I just watched a rather interesting program called Debt Trap, by the show Global Currents on Global TV. You can watch it online here.

The program outlined a number of families and people who have gotten into debt problems. The program slotted the problems into a few major categories:

1) People being offered more credit than they could ever expect to be able to repay

2) Getting into a tight financial situation and using credit cards as a safety net

3) Payday loan companies

4) Student loans

There were more, but those are the four that I have something to say about.

About (1), I do believe its a bit ridiculous the amount of credit the banks offer to people in the form of high interest credit cards. Yes, I do believe in personal responsibility, but having a $10,000 credit card in your pocket when you only make $30,000 per year is excessive. How easy it is to use that card out to dinner, and to book a weekend out of town. And just filling your car with gas. In only 6 months that person can max out their card, and then what? They're paying 1.5% monthly interest on that month after month after month. The credit card companies are happy, and the consumer is miserable. There should be improved laws around this, particular on the amount of high interest rate credit compared to personal income.

On (2), the consumer has to take a large amount of the blame on this. We all lose our jobs unexpectedly. It's how we react to that. On the show, there was a man who had been looking for a job for 10 months. He actually said he's only found "short-term contracts" or jobs that only paid what he made in 2000! You know what? Grow up. You have a responsibility to your family to get a job. If you were making $90,000 before, chances are you might not be able to make that much again. My advice is to take the contract to make some money, and keep looking for a job. Take the lower salary job and keep looking for a job. Money is money. You've been off for 10 months - get off your ass and get moving!

On (3), those payday loan companies should be put out of business. They are loan sharks - pure and simple. Those $60 fees on $200 loans are clearly illegal. As for the family that borrowed from one loan shark to pay the other. And now find themselves owing $1000 on a loan of $300... largely your own fault. Quite frankly, that's just stupid what you did and now you're paying for it. Why can't you come up with $1000??? Seems like you could take on a 1 week short job and pay that back.

On (4), I'm of mixed opinion. On the one hand, why do we burden our students with $50,000+ in loans from their first day on the job. On the other hand, I have NO SYMPATHY, NONE, for that woman featured who has been in school for more than 10 years and is now being hounded to pay back her $100,000+ in loans. What have you been doing for 10 years? How about you take your masters, and go to work. Start saving money. Start paying back your loan. And in 5 years go back for your PhD? There is no constitutional right for you to be a doctor. And if you were smart, once you got your PhD and your $100,000 student loans, you'd move to another country and skip out on your loan. She sounds like she's avoiding her responsibilities - not calling back the government, or calling them and swearing at them.

The loan business in Canada needs an overhaul. Lower the maximum interest rate from 30% to 20%. Get rid of payday loan companies. Force banks to reduce the credit limits on everyone so that consumers don't get themselves into trouble. And people need to wake up and smell the awful stench of debt and want to get rid of it.

Anyways, end of rant. Time for lunch.