Our Mistakes: The Debt Trap

2009 – autumn (at Mrs.S house, talking about the past due payments and how to get the payments back on schedule. She is a retired woman, both her and her husband living on pension):

Colector: What happened, why are you in this situation?

Mrs.S: I have 8 loans at different banks and financial institutions and i’m having troubles paying all the installments. My husband is in the country  providing food and he is a little upset on me because all this situation.

She handed  me a pile of letters from all those financial institutions informing her on past due payments and believe me, they were quite a few and the amount of monthly payments were way to much then her pension.

Mrs.S: What i think i should do is pay them by turn each month, one or two installments.

Collector: You can do that but every month, all of the creditors will issue a new payment.

Mrs.S: ………..

Colector: Mrs.S what did you do with all those loans?

Mrs.S: You know…like everybody, renovating the house, buying new appliances…

Colector: But do you needed that much money based on your pension?

Mrs.S: … They gave me money…i took it.

2005 – autumn (selling loans like crazy):

Mr.Seller: The maximum amount you can take is X.

Mr. Future Debtor 1: Can i get more?!

(At least 80% of this type of clients never paid the debt or paid with great delays)

The examples are endless and mind blowing, there were people that took the loan, get out of the building, hop in a bus to Italy or Spain and gone they were. It was the boom, people were taking huge amounts of money to buy cars, houses, double glazing windows (in Romania of that time, having all double glazing windows in the house was a sign of prosperity for that family), to renovate the apartments, to buy plasma TVs, DVD players, mobile phones, vacation houses in the mountains and many many more.

Everybody was doing that, people get loans for household appliances only with the ID card, sales were booming, people were happy watching 5 o’clock news on plasma TVs and happy they are not the only ones in the block without double glazing windows, millions of eastern europeans went to the west, happiness was all around.

Years passed and disaster struck, the financial crisis came and happiness went busted, people started to sell the second car, the house in the mountains, they lost jobs, loan payments went overdue, banks started taking their bad credits back, now the 5 o’clock news were not that bright on that plasma TV, those double glazing were dirty now and all the new things in and around the house were not giving us that so much joy.

People started to blame the banks and all the stores and financial institutions that get them in so much debt, with no control, but is it all the banks fault? Or those evil banks were helped by our own envy and greed?

The big difference was that a financial institution works with high standard thinking and planning and we, work in general based on instinct and feelings and follow each other like sheep.

The best thing is not to buy something with the money you don’t have right now, but this is how society works these days and if you do need a loan, please be careful and THINK in advance. (You can follow some guidelines on this blog).

Everybody is afraid of sharks, but we help them survive and we feel good about it, heh?! ^-^


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