Getting into debt often starts with feeling good about ourselves through a false sense of credit-worthiness. Events like buying a house through mortgage finance, a trip to the fine dining establishment in a shiny new car bought with an automobile loan makes us feel good about ourselves. Getting to such huge debts seems the right and normal thing to do. Making timely monthly (minimum) payments becomes the normal way to deal with debt. Hello world, we have arrived!
Then one day we realize being enslaved (and surrounded) by piles of this debt. The great feeling of credit-worthiness is replaced by emotions of worthlessness and helplessness. This reality usually hits us at a particularly bad time: perhaps we see the source of our income under serious threat such as layoff, etc? If we are like most people, we’d probably decide to treat this stress as a fact of life. After all a lot of our friends seem to be in the same boat. Like a smoker addicted to nicotine, addiction to debt is hard habit kick!
We probably did not realize at the time of signing on the dotted line that most lenders of automobile and mortgage financing use minimum payment for the fixed loan re-payment schedules. In some countries, once the loan agreements are in place, most lenders will penalize borrowers’ attempt to pay off the debt sooner. It seems that some lenders do not want us to pay back our debt ahead of time. Have you ever wondered why that is so?
Getting into debt should not be considered fashionable. We should plan and save before we spend!