Now that Christmas has passed and is quickly moving 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. Many times I have found myself falling victim to that financial policy of kicking the can down the road for my home. Until recently, I have tried to be more realistic with the wife and children by letting them know that we must 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 this is all real. The only real thing is 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 up so they can get more credit and take on more debt to keep up the appearance that all is well.
Recently, a study came out showing that most 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 bankruptcy filing numbers have continued to decline is that banks are allowing these people to leverage themselves even more. 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 fell 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 broken as is the government. US debt has now exceeded 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 as 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 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 homes in the US in some stage of foreclosure. The news continues to report that real estate was now recovering and all is better. I guess the news reporter didn’t read all the statistics that are important to make that statement. Only time will tell if this Keynesian form of government will fail or will work for the first time in history. I’m putting my money on failure. While 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 being debt-free, even if it means filing for bankruptcy.