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According to studies, household debt has risen beyond previous years. On global levels, Denmark has the largest household debt, with Australia following closely behind as debt climbs to an all-time high. Where does blame lie? While poor spending habits are a factor, it isn’t always the fault of the homeowner. The rising cost of mortgages, the remnants of student loans, and the increased burden of elevated energy prices, are just some of the factors affecting households today. These outside influences affect many of us, and are attributed to what many are calling a ‘debt crisis.’


Still, some of the responsibility does need to lie with the homeowner on a personal level. According to this report, there are several factors driving debt in Australia today, and these can also be categorised for other countries internationally. Three of these factors could be avoided, and the blame does land with the common household. Credit card debt, personal debt (the use of loans), and investor debt fall into the laps of those who instigated them. That’s possibly me, you and your nearest neighbours. We are all susceptible to mistakes, so rather than pointing the finger of blame at unscrupulous bankers, calculating energy companies, and the student loan system (despite the inherent flaws within each), we also need to look at ourselves and our relationship with the money in our pockets.


Let’s look at the three debt factors mentioned.


Credit card debt. How many credit cards do we actually need? And should we rely on them anyway? There is the misconception that our plastic friends offer free money. Well, they do, until we realise they come attached with high interest if we fail to make repayments on time, or when we fall into debt when we max them out. Using a credit card can lead to good credit, but not when their only use is the odd takeaway, a luxury item, or a night on the town with our friends. Used the right way, a credit card can offer freedom, but in the hands of the foolish, they can trap us for a lifetime.


Personal loans. A common loan is the mortgage; a necessary evil for the homebuyer. However, we are often guilty of taking out personal loans for other means, often in a vain attempt to better our standard of living and to keep up with our friends and neighbours. A holiday, a new car, and other consumer items are the guilty pleasures afforded to us by a loan. And it’s so easy to fall into the trap. With money lenders on the high street offering fast payday loans, and junk mail promoting offers to those with bad credit landing in our mailboxes, it’s little wonder we sometimes fall prey to temptation. A loan is fine, provided we have the means to pay it back. But as so many of them come with high interest whacked on top, we are in danger of being in debt for years to come.


Investor debt. Want to get rich quick? Invest in the trading market. That’s the theory anyway. But rookie and expert investors alike run the risk of a bad investment, resulting in financial ruin if savings aren’t in place. Admittedly, beginners are the most at risk, stumbling blindly into the world of stocks and shares. However, with CMC Markets online tools offering trading demos for rookies, and with oodles of information online at our disposal, we can reduce the possibility of a financial downfall through educating ourselves with good practice.



We are living in a world where trillions of people are living in debt, and some of that is imposed upon us. The banking system needs to change, recognition needs to be given by energy companies to those struggling on the breadline, and our government needs to put extra policies in place to protect us from bad loan companies. But we should also look at ourselves. By managing the money we have more effectively; by refusing to pamper our wants through loans and credit cards, and by restructuring our ‘get rich quick’ and ‘keeping up with the neighbours’ mentalities, we can protect ourselves from some of the consequences prevalent in these debt-ridden times.