Start By Changing The Borrowing Mentality
Easy credit has helped the borrowing mentality to become well and truly established in all of us.
The borrowing mentality is based largely on the fallacy that it does not matter how much debt we have as long as we also have assets to a reasonable value such as a house or shares to offset that debt. What blows the fallacy apart however, is the fact that house prices can fall and the value of shares plummet. In addition the cost of servicing our debts means that whilst we may be asset rich, we can still be cash poor.
This "borrowing mentality" is made worse by our exposure to advertisements offering loans at attractive interest rates, and this weakens our resolve still further.
To previous generations borrowing money carried a social stigma and meant that a person was living beyond their means. The idea of borrowing for a holiday for example would have been unthinkable to most people. Pre 1980 credit cards were reserved for the privileged few and marketed in that way. Now credit card companies use sophisticated credit scoring to make their lending policy more flexible. The use of telephone and internet applications has quickened the process of obtaining a decision on a loan.