The Costs of Debt… Real Talk
I have worked in the finance industry for 15 years, and I don’t have to tell you, things did get a little hectic in that time, and they are getting a little hectic now – at least that is the perception that mainstream media portray. Debt is still a thing. The costs of debt are still real.
I’ll argue that the government and lenders have lost their marbles on several aspects of lending policies in the last few years, but through all the chaos, there have been some very positive changes implemented.
As my career as a home loans manager quickly morphed into salesperson, complaints manager and sometimes even relationship counselor – I heard some golden comments, fielded some stellar questions, and took some pretty harsh feedback, from customers who were simply fed up with how the bank was treating them.
The banks have and continue to change tactics and strategies more than we change our Prime Ministers – they are, after all, businesses too. These constant and erratic changes meant that employees had to essentially become salespeople, offering products to tick boxes on a KPI chart, instead of meeting the actual needs of their customers. They’ll make you think that’s not true – but it absolutely is. Not only did banking step away from a personal relationship fostered on trust and understanding, but it also moved into a state of sales-driven chaos.
Trust and transparency turned into a giant mess of costly accounts, excessive credit cards, personal loans, hidden fees and other bank trinkets that are really, (really) easy to obtain, far to easy to abuse, and in many cases not the right thing for the customer.
So here we are – 2019, a new age of Barefoot Investor reading, budgeting and fiscally aware society – or at least we see the beginnings of – who have finally realised that uncontrolled debt is costly and wrong, and we should pay it back as soon as possible.
The thing is, DLS lends money for a living because at some stage for right and necessary reasons, people need money; there is little-to-no chance that each one of us won’t require some form of lending at some point in our lives.
I guess this had to shift the way my thought process worked (I am a Barefoot aficionado, or more accurately on a quest to rid myself of debt). Torn between my income source and livelihood and my newfound ‘debt is bad – kill debt’ mantra, I had to ask myself where that perfect balance lies and explore how Diverse Lending Solutions had to adapt to survive in this evolving market.
Here are the facts:
1. Debt costs money
2. Debt is required in some circumstances (purchasing substantial assets like a home or a car)
3. Debt can be correctly managed
4. Debt can also be misused the solution? Well, DLS is still very much in the business of lending money (because people need access to funds) – with a view to seriously improve our clients’ relationship with debt. Not just debt, but money in general.
We want to be the force that will keep you accountable.
It’s way too easy to sit down and think about the changes you need to make, then sit back and relax as the whole thing unravels and returns to the way it was.
Who’s keeping you on track? What does that look like? Is everyone (your spouse, children – your broker) on the same page? Communication and open, transparent conversations are what underpin any relationship, but this is what is so severely lacking in the finance and money industry. Why?
Maybe it’s the way we were taught not to talk about money and finances openly – that’s no one’s business. That’s also some old school archaic thinking, developed in very different times than the one we live in now. Maybe we are embarrassed by the level or costs of debt that we got ourselves into. Perhaps we are oblivious to the importance of this process altogether.
It’s mostly irrelevant, the point is, it has to change. There’s a better way – and it’s extremely liberating. It starts with knowing precisely what you are up against, what that really means, then working out how to best adjust the current situation and plan to remove your debt as quickly as possible.