Being in debt in this commercially-driven world is not something that is unusual. We live in a world where we have to depend on each other for our own survival, whether an individual, or a nation.
Sri Lanka is no exception. The country is in debt and is still looking for ways and means of paying them off. However, what is alarming is the rate of increase of household debts in the country.
It was reported last week that according to statistics released by the Central Bank, every household had become indebted by Rs. 140,000 during 2015 to 2016. It would probably increase further this year.
We do understand the cost of living has increased over the years compared to the income levels of the people. The people too, opt to borrow money in order to improve their living standards, hoping that they would be able to pay off the debt at some point. But what occurs is a vicious circle. Some are even pushed to the limit of borrowing more money to pay of their debt.
It all boils down to financial management, and being content with what you have. However, it is easily said than done, especially when you consider the high cost of living. Even basic needs are expensive. Education takes a lot of money out of your bank accounts. There are health issues cropping up everyday, and hospital charges are sky high.
So, you cannot blame the people completely. Transport is also an expensive affair if you consider the number of hours wasted on the roads due to traffic congestions.
Then there is the worrying fact that Sri Lanka is ageing pretty rapidly. This has resulted in high dependency where one parent may have to take care of both retired parents in single child households.
The other factor is the growing number of credit card usage. There is no problem using credit cards as long as you know how to use them.
They do not know how to choose the ones that are financially more beneficial. They sometimes do not know about the payment plans and the penalties they come with. The issue here is that a lot of people are not educated on credit card usage and therefore get themselves trapped in more debt.
It is important that people are educated on the consequences of borrowing too much, without taking into consideration their repaying capacity.
Published in the Nation on July 23, 2017