Committed for Better Business

Now that Christmas has passed and we are rapidly moving into the new year, once again many people did it with their Christmas expenses. I know it is easy to do when you have available credit on your credit cards. Many times I have found myself falling victim to that kick in the way of my home financial policy. Until recently, I have now tried to be more realistic with wife and children by letting them know that we should be practical when giving gifts. 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 it is that today’s children and young adults grow up under the illusion that all of this is real. The only thing that is real are those bills that come in the mail at the end of the month that we can’t pay. Many people are trying to keep their credit scores high so they can get more credit and go into more debt to keep the appearance that everything is okay.

Recently, a study was published showing that most Americans were within three weeks of filing for bankruptcy. It is not surprising to discover this fact when we see that the average American’s income-to-debt ratio is now 154%. The only reason the number of people filing for bankruptcy has continued to decline is that banks are allowing these people to leverage even more. The average American in 2008 had roughly $ 4,000 in credit card debt. By the end of 2013, that number had risen to about $ 16,000. During the same time period, the median household income also dropped by $ 4,000 per year. This is nothing more than a recipe for people who have unsustainable debts that end up in bankruptcy.

Let’s face it, the citizens are devastated and so is the government. US debt has now exceeded 105% of GDP and no one seems to care. Instead, Congress is calling for the debt ceiling to be raised so that we can be 120% of GDP, I guess. I believe our politicians are completely disconnected and as they continue to make poor decisions on Main St., America continues to suffer. In 2010, the US saw a record number of people who filed for bankruptcy to the tune of 1.6 million. Although that number has dropped to 1.1 million, many predict that new records will be set in the next two years. It was recently reported that there were more than 5 million households in the US in some stage of foreclosure. The news continues to inform that the real estate sector was already recovering and everything is better. I assume that the news reporter did not read all the statistics that are important to make that statement. Only time will tell if this Keynesian form of government will fail or work for the first time in history. I am betting my money on failure. Although there is much we can do to change our government, we cannot change the way we live and try to get back on track to be debt free, even if it means filing for bankruptcy.

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