Digital debt nightmare

First the good news; the curse plagues even modern countries like Japan. The bad news; the damage and the ignorance is barely recognized, understood or addressed. Not much attention has been given to “Digital debt” or Online loans or “pa-utang.” I personally did not know about it until someone came to me in desperation and to seek advise on what to do with his thousands upon thousands of debt he incurred “On-line” or borrowing money through terminals some of which are seen inside convenience stores. While we are all concerned about the drug war and drug addicts in the country, little do we realize that we are surrounded by another group of addicts; people buried in debt and have become serial borrowers online.

The fact is, there are hundreds of thousands, if not millions who have turned to these “On-line” electronic merchants of loans and indebtedness. It’s way lot easier than borrowing from a friend, relative or financial institution. My impression is that the transaction is “Faceless,” impersonal and non-judgmental and in the worst case scenario, serial borrowers find it easier to ignore the collection notices more than their relative or the 5/6 operator who keeps knocking at your door! The biggest problem is the ease of borrowing can be addictive for those financially desperate and the addiction can remain hidden until something very bad or scandalous happens. Many parents or spouse are clueless of the financial disaster under their very own roof.

Not long ago, the merchants or lenders themselves revealed the bad state of affairs in Metro Manila when a number of companies resorted to dirty or scandalous tactics in order to collect from deadbeats or people running away from their obligations.On-line collectors would start calling offices or employees of the problem borrowers, call their friends or essentially made it known to friends and relations of the borrowers that the targeted individual is buried in debt and has been running away from the debt collector. It was only because of the extent of harassment that the media picked up the story. Sadly, the governing authorities simply reprimanded the lenders for their tactics but did not pay serious attention to the state of “Digital debt” and the extent of damage it has created on today’s generation of professionals and workers who are poorly educated when it comes to Financial Literacy. As far as the lenders are concerned they are willing to hook anyone in with their credit cards and Online loans without even checking if the person is of legal age, sound mind, or has the capacity to pay!

Over the weekend, I saw a report on NHK, the Japanese national TV where they did a feature on Digital Debt and much like in Metro Manila, access to digital loans is easy and relatively liberal in amounts. The problem is many borrowers end up using the loan facilities to pay multiple or serial loans until they lose access or have been blocked off by authorities or association of lenders. In one case, a student incurred so much loans that he got to a point where the burden and shame of serial loans led him to commit suicide. In another case the borrower got in so deep that he went to a loan shark after being blocked on-line and ended up paying double the amount he had borrowed.

There are now moves in Japan to push for early education on financial literacy not just on the curse of On-line loans or indebtedness but also on a practical understanding on the value of money in real terms such as getting value for money because many of those who fall into the debt trap often don’t think in such terms. To them money is the instrument of satisfaction or meeting the need and the more they have the easier they can get what they want. But the question they should be asking is; is it worth the money I have to pay? Filipinos love to talk about financial literacy but ironically, we are in reality not representative of such knowledge. Compared to our Asian neighbors only a third or less have back accounts, we are poor savers, we only save about 20 percent of what our neighbors put away for retirement or emergencies and the bad apart is as we go down the age group or generation, the younger they are, the less likely they will be saving due to their need for instant gratification.

A big part of our current illiteracy and disadvantage is simply because financial literacy is being taught to adults not children. It is our cultural mindset where children are merely given baon or an allowance, raised to be dependent on parents and adult supervision and only when they have jobs or come into some money, do we start telling them to be careful, to invest right, to save for a rainy day etc! We also don’t teach them to grow their money or encourage them to put up a business or be an entrepreneur. We tell them to study hard, to study the very same subjects that turned most of us into employees or minions.

As today’s adults, it now becomes our responsibility to teach the teachable. Whether you are a parent, a manager, a banker or with DepEd and CHED, it is now our responsibility to make sure the kids 18 and below get sufficient training on financial literacy, accounting and growing money and protecting money. This needs to be drilled into the K to 12 program with more priority than ROTC etc. We need to teach them as well as ourselves that borrowing money is never a good idea.

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