Credit is a disease you won't catch here

By glblguy

Wallet with The Virus written on it
One evening a few weeks ago, we stopped at our local convenience store to get some gas. I walked inside to grab a drink. I don’t recall the details of the conversation, but at some point the clerk working the counter said:

Credit is a disease that you won’t catch here!

He was referring to not liking credit cards and debt in general. I still liked the quote and found it a very profound statement. For the sake of this article, I’m going to change it to make it say what he really met : Debt is a disease you won’t catch here

I’ve thought about what he said a great deal since then. Is credit really a disease? Can you really catch it?

Wikipedia defines a disease as:

A disease is an abnormal condition of an organism that impairs body functions. In human beings, “disease” is often used more broadly to refer to any condition that causes discomfort, dysfunction, distress, social problems, and/or death to the person afflicted, or similar problems for those in contact with the person.

A disease is an abnormal condition of an organism that impairs body functions. – This part of the definition definitely doesn’t apply as I am not aware of credit impairing body function. I did hear of a story once where a main was having chronic pain in his leg. For some reason he decided to stop carrying his wallet in his rear pocked and within 2 days the pain went away…but I digress…

The second part of the definition is a little more intriguing…any condition that causes discomfort, dysfunction, distress, social problems, and/or death to the person afflicted, or similar problems for those in contact with the person.

Let’s look at this analyze this part of the definition in a little more detail…

Discomfort

Not sure about you, but being in debt and using credit certainly causes me discomfort. Mainly it causes me to worry, stress and sleep loss. Again, this is less due to the credit than the debt I have that’s associated but the two are tightly coupled.

Personally, I feel discomfort when I use a credit card as I am not a fan of using other people’s money, even when I pay it back on time and pay them interest as a fee for using their money. I prefer to use the money I own and the money I’ve earned. I have enough stress and discomfort in my life without the added strain of owing others money. Am I there yet? No, I still owe quite a few companies money, but someday soon.

Medical studies also show that stress is a significant cause health problems. One of the primary causes of stress? Debt and financial problems.

Dysfunction

Dysfunction is basically the impairing of normal function or behavioral patterns. Does debt cause dysfunction? Sure does. At first I didn’t think so, but then I realized that my current behavioral patterns around money, spending, etc. are the way they are due to debt. As a result, I asked myself a different question, how would your behavior change if you were debt free? Discussing that in detail would be a completely different article, but suffice it to say I would be a lot less stressed and feel much more free than I do.

Distress

Distress can be described as pain, anxiety, sorrow, despair, or being a state of extreme necessity. I’d saying debt can cause everyone of these. I have anxiety over by debt and often feel like it’s a dark cloud constantly over my head. I’ve read numerous blog articles about people in debt feeling hopelessness and despair over their debt thinking they are never going to get out. This often leads to situations of extreme necessity.

So yes, debt causes distress. The more you have, the more distress.

Social Problems

This is an interesting one and there are basically two sides to this coin. On one side, debt doesn’t cause social problems as people don’t really talk about it openly. I mean, how much debt are your friends, co-workers, or neighbors in? Chances are, you don’t know, nor would they want you to.

On the other side, debt has significant influence on your social situation. How often have you declined a group event or not gone out with friends or family due to not being able to afford it as a result of your debt? This has happened to us many times in the past? Did it impact us socially? Absolutely.

Death

While researching this article, I found that Financial problems and debt are generally one of the top 5 reasons that adults commit suicide. The number one cause is depression and one of the main contributing causes of depression is debt.

In most cases, debt won’t cause death but don’t overlook the fact that it does. People commit suicide daily as a result of the overwhelming and helpless feelings associated with their debt.

Conclusion

Is credit a disease? Not, but it does meet many of the criteria. I would even argue that credit is contagious. I’ve seen people with absolutely no debt start to hang around with people that are in debt and within a short period of time that are no longer debt free. Just look at the amount of people in the world that think being in debt and making large payments each month is normal. A fairly recent USAToday article showed that 78 %of baby boomers have mortgage debt, 59% have credit card debt, 56% have car payments.

