In a somewhat follow-up bit of news to my article yesterday, Should We Eliminate Consumer Debt For Everyone and Start the Economy Over the British Prime Minister David Cameron was scheduled to tell UK citizens “The only way out of a debt crisis is to deal with your debts. That means households – all of us – paying off the credit card and store card bills.”
After some uproar the speech was changed at the last minute to read “That is why households are paying down the credit card and store card bills.”
Eliminating consumer debt is the way to get the economy moving but Cameron is running into the same issue others are facing, political pressure. If people buckle down to focus available money on debt repayment it will stall the economy, certainly not something the UK government wants.
Economists suggested the plan for a collective pay-off of credit card debts, if interpreted literally, would be economically disastrous as well as politically inept. – Source
Joanna Elson, chief executive of the Money Advice Trust, said trying to repay money too quickly could be damaging.
“We speak to many thousands of people each month who have lost their jobs, fallen ill, had to take time off work to care for a loved or broken up with a partner,” she said.
“Life changes like these can cause devastating financial shocks in someone’s life, and can make it very difficult to meet previously comfortable credit agreements.
“It is vital that people are given help to repay their debts in a sustainable way. Where people are encouraged to repay money too quickly it can make the problem more serious, forcing people to take out more and more credit just to make the repayments – and ultimately landing them in more debt.” – Source