Debt can make you either prosperous or bankrupt<\/p>\n
By V. Anjaiah<\/p>\n
JAKARTA (JP): Debt has become an essential aspect of modern
\nlife. One can borrow money from a bank through a long-term loan
\nmortgage to finance the purchase of a house. We can buy a
\ncellular phone through a credit card. A car can be purchased on
\ninstallment basis through a finance agency. One can buy shares of
\na company through margin trading.<\/p>\n
Though debt is a lifeline for individuals, companies and
\ngovernments, everybody wants to be a debt-free.<\/p>\n
Some people love credit and some hate it. Some avoid it. If
\npossible some would evade it. The smart ones (read conglomerates)
\nmanipulate it.<\/p>\n
An innocent housewife heard about the benefits from her
\nneighbors of having a credit card and watched how easy shopping
\nwas with a credit card. She wanted to have it one.<\/p>\n
She approached the nearest bank. After explaining this and
\nthat, the bank staff informed her that every month she had to
\nclear her debt on time. Otherwise the bank would charge an
\ninterest rate of more than 2 percent for month. She became
\nfurious. She thought that it was free because nobody had ever
\ntold her that she must pay back the amount used for shopping. It
\nwas difficult for the stunned bank employee to convince her.<\/p>\n
Another feature of debt is that it has to be paid back in full
\nat maturity with interest having been paid throughout the term of
\nthe loan, sometimes the interest can be avoided and sometimes
\nwith a haircut. Interest-free loans are the ones everyone would
\nlike to have it.<\/p>\n
Generally, repaying a debt is not as enjoyable as receiving a
\nloan. Some people are lucky enough to avoid paying their debts in
\nfull.<\/p>\n
In certain countries, natural disasters like floods, cyclone,
\ndrought or earthquakes could become a relief for those who have
\nhuge debts.<\/p>\n
It is common practice in places like India and Bangladesh,
\nfrequently hit by said disasters, for the governments to wave
\nbank loans in full or partially or declare them interest free as
\na relief to the victims.<\/p>\n
Keshavulu, an Indian public servant living in a small town,
\nNalgonda, had made a lot of money over the years.<\/p>\n
\"I have been borrowing money from the local banks with low
\ninterest and lend it again to my friends and relatives at a high
\ninterest rate. My province (Andhra Pradesh) is always affected by
\neither a cyclone or a severe drought every two to three years.
\nOur government always provided us with not only assistance but
\nalso debt relief measures. Though I was not a victim of any
\ndisaster, I also benefited,\" Keshavulu said with a smile.<\/p>\n
But in Indonesia, the case is different. If you borrow money
\nfrom the bank, there is no way you can escape the debt - even if
\nyou are hit by the worst flood or earthquake. As long as you are
\nstill alive, you have to repay the debt. And if you die, the
\ncreditor could demand that your children pay.<\/p>\n
Debt can make a person happy, worry or sleepless. It is a
\nfriend in need. It can wreak havoc when your broke. It can make
\nyou either rich or bankrupt. It's like gambling.<\/p>\n
Money, debt and what one perceives can be done with it is
\nseductive beyond resistance for many. That's why some people
\ndesire debt on any terms, despite high interest rates or payoffs
\nto middle men or corrupt bank officials.<\/p>\n
Some people want to borrow money even when they don't need it.
\nAnd the persons in need generally won't get it.<\/p>\n
Banks, credit agencies, finance companies, brokerages and
\nother agencies earn income from lending. They offer easy terms,
\nlow interest rates and incentives to lure individuals, companies
\nand governments to borrow from them.<\/p>\n
Debt is like a drama. The creditor and debtor are similar to a
\nhero and heroine. Despite their love-hate relationship, they need
\neach other.<\/p>\n
Upon receiving a loan, the debtor thinks that the creditor is
\na god, but during the months of repaying the loan with interest
\nthat perception completely reverses in most cases.<\/p>\n
The interest, both simple and complex, is the baby from their
\nrelationship.<\/p>\n
Not surprisingly, the baby becomes a burden for the debtor and
\na boon for the creditor.<\/p>\n
For a debtor, the villain is the debt collector while the
\ninsolvent debtor is a detonator for the creditor.<\/p>\n
The bank is the home for all the characters in the drama. A
\nbank may look solid but it remains a danger to itself and others.
\nCan one avoid a bank for financial needs?<\/p>\n
\"Yes,\" says a woman living in Jakarta, Evi Daneta, who
\ninvented her concept of \"home banking\" or \"own bank\".<\/p>\n
Since her marriage in 1996, she opened a bank account and has
\nbeen saving Rp 400,000 per month. She cleverly invests her
\naccumulated money in deposits (in both rupiah and dollars),
\nshares and mutual funds. She lends some part of that to her
\nrelatives, friends and herself.<\/p>\n
\"Whenever I need money, I borrow from my own account and repay
\nit with 24 percent interest per annum. Whatever the bank does, I
\nwill do it on my own. It's easy. Now my fund has around Rp 40
\nmillion. That means the total return on my fund is more than 100
\npercent\", said Evi, who works for a private company.<\/p>\n
Debts have to be managed properly. The purpose of the loan
\nshould be clear. One must know his or her capability to repay it
\nor not. Otherwise things will be a mess.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/debt-can-make-you-either-prosperous-or-bankrupt-1447893297",
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