What do you think? Is credit/debt a disease? Share your thoughts in the comments below.


27 Responses (including trackbacks) to “Credit is a disease you won't catch here”

  1. Justin Says:

    Contagious? Possibly. More like a bad habit not beaten by better education. Ignorance is possibly the cause to this and a lot of other problems.

    I did have to latch on to one of your statements though, I am not a fan of using other peopleÂ’s money, even when I pay it back on time and pay them interest as a fee for using their money. When it comes to credit cards at least, if you pay the OPM back on time then you’re not paying interest. Yes, I know you can stretch the payments out, but that leads back to the ignorance issue, which I mean in the lack of knowledge sense and not the insult sense that many people get from that word. Naive doesn’t quite cut it and can be just as insulting.

  2. Mrs. Micah Says:

    It’s certainly a cause of much dis-ease in the world. Death is the saddest consequence, especially when one hears of young people in deep debt committing suicide. :(

  3. Interrobanger Says:

    Very funny, and funny with a point. It’s true there are many, many drawbacks associated with credit. As someone who works for a coalition of merchants, I can tell you this is true even from the other side of the counter.

    There are a whole set of fees charged to merchants based on what kind of card you use — if you can use a debit card, we’d prefer that. If you use a signature/credit card, it actually costs merchants more to accept that than if you use PIN/debit.

    I still think that credit is a necessary evil — I do want to buy a home someday, and having good credit will make that cheaper and mored doable. But I watch my credit card like a hawk and pay it down every month.

    Of course, the merchants can’t do that with their fee issue — the interchange fee it’s called. If you’re interested in more, the group I work with is online at UnfairCreditCardFees.com

  4. Sick of Debt Says:

    I feel it is a disease, that’s why I go with the screen name of “Sick of Debt”. I’m slowly working my way back to the healthy form I was in prior to giving into the credit cards.

  5. editec Says:

    Materialism is the disease.

    Credit is just the carrier.

  6. glblguy Says:

    Great comments and perspectives all, thanks for your comments for adding value and insight!

  7. The Chef Says:

    Even if credit is a disease I would say its just only an effect of a cause. The cause is one’s behaviour and attitude towards life and future. So to remove the disease one has to work upon the cause.

  8. glblguy Says:

    @The Chef – I agree. Credit/Debt is really just the symptom of a larger problem. Thanks for your comment.

  9. The Happy Rock Says:

    I agree debt is a symptom, not a disease.

    We must be careful, because there is probably some genetic factors that make some more susceptible to debt and spending. Although science is starting to show that our choices can affect our genetics, and those around us.

  10. JoeK Says:

    Hi there, can you please explain to me why someone who has had the misfortune to miss payments as a result of losing their job, then has to pay higher interest rates on personal and secured loans.

    It just doesn’t seem fair

  11. justin Says:

    @JoeK: Because when you agreed to borrow money you agreed to pay it back in a certain amount of time. If you miss a payment then you are failing to do what you agreed to.

    Some lenders will work with you if you contact them in time, before you have missed any payments. Some won’t.

  12. glblguy Says:

    @JoeK – Proverbs 22:7 – …”the borrower is slave to the lender”. Hence why I am on a mission to become debt free.

  13. Minimum Wage Says:

    I like to think my depression is reality-based and thus not all in my head.

  14. Minimum Wage Says:

    Convenience stores promote the disease of debt, what was that guy thinking? Convenience stores are where high prices and low wages meet, where people waste inordinate sums of money, where everything (escept maybe newspapers and magazines with the price on the cover) is overpriced.

  15. glblguy Says:

    @Minimum Wage – Not sure what you mean by “reality-based and thus not all in my head”? I agree regarding convenience stores. I guess maybe just because you work somewhere doesn’t mean you always believe in the values or place you work. For example, I work for a bank that provides credit cards. I don’t like it, but still work there.

