Do Americans Have Too Much Debt
Why are Americans Climbing Out of Debt?
We hear every day that Americans live beyond their means as a matter of course, needing to drive or wear the newest and best just because. And it’s true that about 44% of Americans live with at least some “bad” debt such as credit card debt. While certain kinds of debt, such as student loan payments or mortgages, are actually “good” debt because they give you something for your money that’s truly going to benefit you (such as an education or building up equity in your home), much of the debt that gives Americans trouble today is credit card debt or other “bad” debt for which they’ll get nothing in return - and will likely pay whopping interest rates and charges on besides.
When you live paycheck to paycheck and and save for that rainy day or better yet your retirement it is no question that many Americans are living far outside their means. This kind of behavior is encouraged by American society. This is hard to believe but why?
Because in America, economic growth is seen as key to a healthy economy. And what is economic growth? You guessed it. Yes, it means more and better jobs, more people working, and making more money, but it also means more people buying more things. In fact, a large part of economic growth is based on how much we spend every year. And guess what? This number (how much we spend every year) is not split up between how much of that is debt and how much of that is actually money of our own that we earned. It simply says we spent X amount of dollars to shop. That’s right. It means that a large part of that number could actually be you going into debt to buy those goods, but it actually looks like “growth.” In fact, this is a fake measure of how healthy our economy is, because your own personal economy is certainly not healthy if you’re in debt to get things you don’t need and that will not give you a positive return in the long run, such as an education would.
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So how can we expect Americans to know how to manage their own budgets wisely (and not go into debt) until our economy knows to manage its own debt AND truly reflect the numbers that show the economy’s health or sickness with real money instead of debt erroneously reflected as “dollars”?
With the national deficit being in excess of 12 trillion dollars Americans more than ever have less of of a role model on how to manage a budget. All be it the country could stand to go on a budget diet and so should you.
In the meantime, what can you do to rein in your own spending, if you need to? That’s right. Put yourself on a budget, and if you’re in debt, get out. This means swapping lattes at the corner shop for homemade coffee, putting a moratorium on buying new clothes until you’ve actually worn what you have in your closet, and paying off your present car and driving it for a few years instead of trading in for a new one every couple of years “just because”. Of course, if you’re rolling in dough, you don’t have to do these things. But the fact is, most Americans aren’t rolling in dough and to have to cut back on spending. So figure out what your basic needs are, take care of those, and cut back on the rest of your spending until you’ve got credit cards and other “frivolous debt” paid off.
You never know? We as a society could quite possibly be role models to the government in regard to the spending habits and balancing debt.
Tags: Debt