I believe that debt is the cultural issue of our generation. I know that some may disagree and cite other urgent challenges facing our society. But from my own perspective, I see debt as the overriding issue in touching many in society — and often holding them back from pursuing their goals and dreams.
Toxic debt, whether on credit card balances or tuition, disproportionately affects disenfranchised individuals in our country — yet the largest balances of unsecured debt are typically held by the top one percent of income earners. In essence, this is an issue that touches all in our society, even those with more financial means at their disposal.
In launching Relief, an app focused on helping users eliminate their debt, I have spent a lot of time in recent years obsessing over this problem of consumer debt and what can be done. On the surface, it can seem like a simple financial problem — a simple math issue that needs to be corrected with better guidance or financial habits. The thinking seems to be, “Cut out that latte habit and rent your movies from the public library instead of Netflix; now you’re on the pathway to financial responsibility.”
But this is a convenient narrative that puts the onus entirely on the individual as a matter of personal responsibility with no accountability for the larger financial system they’re operating within. After spending years looking at data, I believe that the issue of debt is much more of a cultural issue in America than an individualized mathematical issue.
We value credit score over quality of life.
Yes, building credit is important, particularly for establishing the financial foundation for a home purchase. But we’ve seen instances in which people are paying interest payments that have little to no effect on their principal balance — even if it means missing meals, according to some conversations my team has had with customers. It’s a mark of a society in distress when we outweigh making interest payments to banks over putting food on the table for our kids, all in the name of maintaining a good credit score.
Financial education in America is lacking.
The reality is that finances are complex and impact everyone. Our education system is in dire need of an overhaul to prepare young people with the basic knowledge and tools they need to begin their financial lives.
We hide from our debt.
Hiding creates more problems. According to a recent study, about 44 percent of U.S. adults admit to hiding a bank account or debt. Throwing away those letters in the mail and declining calls from collectors may temporarily seem to remove the problem, but the bills and penalties keep climbing.
We don’t talk about it.
Personal finances can seem like the last truly taboo topic, at least with respect to debt. Sure, we’ll brag about our genius investing ideas or swap stories about NFTs and cryptocurrencies, but stigma persists around debt. (The only comparable example in the financial world I can think of is the stigma around talking about salaries and earnings, which also serves to undermine our collective ability to advocate for our fair share.)
According to a 2022 report, 42 percent of U.S. adults say that money negatively impacts their mental health. Our culture has conditioned us, if even in subtle ways, to regard the wealthy and successful as morally superior. Above all, this is the perception that we need to re-frame. People are not less than for having debt; people are part of a broken education system and deeply flawed economic arrangement that preys on the vulnerable, making personal finances far more complex than they should be.
There’s a role for everyone.
I believe debt is the culture challenge of our time — and we can begin to fix it by coming together. We need to be united in taking on deeper, more systemic changes to our education and financial system. That can sound like a tall order — but we can begin with small steps.
The good news is that we have vast opportunities before us to change the way people deal with debt. As entrepreneurs, leaders, changemakers and citizens, we each have a responsibility and opportunity to change this vicious cycle.
Humbled by the trend we have seen called the Great Resignation, employers are increasingly recognizing they can gain a competitive advantage in a tight job market by helping their employees tackle their debt and achieve greater financial wellness. If you are in a leadership role, think about how you can give back or upskill your workforce. If you are thinking about starting a business to create value, think about all the people who need access to information that can help them save money.
We can begin the process of change by talking openly about the challenge. We can lead the next generation by example and talk about debt.
We can encourage our teachers and other influential people who interact with our children to teach more about using credit responsibly.
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Let’s demystify finance and talk openly about debt.
After two decades of helping people who need debt relief, I have learned that there is no reason to feel alone in this struggle. The more we can help people feel supported and not alone, the greater autonomy they will have to take on their challenges.
The challenge is sizable to be sure. But if we adopt an empathetic approach to helping those around us, we can change the way our culture deals with debt.