What the Greek debt crisis can teach us about personal debt

If we are to learn anything from the debt negotiations between Greece and its creditors, it’s this; strength wins!

For the Greeks, their situation all along was that of a family that came into easy cash. Yes, it can be a little tempting to blame the other folks with the fat wallets and a willing pen and all too ready to sign their cash over, but debt is ultimately about rights and responsibilities.

Family disposable income

Personal debt

We all know the story. Easy cash, easy borrowings and lots and lots of tears when it came to paying back!

At first, we had denial, a sort of “what, us?” when creditors came calling.

Then came defiance “Hey, it’s your problem, you shouldn’t have lent the money in the first place”.

Then the silence!

Followed by the refusal (again)!

Then some more defiance (again), in the case of Greece, it was the election of Syriza.

Then more silence mixed with defiance and a sprinkling of refusal to top things off.

Of course, I am not just talking about the Greek reaction here, I am also referring to the EU politicians that have made a total blunder of things and have made a bad situation much worse for the millions of ordinary Greeks whose economy was put in a stranglehold.

But for the Greeks, the lessons they need to take away from this historic mess is that they are the losers in this game of might.

This is how debt works; in the real world and for families all over the world.

Over the course of the last four years, Irish families have discovered exactly what the Syriza politicians have done in the last few days and it is this:

  1. Debt – its ability to grow and multiply is extraordinary, especially when late fees and additional charges are factored in.
  2. It is persistent – it follows the debtor across borders and through time.
  3. It’s a destroyer of personal wealth – especially when it goes wrong.
  4. It is a destroyer of personal reputations.
  5. It can even destroy families.

The history of the Greek people has been put through the reputation shredder. Across the EU family of nations, there have been disputes for and against debt settlement where the rich are refusing to assist the less well off.

If the Greek debt crisis teaches us anything, hopefully it is this; might is right when it comes to debt repayments. When debt goes wrong, the borrower always ends up worse for wear.

Frank Conway is founder of MoneyWhizz.org, the financial literacy initiative for students and young adults. View this short video on on PERSONAL CREDIT REPORTS. 

 

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