In a society ruled by consumerism, people tend to become fixated in replacing their items with newer and “better” ones. They buy goods, use these for a while, and throw them away to purchase other things. In fact, the idea of having these old items repaired is not a matter of concern to some people anymore. As long as they have the means and capability to buy another product, then they have nothing to worry about. Unfortunately, this practice only leads to dissatisfaction, depression, and more debts.
How Consumerism Affects People
Most western nations adopt the idea of consumerism because of the belief that an individual’s standard of living is impacted by the material things he or she owns. To shed light on this mentality, it is worth pointing out the pros and cons of consumerism to the economy and your personal life.
Basically, this principle offers positive effects because it leads to an increase in industrial production, higher progress rate in the economy, more supply of goods or services available to people, and greater employment opportunities. Furthermore, consumerism can help improve your lifestyle because of more advanced household or commercial tools used.
Although material prosperity is one positive impact of consumerism, there are also pitfalls and drawbacks on the society and every individual. For instance, there is a higher desire for goods, so those who have little purchasing power may feel dissatisfied about their standard of living. Additionally, there is a continuous rat race among people to earn more than what they normally receive. Hence, they are forced to deal with work-related stress, fatigue and tensions.
Material wealth becomes the primary factor that dictates whether a society or person is progressive or not. Unfortunately, spiritual values and morals are underplayed. The crime rate may also increase because of the intense craving to possess expensive items. It is also possible that personal relationships suffer since most people are trying to earn more than the average Joe just to improve their lifestyle and economic status.
About Consumer Debt
With the drive towards consumerism, more and more people find themselves buried in debts in order to keep up with their list of wants. They find ways to meet their financial needs by applying for personal loans, credit cards, student loans, housing and car loans. Generally speaking, consumer loan is the amount you owe to private or government lenders, which can help you meet personal consumption instead of your investments. If you spend more than what you earn from your job, it is likely that you will have the urge to borrow money in the form of consumer loans or credit cards. While these loans are quite accessible to some people, the repayment of debts can be very difficult and expensive, particularly when you have incurred a number of loans that you can no longer pay off.
Types of Consumer Loans
The following are among the common loans that individuals apply for, so they can maintain the quality of their life and keep up with their wants.
The most typical form of debt by most people is accrued through their credit card. There are some banks that will issue a credit card to almost anyone who has a valid mailing address or credit rating, even if these people are not qualified for the financial responsibility of paying off a loan. Moreover, interest rates and terms vary from one bank to another, and default provisions or penalties may differ, as well.
The compulsive usage of credit cards can be quite dangerous since these are convenient to use and frequently publicised as an option to increase your purchasing power. There are also internet sales advertised by most credit card companies since a number of websites provide quick payment plans by using a credit card.
Car loans are also common debts although these are more difficult for some people to obtain, as compared to availing of a credit card. In addition, auto loans can be one source of great financial worry, and the duration of the loan may range from 3 to 5 years with interest rates of about 5 to 10 percent. There may be instances that the rates may escalate to up to 23 percent for clients that have a bad credit score. Most sellers may also decide to push warranties or options to buyers, which tend to increase the cost of the loaned amount.
Mortgage loans serve as the most expensive and largest type of consumer debt. According to the Federal Reserve Governors Board, mortgage debts have placed millions of borrowers with low home values. These loans usually come with numerous requirements depending on the financial history of the applicant. Mortgages also include various options such as fixed rate, balloon, interest-only, and adjustable rate. Unfortunately, these options tend to increase the mortgage company’s profits instead of the buyer’s. With a careful and thorough review of the terms, you can ensure that there are no irregularities existing in the agreement you have signed with the company.
According to the United States Department of Education, the cost of college tuition and fees can be a massive expense, which is why the total federal student loan has reached over $500 billion. In addition, about 77 percent of education loans are from federal loans, based on the report by the College Board. Lenders from private or non-federal sectors are not part of this total, since these loans are provided by a wide range of institutions, and it is difficult to measure the overall number of private student loans that currently exist. However, one fact remains – the volume of private student loans is an increasing phenomenon, as compared to the statistics obtained a decade ago.
A nation that continues to adopt the concept of consumerism is known for prosperity and material growth. However, the economy is likely to suffer as it moves toward the possibility of recession. Many people have lost their source of income, and they experience great challenges in meeting their needs and wants. Thus, it is much wiser to live a simpler life where you can augment your expenses and still manage to experience the basic source of comfort and happiness.
My name is Kevin Watts and I am the creator of Graduating from Debt. I was like millions of recent college graduates in heavy debt with very little hope. With the right attitude and discipline I took control of my financial picture and now I can say proudly that I am debt free.
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.