Consumer Debt

When a person goes out into the public, they commonly see things for sale, most of which they do not need. While most people have the knowledge not to buy things which they cannot afford, some people will buy it anyway using credit. While there are many forms of consumer debt, credit is the most common and expensive, as the magic of credit cards and their capabilities continue to evolve. While consumer debt has been around since before money, it has been rising exponentially among Americans due to lack of knowledge and cultural norms. Many people of the United States lack financial knowledge and simply do not know how to avoid debt and its emotional effects. In a study taken at colleges around the United States, 77% of students recorded paying …show more content…
Over two thirds of people under the age of twenty four realize they do not know enough about finances, and are losing money because of it (Norvilitis). The reason young adults lack this knowledge is because schools rarely have financial classes. Even if such classes are offered, students see few reasons to take them, as getting accepted into prestigious colleges may require classes like math and science instead of those. Another problem is the parents, who do not teach their kids enough about finances and how they work. Children rarely seem to have the knowledge growing up about the importance of finances, saving money, and being cautious with spending your money. When it is not taught at school, it becomes the responsibility of the parents to assume that role, a role that many times is not filled. Without the correct knowledge, many children grow up lacking the thought of keeping track of their expenses, paying taxes, and putting money into …show more content…
The debt to income ratio has almost doubled in just one year, from 2005 to 2006 (Krishna Dutt). Much of this can account for luxury items. People in this era feel a need to have certain things that they desire, and often times, they will purchase it with the swipe of their small, plastic card. With many new ways to advertise, whether it be on a billboard, a commercial on television, or an advertisement online, people are exposed to so many appealing products that they feel the need to consume. People also feel the pressure to keep up with societal norms. If a certain product gives you a certain status among your peers, many consumers will feel the need to buy it. For example, iPhones are a popular product, and although expensive, many people who should not be able to afford it purchase it anyway, for the status among their friends. There are also many new technological advances that consumers feel the need to update, whether it be for work, hobby, or simply because they want the newest product. Companies have begun to realize this and have been releasing new versions of certain products at an alarming rate. With inflation, these products become even more