The debt crisis in America is ridiculous. People spend money that they don’t have to buy things they don’t need to impress people they don’t even like (Will Rogers). Marketing pros convince an unsuspecting public that they want things that they don’t even need.
Everyone is chasing your paycheck.
Businesses and even non-profits want a piece of your financial pie. It’s up to us, through prayer, to keep our spending on track. Do you have problems controlling your spending? If so, this article that I wrote is for you!
Almost four out of five families claim to live paycheck-to-paycheck (Ramsey Solutions). More than half of all American families are unable to cover a $1,000 emergency with cash (CNBC). Only 53% of US households have more savings than credit card debt (Bankrate).
Where are you in this debt crisis?
Are you a common statistic, a debt sucker, or an uncommon superstar?
Getting ahead financially is proving to be challenging for Americans of all age groups. A lack of income is not the problem. Excessive debt, as caused by out-0f-control spending, is the root cause of financial frustration. The debt crisis in America is negatively impacting every generation and appears to be getting worse.
Let’s discuss the debt crisis in America.
Overall Consumer Debt
Total US consumer debt exceeded $16 trillion in the second quarter of 2o22. Credit card balances increased dramatically and aggregate limits increased as well. Delinquencies, while still historically low, are trending higher (info from the NY Fed).
Proverbs 22:7 The rich rules over the poor, and the borrower is servant to the lender.
Credit Card Debt
Conflicting credit card advice abounds. Dave Ramsey adamantly opposes any use of credit cards. YouTubers and bloggers have developed a niche of selling “credit points” hacks. CNBC seems to shamelessly promote and and every available credit card on their site.
So what’s the right right perspective?
The financial planning community is universally aligned when it comes to credit card use. Use them sparingly and pay them off before any interest is billed. Balances should never be carried from month to month.
When credit card balances are carried over it typically is sign that we’re living beyond our means. It’s also a clue that we’re discontent and feel that we “deserve more” in life
Americans struggle with credit card debt. Young people are getting into and staying in debt and some older people are not escaping its clutches.
Generation X is having the biggest issue with credit card debt.
Stop purchasing luxury items (even cheap ones) with plastic if you can’t pay it off in full. If you’re mired in credit card debt do the following:
- Stop spending immediately
- Begin snowballing or avalanching the debt
- Only use one credit card going forward
Student Loan Debt
Pandora’s Box has officially been open. POTUS has verbalized that he will authorize the forgiveness of some student loan debt. The amounts vary from $10,000 and $20,000.
The jury is still out on whether or not this potential political stunt is legal. Debt forgiveness is not actually happening. Someone will pay for this boondoggle. Who? Taxpayers will be on the hook for this attempt to buy votes.
The total cost is estimated at between $605 billion and $1 trillion (Wharton).
Is there a student loan crisis in the United States? That depends on who you ask.
College is not for everyone. Some degrees prepare people for life better than others. The state has been pushing for higher education for decades. I believe that push is primarily to indoctrinate as many people in socialist ways.
Colleges and universities are overflowing with overeducated and unproductive idealogues. Socialism and other isms are forced upon the masses. Many of these well-intentioned students finish school with zero marketable skills, a terrible work ethic, and a strong sense of entitlement.
One of the biggest issues with student loans is that one can’t flush them during a bankruptcy proceeding. If borrowers could file bankruptcy then lenders would be more hesitant to loan money for a degree in beer pong.
If the state would allow lenders to underwrite student loans correctly fewer would qualify. Fewer students mean less demand. A decrease in demand will cause the price to fall.
We have a debt crisis in student loans. However, it’s a result of terrible public policy and government intervention.
The total outstanding student loan debt as of 2022 is $1,620,000,000 (that is $1.6 TRILLION!).
Automotive Debt
Americans love their automobiles! We love them so much we’re willing to forgo saving for our future, establishing a proper emergency fund, or paying for college for our children.
Once the car payment habit is established it’s tough to break.
The total overall car payment in the USA is $667 per month (Bankrate). Payments continue to climb for a couple of different reasons.
One reason is that often people roll over loans. Another reason is downpayments are small. A third reason is that auto prices are dramatically increasing due to new government regulations and requirements.
Paying cash for an automobile is challenging. It can be done though.
We’re super picky when it comes to automobiles. Plus, we drive them forever.
Far too many people have automobiles as a status symbol. Their garage is full of toys and their retirement fund and college funds are empty.
Big hat no cattle is a terrible financial plan.
If you’re curious about some high quality and affordable automobiles click here. I wrote this articles recently and it ranks the top seven automobiles.
The American Debt Crisis
Yes, we have a debt crisis in the United States. Government intervention makes it worse. Plus, churches seem to focus solely on one dimension of stewardship: giving.
Low wages are not always the problem. Discontenment and a lack of self control are key contributors.
If that’s you spend some time in prayer. Read through this article that I wrote about the secret to contentment.
We shouldn’t be keeping up with the Jones’s or the Kardashians. The only person we should be keeping up with is Jesus.
Don’t be a debt statistic or a debt sucker.
Instead, be a debt superstar!
You don’t have to be in debt.
It’s high time for you to win at wealth without losing your soul!
God has given you the power to get wealth (Deuteronomy 8:18).
Get busy.