Why we‘re being sold debt
…And how to avoid it
Australians owe nearly $1 billion in buy now, pay later debts. As reported, micro debts around lifestyle is becoming more common. While we don’t love debt itself, Australia is accumulating more of it, and quickly. 💵
Why is debt building?
Simply, it’s what we’re being sold.
Wherever we go nowadays, we’re being sold debt to fund a certain lifestyle. It’s in the shops and car yards, via HECS, holiday packages and through credit card balance transfers. Wherever you look, debt is being sold.
Debt tomorrow sells better than money today, because emotions are at stake. 🚘 Let’s use the example of a car dealership:
When you walk into a car yard, a sales person approaches you. They are likely trained to find one important piece of information: what emotion is going to drive you into buying a car.
It may be that you’re frustrated with your old car. Or you think you need a new car for work. Whatever it may be, your emotion is the sales driver. Debt is then the bridge to get you driving now. All you got to do sign away to some “affordable and easy repayments”…and the keys are yours today.
3 reasons why we’re being sold debt
The car example above reveals a number of problems. But the buyer often doesn’t realise this in time, and instead, takes the keys and drives off. Let’s explore further…
1. We love spending someone elses money
💳 We love buying things on credit, but the trouble starts when we have to repay it. Buyers remorse kicks in, often when it’s too late to go back. Debt is designed to feel good and delay pain .
2. We don’t really know what it costs
💣 A disconnect occurs when we use debt instead of our own money. We often don’t realise the true cost, because the impact of debt doesn't appear at first. Later on, however, is when we run into problems.
Most of us don’t factor in the true cost of debt either. This includes:
- The fees, charges and interest we’re paying on the debt. (unsecured car loans up to 16% and personal loans up to 36%)
- The stress and burden of debt on ourselves, and our relationships.
- The opportunities missed to save, invest and grow.
3. We want what everyone else has got
🏖 Debt is often accumulated because of comparison. The fear of missing out is a strong emotion, and one that’s often influenced by comparing with those around us.
We also become emotionally attached to things, because we use things to compare with others. Be careful and quick to pull yourself up when you start comparing yourself with others.
“Comparison is the thief of joy.” — Theodore Roosevelt
The truth about debt
Is this: You don’t need debt to have a good lifestyle. ☺️
You can build a good lifestyle that will last you a lifetime, all without ongoing bad debt. This can be done by creating income, spending less than you earn, and use surplus savings to grow and develop extra income through investments. (We talk about all of this in our Money Plan)
It’s also true that debt can be used strategically (with the right advice) to create income through building the right investments over time. Debt in itself does not lead you to the good lifestyle it promises. Especially when it’s influenced by our emotions.
“In a heart filled with gratitude, there is no room for discontentment.” — Rachel Cruze
Do you have a clear plan to grow your money?
Does money cause relationship stress?
Is the weight of debt holding you down?
Does tax and super make your brain hurt?
Are you time poor to organise finances?
📲 Book A Call with Archie Franz, your Financial Coach: www.righttrac.com.au/book
At RightTrac, we help Australians build confidence to prosper, through personal Coaching that grows your money and puts you in control.
