The answer can only be affirmative, right? After all, in 2015 the banks lent more 9.278 million euros to Portuguese families (about half to buy house and half to consumption and other purposes). At the end of this year, the debt of Portuguese households to the bank amounted to 118,500 million euros. During this period, households earned a gross income of 120,757 million euros and consumed 121,819.7 million. It seems that high levels of consumption go hand in hand with high levels of debt.
But do these figures reveal the whole reality about debt? What about loans from family and friends? And the debts to Finance and Social Security? And the household incomes or bills for water, energy and telecommunications to pay? We are even more indebted than we think!
What is the concept of debt?
But it’s not just a matter of numbers, it’s a question of semantics. “Debt” or “being in debt” does not mean the same to everyone. If the loan for the purchase of the house or the car does not raise great doubts, what about the purchases of installments (with or without interest)? And the balance of the credit card, after the minimum payment has been made? What is certain is that not all of us apply the concept of debt – obligation to make payments in the future – to the same realities.
Debt is the obligation to make payments in the future
It’s also true that the numbers hide a lot of diversity. There may be a lot of debt and a lot of people in debt, but that does not mean we are all indebted equally. But that does not mean that we are all equally debt-tolerant. Many of us feel comfortable borrowing from our future income so we can consume today what we are going to earn tomorrow. Others, on the contrary, consider that one should only borrow in case of emergency, to face some unforeseen. Still others use debt to meet current expenses, with income “no longer what it was”. Others, finally, do not use debt or even like to hear about it. They always pay the bill, never the installments, and do not take advantage of the payment deadlines that are offered to them. Some even go so far as to decline loans with zero interest rate.
How, then, is indebtedness explained?
It seems reasonable to conclude that we are not all, on average, responsible for this sea of debt that is making private consumption fluctuate and which at times seems to drown us. People who are very debt-tolerant , probably very materialistic, meet the opposite extreme, that is, with debt-ridden , perhaps more frugal, debt-ridden people . On average, our indebtedness will result from this appetite / aversion, from the pressure of everyday needs and from the social acceptance of debt. A stretched elastic, once loose, resumes the initial shape.
Anyone who is averse to debt, but is indebted out of necessity, liquidates debts as soon as he can. But is it, just as tension can change the shape of the elastic, lengthening it, does debt exposure make us more debt-tolerant?
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