Now that Christmas has passed and it is moving quickly into the new year, once again many people have gone overboard with their Christmas spending. I know it’s easy to do when you have available credit on your credit cards. I have found myself many times falling victim to that financial policy of kicking the can down the road to my home. Until recently, I have tried to be more realistic with the wife and children by letting them know that we need to be practical in gift-giving. I mean, who really needs a 70-inch big screen TV to watch football? Corporate America has done a good job of blurring the lines between our needs and our wants. What is it that today’s children and young adults are growing up under the illusion that all of this is real. The only real thing is those bills that arrive in the mail at the end of the month and that we can’t pay. Many people are trying to keep their credit rating high so they can get more credit and get more in debt to keep up the appearance that everything is fine.
Recently, a study came out showing that the majority of Americans were within three weeks of filing for bankruptcy. It’s no surprise to discover this fact when we see that the average American’s income-to-debt ratio is now 154%. The only reason the bankruptcy filing numbers have continued to drop is that the banks are allowing these people to get even more leverage. The average American in 2008 had approximately $4,000 in credit card debt. By the end of 2013, that number had risen to nearly $16,000. During the same time period, median household income also dropped by $4,000 per year. This is nothing more than a recipe for people who have unsustainable debt that ends in bankruptcy.
Let’s face it, the citizens are broke just like the government. US debt is now over 105% of GDP and no one seems to care. Instead, Congress is asking for the debt ceiling to be raised so we can be 120% of GDP, I guess. I think our politicians are completely out of touch and while they continue to make bad decisions on Main St., America continues to suffer. In 2010, the US saw a record number of people file for bankruptcy to the tune of 1.6 million. Although that number has now dwindled to 1.1 million, many predict new records will be set within the next two years. It was recently reported that there were over 5 million homes in the US in some stage of foreclosure. The news continues to report that real estate was now picking up and all is better. I guess the news reporter didn’t read all the statistics that are important to making that statement. Only time will tell if this Keynesian form of government will fail or work for the first time ever. I’m putting my money on failure. Although we can’t do much to change our government, we can’t change the way we live and try to get back on track to be debt free, even if it means filing for bankruptcy.
