which cannot be said about all other 45 states in our country. 11 of the states were given a letter F grade, including our beloved California. These states do not offer finance classes alone or embedded into other courses. Although the achievement of students who take these courses is not exactly measured after graduating it is still significant information for them to carry with them into their adulthood. Many high school graduates will enroll in a community college or a 4-year university and will be targeted by credit card companies because they lack the knowledge on how important credit is and how to avoid debts. This is not only a worry shared by the graduating students but by the parents as well. MasterCard gave a survey to its cardholder members and 64 percent of these adults said they were worried that their
We now live in a society where kids start their adult lives “in the red”, as their debt exceeds their income. (Draut, 2005) 60 years ago this wasn’t the case, as told by Studs Terkel in Hard Times-An Oral History of The Great Depression, “I had no idea how long $30 would last, but it sure would have to go a long way because I had nothing else. The semester fee was $22, so that left me $8 to go.” (Turkel, 1970) Imagine that! 60 years ago tuition was $22 dollars a semester! Furthermore, 45% of adults under 35 state they find themselves resorting to credit card use for basic living expenses like rent, groceries and utilities, (Draut, 2005) adding to their mounting debt. This use of credit puts them into an entirely different category of indebtedness: survival debt. (Draut, 2005) Imagine being forced to borrow to live! (Draut, 2005) If a car breaks down or someone gets sick, the only option available is using a credit card. (Draut,
Credit card debt is what’s known as unsecured consumer debt. Card debt is not necessarily collected through the use of a credit card. Debt can be accumulated from transfers, such as transferring money to make a payment or to another account. This can get you in a cycle of revolving debt meaning, what you owe can spiral out of control. Many people owe money because of the current financial situation of the U.S Economy. Credit card has a major impact on one’s personal wealth. People who have an asset have personal wealth; some examples of an asset are your house as well as your land. Many people may feel if the house burns down or gets destroy in a tragedy, then they have nothing left but that not the case. You still have your land, but asset also come in form of items that may be more personal such as a car, bank account, stocks and bonds or an item of value that has been passed down for generation.
Most people want to blame the banks and card companies, but in the end the person put themselves in that predicament. The majority of adults are not taught how to manage their money properly and may eventually end up living off of credit as a way to pay for necessities. Therefore, simple planning and budgeting can prevent over spending and knowing what the money is being spent on. In the article Credit card woes may be your own fault, La Times writer Liz W Pullman states, “credit card debt, by definition, is a bad idea. It’s corrosive to your financial health and much too expensive for what you get- essentially the luxury of temporarily living above your means.” In other words, Liz is stating, debt is comprised of trying to live a lifestyle a person is not able to afford. When someone is spending money they are not looking at the possible implications, but instead a person is looking at what is going on that moment. Spending money is seen as fun and having access to cash is simple. For example, payday loans are everywhere and charging up a credit card during a shopping trip is not only fun, but also a normal occurrence for most people. Therefore, people need to know their limitations of how much they can or cannot spend in order to have a clear idea of what they are able to pay back. When credit debt is accumulated through spending habits no one can
Parents may not feel comfortable enough with their own financial situation to discuss personal finance with their children (Williams, 2009). Additionally, the parents, or other influencers, may not have a full grasp of certain concepts of financial literacy. In an article by Carlin and Robinson (2010) it was noted that “many retirement-age adults lack the financial literacy to understand the basic features of their retirement plans.” Financial literacy through socialization and practice may not be enough for students; whether it be “disadvantaged” youths who often lack a high quality of life at home, or youths whose parents have stable jobs with retirement
Life & Debt The documentary Life and Debt portrays a true example of the impact economic globalization can have on a developing country. When most Americans think about Jamaica, we think about the beautiful beaches, warm weather, and friendly people that make it a fabulous vacation spot. This movie shows the place in a different light, by showing a pressing problem of debt. The everyday survival of many Jamaicans is based on the economic decisions of the United States and other powerful foreign countries.
Research shows that parents play an important role in a child’s social and monetary behaviour in society. For instance, Dr. David Koffman discussed in his “Do I Make Money or Does Money Make Me” lecture, that there is a negative relationship between the amount of information learned from parents and the credit use of this information. Moreover, according to the first week’s reading many parents are often hesitant on discussing any financial information with their children due to their children’s age, as they do not want to reveal any information on their income or debt. This causes children to have an inadequate learning experience about the meaning of money and its uses which is referred to as money pathology.
Some of the arguments in the article say that the reason why people are in debt is because expenses are higher now than they were in the 1970 's. Another argument is that we are living in a materialistic place, especially in California and New York. Everybody wants to look good and have the best, so they use their credit card to make these expenses. Some arguments blame teens for using credit cards. Teens already use credit cards and spend money. Banks and financial institutions are also blamed for the rise in credit card debt because they lower monthly payments on credit cards. Others just think that Americans are comfortable with having credit card debts.
The idea that everyone’s ideal lives are the same is a farce. Individuals create different worlds for themselves to live in thus generating situations with different solutions. These solutions drive them to reach their own specific goals and dreams to attain the ideal life. As they accomplish these feats, their impression left behind to create a reputation of their character. For an everyday use, one of those impressions left behind by the ability to handle debt. It is impossible to live debt-free; most borrowers cannot pay cash for homes or their children 's college
Since I can remember my family has always struggled with money. My parents’ financial experience is like a box of assorted chocolate. Sometimes they make ends meet, sometimes they do not. My mother used to work for the state of Tennessee. She worked on computers and was married to my dad who was in a rock band that took tours overseas a lot. Momma worked full time and came home to do the exact same thing. They soon got a divorce and my mother was working her tail off for my sister and I to be able to live. Since then my mother has gotten remarried, has not been paid child support since I was seven years old or so, and is now trying to make ends meet and pay off a bunch of debt.