Most Americans are too busy to worry or care about the growing national debt. But some day we are going to have to address this mountain of I.O.U.’s. A recent article in the Wall Street Journal casually mentioned that the 2016 U.S. budget deficit will widen to $549 billion dollars, up from a $500 billion estimate a year ago. In other words, Uncle Sam used his government VISA to pay for the $549 billion dollars he didn’t have. Sadly, this happens every year. And every year the interest mounts for Uncle Sam as he cannot pay off his growing debt.
At the same time, a note on the Internet also casually mentioned that the current National Debt was roughly $19,452,463,000,000 dollars. Yes, that’s trillions!!! In case it is of concern, each American’s personal share is now $118,843.00. In fact, the debt is accumulating so fast that it can no longer be written accurately unless one stops the debt clock and records the debt as of that particular moment in time.
Student debt is also growing. And believe it or not, even the retail industry is concerned. Having grown to more than a trillion dollars, this debt now surpasses the combined salaries for all recent graduates. Annual interest is now at $160 billion dollars and the largest group of holders of student debt are between the ages of 30 and 39 which traditionally had been the biggest spenders in the retail industry.
Credit card debt is a staggering $3.62 trillion dollars as of May, 2016. With approximately 200 million credit cards in use, per household debt is estimated to be $15,310. Total household debt averages $132,000.
Why is there so much debt?
The rise in the cost of living has outpaced our income. While median household income has grown 26% since 2003, household expenses have grown by 51% and food prices alone have increased 37% in that same period. Debt is soaring as it becomes more expensive to be an American.
Debt hurts—and eventually curtails the way we live. The average household pays $6,658 in interest alone per year. Credit card debt can be extremely costly. Unless funds are available to pay down this debt, the monthly interest charges can make it seem to be a “perpetual” expense. It costs consumers on the average $2,630 in interest per year. Having a family today can also be expensive. Some statistics show that it costs $250,000 to raise a child from birth to age 18 and this does not include college.
Debt grows. For the year 2011, 1.37 million people filed bankruptcy in the United States. For many unfortunate people, debt will continue to mount and eventually become unsustainable. Debt makes it harder and harder to save. A great deal of bankruptcy is the result of medical bills (42%) and a job loss (22%) but uncontrolled spending is right up there (15%). Americans have a tendency to live like their government, but unlike their government, Americans cannot continue to fund their debt for an unlimited period time by floating more debt.
Sadly, we have developed a “debt culture.” In the materialistic society we live in, there is a desire for more and more possessions. Our economy is based on the illusion of infinite growth. For capitalism to work, people have to buy more and more. In the prosperous 1950s and 60s, it was still possible to buy a car straight from your paycheck if you saved. Buying a car today is equivalent to buying a house. These days, even the purchase of a condominium takes a lifetime to payoff. Indeed, many of these debts, cars, houses, apartments, and education will never be paid for entirely. As our culture of debt rolls on, no one really expects these debts to be paid for. Most Americans have credit cards which they use freely. Overdrawing a credit card has little consequence as you can apply for a higher limit or switch the balance to another card.
Stated simply, we are living in bankruptcy. And our debt is a fact of life.