Posted on 07/31/2015 11:02:38 AM PDT by SeekAndFind
Could you live without debt? Most Americans say that they cannot. According to a brand new Pew survey, approximately 7 out of every 10 Americans believe that “debt is a necessity in their lives”, and approximately 8 out of every 10 Americans actually have debt right now. Most of us like to think that “someday” we will get out of the hole and quit being debt slaves, but very few of us ever actually accomplish this. That is because the entire system is designed to trap us in debt before we even get out into the “real world” and keep us in debt until we die. Sadly, most Americans don’t even realize what is being done to them.
In America today, debt is considered to be just part of normal life. We go into debt to go to college, we go into debt to buy a vehicle, we go into debt to buy a home, and we are constantly using our credit cards to buy the things that we think we need.
As a result, this generation of Americans is absolutely swimming in debt. The following are some of the findings of the Pew survey that I mentioned above…
*”8 in 10 Americans have debt, with mortgages the most common liability.”
*”Although younger generations of Americans are the most likely to have debt (89 percent of Gen Xers and 86 percent of millennials do), older generations are increasingly carrying debt into retirement.”
*”7 in 10 Americans said debt is a necessity in their lives, even though they prefer not to have it.”
Most of us wish that we didn’t have any debt, but we have bought into the lie that it is a necessary part of life in America in the 21st century.
It has been estimated that 43 percent of all American households spend more money than they make each month, and U.S. households are more than 11 trillion dollars in debt at this point.
When it comes to government debt, that is easy for us to blame on someone else, but all of this household debt is undoubtedly something that we have done to ourselves.
It all starts at a very early age for most of us. When we are still in high school, we are endlessly told about how important a college education is. All of the authority figures in our lives insist that we should just try to get into the best school that we possibly can and to not even worry about how much it will cost.
So many of us go into staggering amounts of debt before we even get out into the working world. We had faith that the “good jobs” that were being promised to us would be there when we graduated.
Unfortunately, in this day and age those “good jobs” end up being a mirage more often than not.
But whether or not we can find a good job, we still have to pay off all that debt.
According to new data that was recently released, the total amount of student loan debt in the United States has risen to a grand total 1.2 trillion dollars. If you can believe it, that total has more than doubled over the past decade.
Right now, there are approximately 40 million Americans that are paying off student loan debt. For many of them, they will keep making payments on this debt until they are senior citizens.
Another way that they get you while you are still in school is with credit card debt.
I got my first credit card while I was in college, and nobody ever taught me about the potential dangers.
Today, the average U.S. household that has at least one credit card has approximately $15,950 in credit card debt.
So let’s say that you have that much credit card debt and you are paying an annual interest rate of 17 percent. If you only pay the minimum payment each month, it will take you 229 months to pay your credit card off, and during that time you will have paid $13,505.82 in interest charges.
In other words, you will almost have paid twice as much for everything that you originally bought with your credit card by the time it is all said and done.
This is why banks love to give you credit cards. If they can get back nearly twice as much money as they originally give you, they get rich and you get poor.
Most of us get loaded down with even more debt when we go to buy a vehicle. Instead of saving up and getting what we can afford, many of us end up getting the largest loans that we can qualify for.
In a previous article, I discussed the fact that the average auto loan at signing in America today is approximately $27,000. In order to get the monthly payments down to a level where we can afford them, many of these auto loans are now being stretched out for six or seven years. In fact, the number of auto loans that exceed 72 months has hit at an all-time high of 29.5 percent.
It is the same thing with home loans.
In the old days, it was extremely rare for a mortgage to be stretched over 30 years, but today that is pretty much the standard.
Sadly, most people don’t understand how much money this is costing them.
If you take out a $300,000 mortgage at 3.92 percent and stretch it over 30 years, you will end up paying back a grand total of $510,640.
In other words, you will pay for two houses by the time you are done.
Yes, we all need somewhere to live, and there are definitely negatives to renting as well. But it is very important that we all understand what is being done to us.
And I haven’t even discussed one of the most insidious forms of debt yet.
Have you noticed that most doctors and most hospitals will never tell you how much something is going to cost in advance?
They get us when we are at our most vulnerable. When there is something wrong with us physically, we are often desperate to get help. So we don’t ask too many questions and we just go along with whatever they say.
But then later we get the bill and we are often completely shocked by what they have charged us.
If you are completely unethical, it is a great business model. People that are extremely desperate and needy come to you and you don’t even have to tell them how much your services are going to cost. And then once they leave, you send them an absolutely outrageous bill for whatever you feel like charging.
