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How Lifestyle Can Impact Debt

By: Garry Crystal - Updated: 26 Jul 2010 | comments*Discuss
Lifestyle Debt Credit Financial

For people earning a decent income with a healthy credit score it has never been easier to receive credit. Recent media reports have stated that the average Briton has more than £33,000 worth of personal debt. Some people may find this figure shocking but to others debt such as this is just a way of maintaining an adequate lifestyle. For a great number of people, lifestyle and debt choices now go hand in hand.

Low Income Lifestyle and Debt

Trying to avoid high interest debt can be a problem if you are on a low income. Single parents known only too well the expense that children bring, and with only one wage, easily available, high interest loans may be the only solution. People may only take one high interest loan to tide them over, but once someone has become trapped in the debt cycle it is very hard to get out of.

For many people on a low income, high interest loans may be the only credit available. The lenders are well aware of this and will use advertising targeted at this particular sector of the public. With APR rates at 183%, lending like this is still not illegal but many people claim it is immoral. Unfortunately until the government steps in there will be no change in this type of high interest credit lending.

The Family Household Lifestyle

Even with two wage earners bringing in a decent income it is still sometimes hard to make ends meet. Rising house prices, interest rates, taxes, and children all make a big dent in salaries. Many families have to fund their lifestyles by juggling credit cards and taking out one loan as soon as the other has ended.

Although two wage families do have a greater income, their expenditure is usually greater as well, which makes any type of saving very difficult. A great number of parents with children are resigned to the fact that for most of their lives they will be in debt. It will take careful planning and wise investments to become completely debt free by retirement age.

Lifestyle Envy

Lifestyle envy is not a new concept but it has been gradually introduced as a link towards high consumer spending. Envy of other people’s lifestyles has been common for years but now people are taking advantage of easily available credit in order to live well beyond their means. Holidays, cars, houses, and even plastic surgery are all being purchased by some people without a regard for interest rates or long term payments.

Lifestyle envy has accounted for many people juggling multiple credit cards simply due to impulse buying on goods they do not need, but simply want. One of the worst mistakes people can make is to juggle debt in order to fund a lifestyle that they cannot afford. Similarly, borrowing money to try to improve your lifestyle will only lead to greater debts and may lead to a lifestyle you really did not wish to achieve.

Lifestyles without Debt

Many people can manage a lifestyle without debt, it does not mean penny pinching or missing out on luxuries, it simply comes down to making smart financial choices. Making your money work for you by saving and investing is a wiser move than spending every penny as soon as it comes in.

It may be hard to budget at first, but as soon as you see the extra money in your bank account every month this should act as an incentive. Using credit to fund your lifestyle is similar to having someone else pay for it, and they will expect a return for funding your lifestyle.

In today’s society, banks, credit card companies and high street lenders make their massive profits by funding people’s lifestyles. For many people lifestyle and debt do go hand in hand, and for many people the two can co-exist without problem, but living beyond your lifestyle by using debt is never a smart financial choice.

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