    Great perspective on “Convenience stores are where high prices and low wages meet, where people waste inordinate sums of money, where everything (escept maybe newspapers and magazines with the price on the cover) is overpriced.” That is a very insightful perspective Minimum Wage. I knew that, but honestly hadn’t thought about it from that perspective.

    btw, welcome back…been while since you’ve commented!

  16. editec Says:

    I think that some of us are ignoring the fact that our entire consumer driven economy is based on the manufacuting of money via the debt system.

    While I quite agree that people are in a lot of trouble because of their debts, let’s bear in mind that if enough people do not borrow enough money today, our economic system, which is based on fiat money created by the indebtening process, quite simply shuts down for a lack of capital.

    I offer no solution to this state of affiars, because it has become the system of modern capitalism for about the last 500 years. It started with the national banking system around 1550 and was further exacerbating when the world went off the gold standard at brent Woods in the 1930s.

    By leaving the gold standard behind we freed our money supply to grow and grow as long as people signed on the dotted line. More money in ciculation meant that the prices of things went up over time and so everyone (especially banking system) feels richer, spends more, borrows more and the real wealth made with that fiat money produces the goods that we all want and buy.

    What IS debt? Where does the money we borrow come from?

    The money we borrow does NOT come from someone else’s savings. That’s a myth told to children to encourage savings and so people don’t eventually lynch bankers.

    Let me prove it, okay?

    Collectively, how much money did Americans borrow last year?

    Trillion$, folks, especially when you include what our goverment is borrowing in our names.

    Now, how much did the American people collectively save last year?

    ZERO, nada, zilch.

    You or I might have saved some money, but collectively our society has been spending more than we’ve made.

    So where did the money that was borrowed actually come from?

    The banks quite literally make it up based on your promise to pay it back (with interest) in the future.

    No, some of you probably imagine that we borrowed it from other nations of savers, right? Places like China?

    Well, that is partially true, of course, but that’s an accounting fiction as much as an explaination.

    When we borrow money, for example, to buy a house, we are granting the bank the right to create that money based on our ability to pay in the future.

    Those motgage debts get bundled up and sold as investments to places like China.

    That EXACTLY why the looming cofidence crises in mortgage debts is so threatening to the world economy.

    When there’s a loss of confidence in borrowers’ ability to repay those loans, the finacnial insturments that were sold based on those debts lose value.

    It’s called the “Fractional banking system”, folks.

    Creating new money in amounts multiple times as much as the banks have money on their books.

    And once the system is in place, as it is now in spades, if people do not borrow, there is not enough money in circulation for those who borrowed earlier to pay back their debts with interest.

    And if people cannot repay those debts, the value of their debt, which is wrapped up on bonds ceases to exist.

    The money quite literally vanishes as “bad debts”

    If you think this system is crazy because it is something like a ponzi scheme, you are absolutely right.

    But like every ponzi scheme it works UNTIL people lose faith in it.

    I am NOT a gold bug.

    The gold standard makes even less sense (for a modern industrial society) than what we have right now, but the one thing that it did was prevent banks from going wild and lending beyond society’s ability to repay using fiat money.

  17. glblguy Says:

    editec, when you say the banks make money, don’t you really mean they borrow it from the fed that actually produces it? I work for a bank, and know for a fact we don’t make (as in create) money.

  18. editec Says:

    So the Fed “creates” it?

    Interesting. The Fed is what, again?

    A bank, right? A privately owned bank, BTW. One owned wholly by other privately owned banks.

    So when I say the banks, I mean THE banking system. The fractional banking system…all of it including the “Fed” overseeing the interaction between banks though the system overnight loans.

    Now what does the Fed “create” that money that the banks loan out to you from?

    There is no “money” in the Federal reserve. The Fed is a regualatory body overseeing the banks which own it.

