Public budgeting - Article Example

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The case of debt management is not an isolated one. The article, “winning the Battle but Losing the War: The Psychology of Debt Management” by Moty Amar, Dan Ariely, Shahar…
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Psychology of Debt Management Article Review Collage Affiliation: Winning the Battle but losing the War: Psychology of Debt Management
People normally come up with views and opinions whenever an issue becomes disturbing (Deagelo, 2009). The case of debt management is not an isolated one. The article, “winning the Battle but Losing the War: The Psychology of Debt Management” by Moty Amar, Dan Ariely, Shahar Ayal, Cynthia E. Cryder, and Scott I. Rick, also published in the Journal of Marketing has issues with the way people think that debt should be managed, instead of going the way that debt can be fully managed in a thing they term winning both the war, and the battle. These principles that can guarantee one winning the battle totally are termed by the authors; normative principles (Amar, et al., 2011).
The article starts by laying down the statistics from the Federal Reserve displaying the high number of Americans, and the all-time $975 billion dollars in the year 2008. The projections as of the time was that debt would keep on increasing since people kept reaching for the credit cards debts in order to make ends meet. According to the statistics from the Sachs & Williamson (2009), many consumers have more than five credit cards, with an average total of about five each per family.
The psychological look at the consumers by the researchers termed the consumers as having a low debt recovery modality owing to the many debts they find themselves wading. As such, they stray from what they term as normative debt management principles (Amar, et al., 2011). Consumers go forward and start paying individual debts while not looking at the value of each and every debt and prioritizing them. The total redemption from indebtedness is difficult, something that sometimes prompt consumer’s adoption of sub-goals that are normally aimed at settling the individual debts. They sometimes settle the small debts and remain with the huger ones. The oblivion borne by the consumers to the larger debts and misplaced focus by them is what takes a huge toll in the paper as the author analyses the things to do when one is indebted (Heckler, 2013). To the authors, paying of the small debts and remaining with the bigger ones might help relieve the burden but the amount to pay keeps sky-rocketing as one dilly-dallies.
The article is well arranged as the authors move from the obvious to the completely hard stuff concerning debt management. The authors lay down the statistics, the trend in debt management, then finally give their opinion of what should really be happening in the real world concerning the issue of contention. Authors term paying off of debts with larger interest as a must, and more urgent than small loans with a lesser interest. Winning the war comes with taking control of all the happenings about the individual loans and being same at the same time, other than just managing the loans and staying oblivious of the fact that loans with bigger interest have a high prospect of being burdensome and falling out of control.
In my opinion, the authors have put the article down in a good and manageable way such that from the onset, the readers understand the issues at stake. The way they tackle the issue at hand shows a great understanding of the subject matter (Lea, 2009). Approach given also gives a clear and concise way of dealing with debt; even multiple debts, in a manner than leave the consumer still in-charge and not falling in the category of debt averse consumers (Walker, 2007).
Amar, M., Ariely, D., Ayal, S., Cryder, C., & Rick, S. (2011). Winning The Battle But Losing The War: The Psychology Of Debt Management. Journal of Marketing Research, 38-50.
Deangelo, L. (2009). Discussion of Evidence of Earnings Management from the Provision for Bad Debts. Journal of Accounting Research, 32-32.
Heckler, V. (2013). On being helped to become a management psychologist: Partially paying back a debt of gratitude. Consulting Psychology Journal: Practice and Research, 255-262.
Lea, S. (2009). Psychological Factors In Consumer Debt: Money Management, Economic Socialization, And Credit Use. Journal of Economic Psychology, 681-701.
Sachs, J., & Williamson, J. (2009). Managing the LDC Debt Crisis. Brookings Papers on Economic Activity, 397-397.
Walker, C. (2007). Financial management, coping and debt in households under financial strain. Journal of Economic Psychology, 789-807. Read More
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