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Are you in debt from your home costs, student loans, and other personal expenses? Well, you’re not alone. In fact, it’s a growing worldwide epidemic. A study by McKinsey shows some shocking statistics about the rise of debt worldwide. Global debt has increased by 57 trillion USD since 2007. All countries also have higher levels of borrowing. No major global economies have decreased their debt-to-GDP ratio in this period.
It comes in the wake of the financial crisis of 2007. The burst of the global credit bubble has caused financial troubles for many world economies in its wake. More and more citizens around the world are struggling to make ends meet due to this.
One nation where the problem is particularly prominent is the UK. A survey found that nine million people across the UK are in serious debt- almost a fifth of the population! Despite this, very few attempted to get personal help. It suggests a greater need for financial education for people to manage their money sensibly. In five cities in England, over 40% are struggling to repay debt!
It’s also a huge problem in countries such as Ireland, Singapore, the United States, and Greece. The problem appears to be on both ends. Although countries are struggling to keep their economies stable- people are also borrowing too much. But what are the reasons for people’s growing personal debts?
Student loans are a major factor for those in debt. While education is free in some places, such as many of the countries in Europe, there are still high tuition costs in countries like US and UK. These nations also attract a lot of international students, who pay even higher tuition fees as well as living costs.
Loans are essential for most people to get a degree. While people can forgo this, it often leads to severely reduced job opportunities. This only makes their financial situation worse. Working while in full-time education can also impact their ability to get a degree.
Despite growing debts, many people still rush into buying a home. It’s especially prevalent in the US and the UK- a Financial Times article claimed these countries have a cult of home ownership. Many people go into buying a home without considering the financial implications of it. A mortgage often doesn’t cover the whole cost, as things like maintenance costs and emergency repair expenses often come up.
Many people need to take out second loans to cover their home costs. This ends up leading to even more debt for many individuals. In these cases, things like debt consolidation loans are often helpful. Loans like this can reduce interest rates and cover everything you owe in one monthly payment.
People need to be more fiscally responsible and consider whether they have the money for such a long-term investment.
People are also spending more on consumer goods. Fashion retail stores are still popular for many people. Those with bad spending habits often splash out on new clothes every week.
Things like expensive gadgets, new furniture, and home appliances also cost people a lot. These expenses can often add up, leading to even more debt for individuals. With shopping being so easy to carry out online, even from a smartphone, it seems consumerism is only growing stronger.