    They invent specie just like their member banks do.. using their member banks promises to pay their loans back at an interest rate set by the FED.

    No money is printed up. These events exist as notations in a digital ledger

    In other words, you bank’s money, MOST of its assets are again what? debt instuments — promises that someone else made to pay money they borrowed in the past at some FUTURE date and at some agree upon interest.

    But BASED on those debt created “assets” your bank can loan out some FACTOR of the money they have.

    For example, if they count their assets as 1000, they can, according to the fractional banking system we have, loan out some MULTPLE of their assets.

    Let’s say for purposes of demonstration tens times their book value “assets”.

    They can now lend out 1000 x 10.

    And when they lend out that 10,000 it typically ends up where?

    Eventually onto to some or many bank’s ledgers.

    Which increases THOSE banks assets by 10,000.

    Meaning what? That those banks can NOW loan out how much? 100,000.

    And then they bundle up those many loans and sell those loans as bonds.

    To whom?

    Ironically, often to other banks, which hold them as assets giving those banks the opportunity to lend out based on those “assets” at ten times the rate they claim to have as cash, again.

    Can you loan out TEN TIMES the amount of money in YOUR POCKET?

    No, you cannot.

    You want to know why you can’t?

    Because you are not a bank with the offical license to do so.

    Hey, this isn’t me trying to beat up banking or bankers. When the system works it works wonderfully AS LONG AS THE ECONOMY IS GROWING.

    But it is me trying to explain why debt, which so many people understand on a personal level is a bad thing, in OUR system of fractional banking is the CREATOR of all specie in our system.

    We are about to see what happens when people pay off their debts.

    When we do, even though the PEOPLE who pay them off might be better off, the total amount of money ciculating in the economy is going to be much much smaller.

    Leaving those who suffer during the economic downturn unable to pay off their debts.

    Meaning, as we are seeing in the case of the mortgage crises, that the banks themsevles are caught with their fractional banking pants down.

    Meaning their shares arew worth less.

    Meaning people do not have the wealth they THOUGHT they had.

    You see the vicious cicle here?

    Debt, on a personal level is a bad thing…but DEBT is what makes our economy run.

    Our whole economic system is BASED on DEBT.

  19. glblguy Says:

    @edittec – Interesting, you seem to know a lot more than I do about all of this, but I found your comment very interesting. Need to think on this a bit. Thanks for taking the time to explain it.

  20. editec Says:

    No problem.

    It a whole lot more complex, in terms of detail surrounding the banking system, than this venue can handle, or for that matter than I can explain.

    But money isn’t anything real. Money is something based on our mutual CONFIDENCE in it, that we use as a medium of exchange.

    It can be gold, or it can be paper. Hell it can be anything that we agree to accept.

    But the “specie” we actually have is created in our system by debt.

    Not by goverment printing presses, not based on anything tangible.

    It is based on PROMISES to pay in the future that millions of us, banks included, bond issuers included, goverments included AGREE to pay.

    When our confidence is shaken in people’s abilities to pay, as for example we are currently experiencing with the mortgage crises, then EVERYONE is effected…even those with NO DEBT.

    What I am trying to tell those of you who are libertarians and who app[arently imagine that what happens to you neighbors doesn’t affect you is that is simply applying 12th century thinking in the 21st century.

    EVERYONE is hurts when many people are hurt (like for example when you ship everyone’s jobs to China and they can’t pay their mortgages) because we are all tied into a single economic SYSTEM based on their HOPES of their brighter futures.

    We must have an expanding economy which CAN PAY BACK the debts issued in the past, or anyone holding those debts (and that is ALL our banks) is poorer.

  21. minimum wage Says:

    By “reality-based” I meant that a person considering my situation objectively would probably find good reason to be depressed.

  22. glblguy Says:

    @minimum wage – Ah, ok, thanks for the clarification. Understand what you mean, my personal situation a year ago led me right down that path. I was seriously depressed and frankly overwhelmed. Faith and prayer was what got me through.

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