Introduction
In light of the never-ending economic crises, more families and governments apply to debts. Everyone wants to survive, but not everyone has enough finances to provide for the most essential living resources and needs. Debts and borrowing act like a two-edged sword. On the one hand, it is always good to have an additional source of finances that will help improve one’s welfare. On the other hand, too much debt can lead to a financial, social, and moral disaster. The growing amount of debts in society is a matter of elevated public concern. Households, businesses, and governments owe billions of dollars to their creditors. Today, debts have profoundly negative impacts on individuals, families, and society, because they lead to serious health problems, result in family conflicts, and keep governments from pursuing stability and continued economic growth at a national scale. The purpose of this paper is to show how debts are harmful to individuals and society. This paper is intended for the general audience with no special knowledge of finance.
The world is facing the risks of bankruptcy. Almost everyone in this world owes something to someone. Debt has become a reality for millions of families and hundreds of national governments. “Over the past 30 years, […] the ratio of debt to GDP in advanced economies has risen relentlessly from 167% in 1980 to 314% today, or by an average of more than 5 percentage points of GDP per year over the last three decades” (Cecchetti, Mohanty & Zampolli 1). Many individuals, families and national governments cannot imagine their lives without debts. Otherwise, these families and countries would be poor (Cecchetti, Mohanty & Zampolli 1). Unfortunately, the negative impacts of debts are either rarely considered or persistently ignored. In reality, debt is a continuous source of emotional and financial stresses for everyone involved in this kind of financial relations.
Debt causes serious personal difficulties to everyone, who owes something to banks or individual creditors. For every person who has a debt, its sum and the circumstances of moving into it trigger serious negative emotional responses. Especially when individuals perceive their debts as overwhelming and unmanageable, they are prone to develop stress and depression (Anonymous). Individuals, who feel that they may not be able to pay their debts on time, feel restless and worried about their future. They experience a wide range of negative emotions, from anger to fear and panic (Anonymous). These emotional complications create a vicious circle of difficulties, because individuals who experience stress and panic cannot function normally in the workplace. As a result, they lose a chance to earn enough money and get rid of their debts. Added to these are the physical health problems developed as a result of stress. The negative effects of stress on cardiovascular system are well-documented (Goldberg). Stress increases the risks of diabetes and skin conditions (Goldberg). Consequently, a person who has a debt ends up having an even greater financial burden, due to the growing medical and health care costs.
Debt is damaging to family relations. According to Nall, being in debt is associated with numerous family problems. Couples that experience financial difficulties and feel that their debts become overwhelming are more likely to have conflicts or disagreements about their financial decisions (Nall). Nall is right: these financial conflicts impact all family members, but children are the most susceptible to their negative effects. Children may not understand the seriousness of the financial problems facing their family, but they will notice the stress and panic experienced by their parents because of debts. This stress, fear and panic change children’s emotional reactions; as a result, such children are more likely to develop mental health and emotional problems later in life (Nall).
No less damaging are the consequences of debt for governments. Today, even the most developed countries have debts. The burden of debt on governments is becoming enormous, and not all of them can successfully fulfill their financial obligations. The recent example of Cyprus is very demonstrative: millions of people were not allowed to use their bank accounts and had to sacrifice part of their bank savings to the state to help it cope with the budget deficit. Apparently, debts impede economic growth, especially when governments become too obsessed with borrowing. Such governments have to spend most of their financial resources to accomplish their financial obligations, leaving their citizens financially insecure (Cecchetti, Mohanty & Zampolli 20). Such governments have little finances left to spend on health care, social security, homeland security, and other top social and economic priorities. They have too little financial resources to invest in their countries’ industrial growth. Eventually, too much debt leads such countries to a dramatic financial collapse.
Certainly, not all debts are bad. When acquired and managed reasonably, debts have the potential to improve families’ and governments’ welfare. However, such improvements are temporary, if the financial and capital resources borrowed from another individual, family, or government are not invested in financial and economic growth. Debts are more binding than they may seem. Those, who cannot manage their resources effectively, will hardly be able to cope with their debts. Given the financial, social, emotional, and family consequences of debts, they should be avoided by all means.
Conclusion
Debts are undesirable and should be avoided, because they lead to serious health problems, generate family conflicts, and impede countries’ economic growth. Individuals who have debts experience serious stress and even panic, which invariably impact their physical health. Families living in debts face conflicts and disagreements. Governments that owe too much to banks and other countries have too little financial resources to invest in social and economic growth programs. At times, debts can help families and governments improve their wellbeing but, in most cases, debts create a road into nowhere.
- Anonymous. “The Emotional Effects of Debt.” America’s Debt Help Organization, n.d. Web. 20 April 2013.
- Ceccetti, Stephen G., M.S. Mohanty & Fabrizio Zampolli. “The Real Effects of Debt.” Bank for International Settlements, 2011. Web. 20 April 2013.
- Goldberg, Joseph. “The Effects of Stress on Your Body.” WebMD, 23 July 2012. Web. 20 April 2013.
- Nall, Rachel. “The Effects of Debt on Families.” Livestrong Foundation, 14 June 2011. Web. 20 April 2013.
