Where there is debt, interest payments follow. The discussion about debt is a discussion more people should be having as the global debt just reached a staggering $247 trillion for the first quarter of this year. When interest rates eventually spike, repayment and refinancing will be a challenge for the average household and some debts will be defaulted.
One massive area of often-unavoidable debts are student loans, more than one million American student loan borrower’s default on their debt each year. The fact that millennials are postponing marriage, home buying and having kids, simply because their average paying jobs cannot cover debt-servicing payments of their loans is evident all over the world.
With rising interest rates imminent and a trade war between the U.S and China a real probability, there are reasons for concern. Renowned investor Warren Buffet admits stocks are currently overvalued and he foresees the market going down. The signs are there for the average household to adopt a more frugal approach to spending. Debt is a commitment, which needs to be taken more seriously in the current economic conditions than before both governments and individuals can’t keep spending more than they take in.
With current market and economic growth, we need to ensure that necessary programs are funded to reduce loopholes in tax breaks and needless spending, and our debt is ultimately decreased. The truth about debt is that it is a double-edged sword: It can cut for you like a toll, but it can also cut into you and bring harm.