Can we call humanism that provides a human with a tool of labor, a medicine without instructions for use?
This is what the capitalism of the 20th century offered us – it surrounded us with imposed household items, telling us about their necessity because they help to gain a certain social status.
In return, it offers work that barely provides the necessities, but performs an important function for the state – taxes. Such a system encourages a person to become over-indebted, which condemns a person to eternal slavery. Capitalist slavery allows the employer and all those receiving financial flows from the sale of the product to work less or not work at all. The lack of information about this financial instrument leads to abuse and, as a result, to dangerous consequences in the form of a debt trap, confiscation of property, freezing of an account, and in case of the most vulnerable layers of citizens – minor children removal from their parents and even suicide. But such fatal events in human culture are usually explained. And not just explained but trumpeted about. Instructions on safety measures during emergencies are conducted from childhood in school. They also talk about the dangers of smoking, alcohol abuse, excessive overeating, and for some reason they decided to keep silent about hopeless debt.
Global impact
USA
The US subprime mortgage crisis, which began in 2007 and peaked in 2008-2009, is one of the most serious economic crises of recent decades. It had a significant impact not only on the US economy, but on the global one.
The crisis began with a rise in defaults on mortgages that were issued to people with poor credit (so-called “subprime” borrowers). Most of those loans had variable interest rates, meaning that the borrowers' payments increased as rates rose. When rates began to rise, many borrowers stopped repaying their loans, and ended up with the bankruptcy of many mortgage companies.
A complicating factor was the practice of reselling mortgages by various financial institutions on the securities market. This led to a complex structure of financial products in which it was difficult to determine the real value of mortgage assets. As a result, when property prices began to decline, many of those assets were overvalued or worthless.
The subprime mortgage crisis in the United States had long-term consequences for both individual families who lost their homes or experienced financial difficulties and for the whole economy. It highlighted the vulnerability of the financial system and demonstrated the need for strict supervision and oversight of credit institutions and financial regulation in general.
Latin America
A number of Latin American countries, such as Brazil and Mexico, have high levels of consumer debt. Due to high interest rates and the availability of credit from banks, consumer lending can affect the financial sustainability in long term. Student debt also remains a problem in several Latin American countries.
Europe
In some European countries, such as the United Kingdom and Germany, household debt to income ratios are quite high. Borrowers may face high levels of mortgages and consumer debt, which can lead to financial stress and limit their ability to save and invest. Some European countries are facing the problem of student debt, which also affects the financial well-being of young people.
Asia
In some Asian countries as China, India and Japan, there is a trend towards increasing consumer lending among the population. Especially in developing countries of Asia, there is an increase in consumer lending associated with the growth of the middle class and further urbanization. Consumer debt and real estate loans can become a source of financial risks for households in case of economic instability.
Russia
According to the Central Bank of Russia, the debt of Russians to banks as of May 1, 2023 reached 30.22 trillion rubles. At the end of the first quarter, this figure was less than 28 trillion rubles, and the level of indebtedness was at 41%.
The study was prepared based on data provided by Rosstat [Russian Federal State Statistics Service], the Central Bank of Russia, and the largest credit reporting agencies. Experts say, this tendency will even increase in the second quarter.
Repay project goals
The goal of our project is to contain and mitigate risks to the development of human civilization. To achieve this, we have defined the following objectives.
Financial illiteracy of the population can cause many serious problems for both individuals and society. Inappropriate use of credit and debt worsens the financial situation. People may find themselves in a situation where they cannot pay off their debts and have to take out new loans to pay off old ones, which leads to a debt trap. Ultimately, this result in increased poverty in society, stagnation, recession, and economic crisis.
People with excessive debts are most often limited in their spending, which reduces overall consumption. This affects the economic growth. Constant financial pressure can cause high levels of stress, anxiety, and depression. People in a credit trap may experience a sense of hopelessness, which negatively affects their health. In addition, excessive debts often lead to conflicts in the family and in society. Financial pproblems can cause divorces, family discord, and other social problems that contribute to disintegration. At first glance, such a problem may seem insignificant, however, in long term such processes will cause serious demographic decrease. Reducing the quality of life of entire generations, leading to psychological problems. These factors, combined with a low standard of living and a large socio-economic gap between social groups, cause the next problem, namely, the rise in crime. People who find themselves under debts pressure may use illegal methods to solve their financial problems.
Financially illiterate people often refuse medical care due to fear of accumulating more debt. This can lead to deteriorating health and chronic diseases that require expensive treatment. And this in turn will lead to an increase in the burden on social services.
Aggravation of problems related to poverty and financial instability can lead to more requests for help from social services. This creates an additional burden on government resources and public organizations.
Thus, financial illiteracy and unbearable debts pose a serious threat both to individuals and the whole society, disrupting social and economic structures.
Achieving our goals depends on a number of objectives
Helping low-income, indebted families not only improves their lives, but also contributes to the prosperity of the entire society.
Debt Reduction
Over-indebted families often experience stress due to mounting debt loads and the constant pressure to repay loans. Help in the form of financial support or counseling can help reduce this burden, allowing families to begin to rebuild their finances.
Psychological Support
The psychological burden associated with poverty and debt can lead to stress and depression. Support and counseling can help families cope with psychological issues, increase their self-confidence, and improve their overall well-being.
Financial Literacy Education and Training
Programs that teach families financial literacy can play an important role in preventing future re-borrowing and debt problems. Teaching families how to manage their budget, save, and use their money responsibly can have a long-term impact on their finances.
Social Inclusion and Community Support
Helping low-income families strengthens the social fabric of society. Creating programs and initiatives that support such families can both bring people together and create networks where participants help each other.
Creating opportunities to escape poverty
Providing access to housing programs, employment, and training can be a decisive factor in choosing a life path that allows families to break the cycle of poverty and debt.
Sustainable development of society in whole
Supporting low-income and indebted families contributes to more sustainable and equitable society. Reducing poverty and debt dependence leads to reduced social tensions, increased economic stability, and a higher standard of living for all citizens.
Planned activities to achieve the set objectives
These programs are aimed at providing comprehensive support to low-income, indebted families, and enabling them to develop sustainable strategies to improve their financial situation and quality of life.
Financial charities
Establishing financial organizations in different countries to find low-income families and pay off their bad debts. Bad debt is a debt that the debtor is unable to pay. Often these are people who have been repeatedly refinanced, taking out new loans to pay off old ones. Such debts are borne by large families, disabled people, or families who have lost the breadwinner. As a result of paying off such a debt, the family situation may transform and change completely.
Financial counseling and education
Free programs that offer financial literacy training can help families learn how to manage their budget, savings, and loans. Counselors can conduct seminars and individual sessions, explaining the basics of sound financial behavior and spending planning.
Debt reduction programs
Debt management programs that help families refinance or restructure their loans. This may include setting up legal departments within financial charities and having them negotiate with creditors to lower interest rates or ease payment terms.
Employment Training
Free programs that offer training and retraining can help family members gain new skills that will improve their chances for employment and improving their financial situation. Courses can range from vocational skills to computer basics and entrepreneurship.
Social Support Programs
Some organizations offer psychological support and counseling services, which can be helpful for families suffering from stress, anxiety, or other mental health issues due to financial pressure.
Charity Foundations and Grants
Programs that provide financial help, grants, or subsidies to cover unexpected expenses, such as medical bills or children’s education costs. This can help keep families from falling into debt due to emergencies.