AVOID DEBT

by Anonymous 4:23 AM 0 COMMENTS

Last year I said very plainly that we were entering into a depression, and that things would get worse. Yeah, I know, I'm a really fun guy. However, pretending a problem does not exist will not make it go away. What makes our current depression worse than past depressions is our overwhelming debt. We have: trade deficits, budget deficits, state deficits, the national debt, and unbelievable unfunded liabilities. We, justly, are angry at our political leaders for allowing this to occur. However, it's not just the clowns in congress that have done this, the average American is deep in personal debt.

The average household debt in America is 136% of average income. You all know someone who is living on credit, who is being buried alive in compound interest. It is going to take a while for our economy to recover, and things will likely get worse. We need to plan ahead for even harder times. We do not need to live like refugees. We (as a whole) just need to start being more responsible. Allowing the average to be 136% is dangerous! Pay off your debts as fast as you can.

There are some purchases which justify taking on debt:

• An AFFORDABLE home
• An Education
• Reliable AFFORDABLE transportation

Unfortunately we have become a culture addicted to instant gratification. We want a big screen TV, new furniture, and other unnecessary items, and we want them now. Millions of people make large purchases with high interest credit cards. Buy the time they pay off the purchase and the interest (if they ever do) they find they have paid far more than the product was ever worth.

When I was young and stupid, I purchased a little surround sound system, on a store payment plan. I made minimum the payment month after month. When it was paid off, I discovered I had paid about $800 for a $300 system. The interest sure does have a way of adding up.

The housing crisis is a perfect example of the danger that personal debt can bring to our nation. Far too many people were in over their heads buying houses they could not afford. Now, we "the tax payers" are stuck with our neighbor’s bill.

Conservatives preach fiscal responsibility and accountability, but do we practice what we preach? If you were to lose your job today could you handle your debts? Do you have unnecessary debt for things you do not need? Before we rush out to buy by the new I-phone, we should ask ourselves: Do I need it? Can I afford it?