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.
I bought a semi luxury car for my last one. Paid it off and haven’t had a payment for about 4 years. Ahh sooo nice.
Paying cash is even nicer.
I dropped $7k and got an Infiniti G35. Smartest car move I ever made. My wife got a 2010 Ford Fusion which is a really good car.
The only new car I ever bought was 1985 Honda Accord.
“The payment on $300k at 4% is only $1,432.20 a month. That’s less than renting in a lot of markets. And the interest portion (most of it, in the early years) is deductible from your income for tax purposes. “
Yep
I pay directly on line with my checking account, and make sure I stay on top of it like I do with all of my bills.
But I understand we all have our preferences, kind of nice to know in an emergency that you have the ability to take care of it though.
True
Ask them if the Federal Government should do something to help them with their debt.
Be sure you are sitting down before reading the results.
Perhaps have a couple of belts first.
Well, I’ve got enough savings to handle most any emergency short of some catastrophic illness, and I’ve got insurance for that.
What's nicer is getting money back on money you would have spent anyway, and achieving an excellent credit rating to boot!
In 9 months I have to date $329.00 cash back on everyday expenses, but to each his own.
I play the game and benefit from it, it works for me.
Sure it sounds like its free money. They like you so much they are paying you.
RIght
I hear ya FRiend.
We all have our ways of attacking life and trying to get ahead.
I had to replace a fuel pump in my car (again) at $1,100 a whack a couple of months ago. I put it on a card that is interest free until May of next year and paid it off already.
I could have paid it from my savings but used the card instead and got 1% back on it.....more than any interest that banks pay these days.
Anyone I know who doesn’t have at least mortgage debt also doesn’t have children; they are “frugaling” themselves into extinction.
I spend about $500.00 per month on groceries alone per year and get 6% of that in cash back, how is that disputable?
You probably spend the same, wouldn't you like something back on money you spend anyway
Play the game, if you choose too. For me and my situation it is a win win.
A home mortgage is probably the last thing anyone should pre-pay; it is generally a low interest rate and tax-deductible. While everything you buy even a year or two down the road will be at higher prices, the sales price of that home remains constant. Even with the fall in housing prices, we’re OK because we bought before the bubble (and would never pre-pay it as long as ANY other bills are around - and even then I’d hesitate to pre-pay).
I find the credit card companies to be evil vile organizations who prey on the weak and ignorant.
I give them as little as possible.
I think I have the various -ists who like to send me a bill every couple of weeks to nickel and dime me to death paid up as of today.
Watch my money and get through anniversary which should be done and budgeted until the next pay period then I can make a big dent. As long as I don’t get any more overpriced useless trinket requests, I should make it.
“We don’t owe on a thing except our one monthly credit card, that we pay off monthly.”
Same here. There were one or two times in our life where we didn’t pay off the entire credit card bill the same month. Like when buying a house and came up short that month due to cash flow and excess closing costs.
People should look at their net worth, not what they owe. Especially when you get old and don’t have any work retirement. Half a million $ or so might get you by.
RE: 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!
Very good, and now... for the PROPERTY TAXES. I hope you live in an area where they do not perpetually increase to a point where it becomes a burden like many other places in the USA.
I have no debt at this time but I intend to borrow every last cent I can when the USD starts to fail...
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