Debt Slavery
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This article is written with specific reference to American Economy and people to demonstrate the fact that the major ailment of Americans is their ‘debt culture’ as a result of which they are trapped into ‘debt slavery’ which is a major enemy against ‘frugal living’. This article however has relevance to any economy where people are falling into this trap under the impression that this is the best way to live which is totally false.
What is “Debt Slavery”?
Debt slavery is where your debt load dictates your life. A quantifiable definition is that when one pays 5% out of his/her income as ‘interest’, then he/she has fallen into the clutches of ‘debt slavery’.
Debt Slavery is NOT the same as being poor. A poor, retired couple might be able to live well on a minimum monthly Social Security, because they have no debts. Meanwhile a young couple with much debt might not seem to be poor, but they are in Debt Slavery nonetheless because they give away hundreds or thousands of bucks a month in interest. They might live well, but they should be able to live even better. It is more desirable to “live with less” than to pretend to a higher standard of living than you can actually afford, and consequently become shackled with debt.
Types of Debt Traps:
People frequently fall into 2 well-laid traps. Trap A tricks you into buying a buck more than you need, which costs you 3 or 4 bucks in the long term. The benefit you choose is small (for instance, the benefit of having a brand-new car over a 2-year-old car), but you pay much more in the long run, especially because of interest. By avoiding this trap, you receive a LARGE savings, in exchange for giving up a SMALL benefit.
If you buy a house or car that costs 10,000 bucks or more, you’re not just making a decision to spend an additional 10,000. Yes, you are agreeing to pay back that additional 10,000, which increases your debt. But you will also pay a lot more interest. And for houses and cars, the cost of insurance on a more expensive model will be higher as well. So by learning to get by with less, you’re saving a LOT more that the mere price difference between the two.
Trap B tricks you into spending money where there is no need to. For instance, spending a day at the theme park rather than a day at the park. . Buying stuff just because it is on sale, even though you got by just fine without it. We are not referring to people suffering from ‘compulsive buying habits’ but the ones who indulge into these just for ‘fun’ or with a view to demonstrate their ability to own things albeit falsely to their neighbors.
Three Major Contributors to Debt Slavery:
- Mortgage Loans, particularly the one known as ‘ARM’ , other secured loans as for buying of Cars, Personal Loans and Last if no the Least the Credit card Loans.
- While under some circumstances, Mortgage Loans may be a necessity from the point of view of having a place of your own, mortgage loans taken with a speculative motive should be avoided at all costs. One should say a big no to personal loans and credit card loans which are the worst form of unsecured loans and destroyers of ‘frugal living’.
- We would conclude this article by requesting the readers to have a ‘Re-think’ as to how you see the banks and credit card companies. Do not consider them beneficial businesses, helpers or friends who care about you. That is what their advertising campaigns would like you to believe. The truth is they are tyrants, vultures, who would just love to enslave you, drive you into poverty, and take the food out of your children’s mouths.
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10 June 2008, 3:12 pm
[...] of debts in destroying the fruits of frugal living by those who have fallen into the the ‘Debt Slavery‘ voluntarily. We emphasize the word ‘VOLUNTARY’ because of the fact only people [...]