You can be the master of debt or it can be the master of you

Unfortunately, few understand debt.  We are meant to think that we do but the current recession proves that most don't.  Take the many Americans convinced they were doing the right thing.  House prices apparently always go up so they took out mortgages and renovated, bought a bigger home or got that fancy toy they've always wanted.  They thought they'd mastered debt, until the tide changed.  Their homes lost value, many lost their jobs or had lower wages and suddenly their debt became far more of a burden than the enabler they had thought it would be.

Thus, when individuals like Senator Walton Brown proclaim our debt as "akin to a family borrowing money to purchase a home", you should take note.  What are we getting for our debt?  Will it earn more than it costs or will we wake up one day and realise we've not only made poor investments, but our home is worth far less than it once was.  Fancy statements comparing our debt to GBP to that of our American and British peers are like comparing a battleship to a rowboat.  There is no comparison, especially if a storm is on the horizon.

 

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