Today’s topic is achieving financial freedom after years of struggling with consumer debt. While Japan overall is not a consumer debt-driven culture to the extent that the United States or other countries (South Korea, recently) might be, many foreigners living in Japan often struggle with a heavy debt load to pay off.
Be it student debt, credit card balances, a second home mortgage, or alimony, many people share this “secret” burden, sending home a hefty chunk of their salaries each month.
The topic of how to go about reducing debt is broad enough to encompass several books. There are many systems peddled by different self-help or personal finance gurus that promise to dramatically reduce or eliminate your debt. Some of these are quite helpful, but I won’t explore them here right now. The main focus, I believe, is learning to “debt proof” your life, instead of continuing the debt-incurring cycle.
Mary Hunt, author of Debt-Proof Living (click to purchase) and publisher of The Cheapskate Monthly (both favorites of mine), defines debt-proof living as: “You spend less than you earn; you give, save, and invest confidently and consistently, your financial decisions are purposeful, you turn away from impulsive behavior; you shun unsecured debt, you borrow cautiously, you anticipate the unexpected, you scrutinize your purchases, and you reach for your goals following a specific plan.” (Debt Proof Living, p. 9.)
Whew! That’s a tall order, especially for someone who might be struggling to meet the minimum statements on their credit card bills or rarely has money left over at the end of the month. But it’s a start.
See: Debt Free Living – Part 2
Speaking of Consumer Credit, Here are Some Startling Statistics
American consumer debt totalled $2 trillion at the end of November 2003. That’s the equivalent of about Y200 trillion (at Y100/$), or 200X the annual net profit of Toyota Motors for 2003. According to various Internet sources, that is also roughly the same size as Japan’s government debt burden, and the total amount of money tucked away in Japan’s postal savings. Wow. (Consumer debt does not include mortgages.)
The US isn’t the only country addicted to credit card spending. According to the International Herald Tribune, “there are 99 million credit cards in South Korea, an average four for every working person. Payments still due on those cards stood at 122.4 trillion won at the end of June 2003. That is equal to about a quarter of all the goods and services produced by South Korea last year.” The government has stepped in to help banks deal with the resulting bad debt issues.
The United Kingdom is also seeing a boom in consumer debt, fueled by an increase in property prices and a general economic recovery. Epolitix.com says the average person owes “at least GBP1,062 on credit cards, GBP1,561 in personal loans and GBP760 in overdrafts.”
© 2004 Wendy J. Imura.
December 24th, 2008 at 8:59 pm
[...] few weeks ago (when the weather was a bit more bearable), I introduced a rather ambitious topic: debt-proof living. After defining debt-proof living, I promised to revisit the idea with further details later. Well, [...]