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Lost in a spiral of debt

By Daniel Donahoo - posted Tuesday, 21 December 2004

Something must be up when the Peter Costello starts selling love over consumption. He should be careful: We might start mistaking him for his brother. But media reports of our excessive consumption and the dangers of credit at Christmas are becoming as much a part of the festive season as all night shopping at Chadstone.

And we are getting used to ignoring the warnings. Do they really expect us to believe credit is bad? Every six months we get a letter from our bank offering to increase our credit limit and the plastic fantastic is more secure and less attractive to thieves than cash. So, why not use it? Everyone else is.

Credit is no longer a dirty word. It took us a while to get used to - we are generally a cautious bunch. But, today we are converts. Australians own over 11 million credit cards, with access to over $75 billion dollars in credit.


That’s more than just a lot of money. If we all pooled our credit card resources, we could probably buy a few small island nations.

When you start to look at the figures, however, it seems we have been led astray. While we happily praise our governments for running surplus budgets and reducing national debt, we plunge ourselves further into it.

Ten years, ago the average credit card debt was $794. Today, the average owed is $2,481.

Not many of us have a spare two grand to rid ourselves of that debt - and we are at the mercy of high credit card interest rates. Many of Australia’s 11 million credit cards never get paid off - and we end up paying much more for our Christmas presents than we would if we paid cash.

In a recent survey by Liberty Financial, 7 per cent of cardholders admitted they still hadn’t paid off last year’s Christmas credit card debt. I’d like to see the percentage of cardholders who lied about that question.

Credit is like a drug. It is a quick-fix solution to a lack of cash. When I lost my job, I “maxed” out my rather tame $2,000 limit in less than a month. I could pay for my food, my petrol, my rent or anything I wanted - and it only cost me my signature. When you don’t have to hand over the cash, transactions seem so easy.


Anyone who has been addicted to smoking knows how hard it is to quit. Going cold turkey on credit is just as hard. So, most of us will treat the Treasurer’s concerns over Christmas credit like a smoker treats the cigarette pack warning labels. We will go on spending on credit.

But if Mr Costello is serious, an ad campaign could help. Maybe we need to be sold the joys of being debt-free. Peter seems to be good at the job; maybe he should be the public face. Perhaps we need ads that warn of the extra costs we incur when we use credit, and that promote alternative purchasing arrangements.

Imagine a family Christmas spent working on those relationships that so often fracture families at this time of year. We could all work towards celebrating each other’s reduction in debt as each Christmas rolls around. Instead of presents, maybe the family could each pay $100 off each other’s credit cards. Showing someone you love them is wonderful; helping them out of debt as well will warm hearts and hip-pockets.

A life spent living in the red is one stressfully spent, always owing something to someone else. A life in the black means we might not spend as freely, but we will surely appreciate what we have, knowing we’ve truly earned what we own.

For those of us who are ready to quit, and face the family with homemade gifts this year, we will have taken the first step. Christmas will be even more enjoyable. We will laugh at our dodgy homemade scarves and be free of the post-Christmas stress of over-stretched credit. When we can rely less on credit, we stop tightening our belts, and start opening our hearts. 

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First published in the Herald Sun on December 10, 2004.

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About the Author

Journalist and columist with The Age, Sushi Das says he is ‘one of today’s young rebels’. Author and ethicist Leslie Cannold has referred to him as one of her ‘gorgeous men’.

Daniel Donahoo is fellow with OzProspect, a non-partisan, public policy think tank. He writes regularly for Australia's daily papers and consults on child and family issues. A father to two boys. Daniel's first book is called Idolising Children and explores our society’s obsession with childhood and youth. Updates on Daniel's work can be found at

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