Frankly, I don’t know how a lot of people working in the medical field live with themselves. In their extreme greed, they are ruining the lives of millions of ordinary American families.
One very disturbing study found that approximately 41 percent of all working age Americans either currently have medical bill problems or are paying off medical debt. And collection agencies seek to collect unpaid medical bills from about 30 million of us each and every year.
Most of us will spend our entire lives paying off debt.
That is why we are called debt slaves – our hard work makes others extremely wealthy.
When you’re young and have no money or credit, you can’t avoid loans. No excuse later in life though for most people not being debt free.
Never had any debt. I pay my bills every month and if I want something, I save up until I can pay for it.
Of course, that means I don’t have much in the way of a credit score either, which I find completely backwards, but still, better than being a debt slave.
Sounds like she was the designated sucker born that minute way back when...
I have NO problem with a farm mortgage, or a mortgage on additional land - IF you can afford it on your wage.
Credit Cards, HELOCs, car loans, store credit cards? Nope.
But, that’s just me. Guess I’m, Un-American, LOL!
“Some debt is good, other debt is bad.”
Easy rule: if the debt can help you make more income, it might be good. If not, it’s bad.
“I can see having a 30 year mortgage and working to pay it off sooner.”
It’s amazing what a little extra thrown at the principle each month can do. :)
"In other words, you will pay for two houses by the time you are done."
Well, no. This is treating all dollars as if they were equal, but they aren't. It ignores the future value of money. A dollar you have now is worth more than a dollar you get in the future. When you take out a mortgage you are getting all the dollars now and paying back with future dollars, which are worth less. Hence the interest. In 30 years just trying buying a second house with the same money the first one went for.
Debt is a useful tool. It can be abused. That doesn't mean it's bad. My only debt is my mortgage, which rate is so low that it would make no sense to pay it off early.
I had some surgery a couple years ago. The hospital bill was $24000. The insurance company "negotiated" it down to $8000 of which I had to pay $2000. I don't know if that included the surgeon and anesthesiologist because they were on the hospital staff and were included in that bill or if they just got in after the hospital hit my out of pocket maximum and I never got their bills.
It has never made sense that hospitals charge triple what they expect to really get from most patients. It would be like having the typical new car costing $75k unless you are a member of a buyers' club that negotiates it down to $25k.
“The payment on $300k at 4% is only $1,432.20 a month. That’s less than renting in a lot of markets.”
Perhaps, but rent includes property taxes, and at least some utilities, as well as other services, like landscaping, common area maintenance, etc, that the homeowner would have to pay for. So you can’t compare rent to a mortgage alone, you have to total up all the relevant expenses.
Her first occupation was being on drugs and mooching off my parents. Then she married an abusive control freak. Great person but has no vision of the future. Everything is for the present. “I don’t need health insurance because I can’t afford to get sick.”
I already had the “I’m not throwing money at your problems” talk with her. My siblings are the reason that both my college-aged kids have been working since they turned 15.
Life has more possibilities without debt hanging over everything.
Exactly. Renting assumes all the risk. If you buy a house at $300k and the value drops to $180k, you can forget selling and moving for a better job.
And who set the table for this mess? Our lying, corrupt, greedy, incompetent, selfish, self-serving, ignorant, parasitic, spendthrift and hypocritical government politicians.
I have a 2000 or so balance. Bunch of medical and dental stuff hit. Now I am free I think, maybe by end of the month, pay it off.
IMHO, the first and third are investments and do not necessarily constitute "debt". Sure you owe, but in the end you should profit.
The fourth is the real issue, better defined later as this:
It has been estimated that 43 percent of all American households spend more money than they make each month,
That is the real issue, again IMHO
Indeed, even if you're up side down on a home, in the end you end up with something....renting, not so much.
Same here. I bought a house in a nice neighborhood I could afford. Paid it off in 8 years. Became 100% debt free in my mid forties.. Life’s good.. Ahhhhh!
Play their game, you can still charge things but don't do it until you have the money to pay for it. Charge it, then pay it off immediately.
I have a AMEX Blue Card that gives me 6% cash back on groceries, 3% on gas and 1% on everything else so I use it for those purchases and get cash back on every day expenses, pay it off every month and get money back on money I would have to spend anyway....makes sense to me and I have a 770 credit score.
Yeah, I suppose I could, but since I have little credit to begin with, they only offer me cards with ridiculous rates. So if I were to screw up and forget to pay once, I’d be getting bent over. No thanks.
Right now I get a great deal on rent so I don’t really need credit. Though when I want to buy something, I’ll have to get a card and do like you said.
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