Personal Debt.

DebtThis topic has been suggested by me for the weekly Friday Loose Bloggers Consortium where currently six of us write on the same topic every Friday.  I hope that you enjoy my contribution to that effort.  The five other bloggers who write regularly are, in alphabetical order,  AshokgaelikaaMaxi, and Shackman and The Old Fossil. Do drop in on their blogs and see what their take is on this week’s topic. Since some of them may post late, or not at all this week, do give some allowance for that too!

When I suggested this topic there was a young mentee who was fighting to gain control of an enterprise that she had unwittingly got into in partnership with some others who had not put in any equity but had promised to bring in management and administration inputs which they failed to provide. My mentee had got into debt in her individual capacity and the business had to generate enough surplus to enable her to pay off those debts as well as finance her gaining control of the business by buying out her partners.

At the same time, I was also involved in the problems of a friend whose son had got into very serious debt problems buying a flat, furniture, car etc and also got into financial settlement, alimony etc in a messy divorce case.

So, the topic was on top of my mind and subsequent information that I received from other sources about other individuals with similar stories, has only firmed up my conviction that this is a major problem facing our youth today due to one single fact, instant gratification.

Among other pieces of information that I came across was the shocking revelation that many student loans are not repaid and the institutions that had guaranteed the loans stood to make good the losses incurred by the banks who had advanced the loans.  And this about some very famous and leading institutions of higher education and some of the names that were bandied about in the conference that I attended were simply staggering.

I also hear about professional collectors making life miserable for defaulters including causing  physical harm to the borrowers and wonder if our society will become like what we used to read about loan sharks and their baseball bats!  Since banks are the lenders, they hire these very respectable collection agencies who however indulge in very dubious methods to collect.

The individual lender/borrower equations like I wrote about seems to be not such a big problem now that we have banks falling over each other to entice young people to borrow from them and we also have what are called Micro Finance Banks who are replacing the traditional local money lender in many parts of the country.  There are so many institutions willing to lend to individuals, often without collateral, but also for hire purchase, the debt burden seems to be increasing.  Enjoy now pay later is the motto currently in vogue.

I personally am debt free today as is my son and daughter in law and that is a feeling not quite shared by many of my friends whose children are overburdened by debt and often depend on their parents to help them out during emergencies.

I would rather live in those good old days when consumer lending was not in style and when we had to save up to buy anything and any borrowing was from family and friends.  The younger generation here of course thinks that I am a relic who belongs in some museum somewhere.

What do you think?

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