Friday, December 23, 2011

Stretching oneself too thin

We individuals tend to do this all the time when it comes to finances but now in this economy everybody has stretched out themselves to the limit. And it is not just the individuals but corporations, states and countries have become overly indebted and thus beholden to forces outside their control. Debt can be good if you are going to use to pay for stuff which you would have to wait a long time before buying but to roll over the debt and keep on putting off by buying more stuff means you are setting yourself up for disaster. This has happened to most people lately and countries have stretched themselves too much without ever having the means to repay their debt completely.

Now the question is how to repay your debt. You can do it in two ways. One is to cut your spending but how much and where to cut is the question. If you cut too much people and your own life style will suffer and if you don’t cut then you have to increase your income in order for the increased income to pay for the debt. But as the economy is right now, it is becoming increasingly difficult to find another job or work overtime. the other way for the individual would be start a small side business to supplement his/her income. But here again you have to know what you are going to offer to your potential customers and for how much, where are you going to get the goods and how much margin you should be earning (a whole different story). But my point is stretching yourself too much can stress you out physically, mentally, emotionally and if you are a country politically. We should try to avoid this scenario at all costs if possible.

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