A quick check at www.usdebtclock.org shows the U.S. national debt has reached over $20 trillion. If evenly distributed, that’s an average debt of over $63,000 for every man, woman, and child in the United States. The sad part is that my two boys, who are only 14 and 11, have somewhere around $125,000 of debt.
They don’t even own a treehouse!
Our elected leaders talk about, but continue to fail to execute, cutting the national debt. It looks like our politicians have lost touch with the American people and retreat to finger pointing, while the reports across the pond in Europe are enough to make any investor wonder how far the ripple effect will go.
As the global debt problems continue to grow, families can take one simple step to avoid the debt time bomb from going off at home.
First, let me be clear — I absolutely love America. I think we live in the greatest country in the world and wouldn’t trade who I am for anyone else’s position in history. I have everything in life I could ever want or need — I am truly blessed. I believe I’m like the majority of the informed and am willing to pay more in taxes and give up some of my “entitlements,” if it means helping my children and others. Unfortunately, we live in a largely unaware society; some are starting to wake up, but more need to know. Therefore, our mission is to inform all Americans about how they could be financially self-reliant.
Here is our country’s current financial picture: According to the U.S. Debt Clock, the U.S. federal budget deficit is almost $719 billion, which means the government is continuing to spend much more than it is taking in. Ten years ago, the U.S. federal budget deficit was $287 billion. Thirty-nine million Americans are living in poverty, and over 27 million are without insurance.
On the surface, the problems overseas may seem like theirs to deal with, but that may not be the case. Our government currently owes over $6 trillion to foreign nations, China, Japan, and Ireland being the top three. The International Monetary Fund has been involved in many of the global bailouts. Their website states, “The International Monetary Fund (IMF) is an organization of 189 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.” You might think that, with 189 countries, the United States has little at stake.
The IMF uses a “quota” system to determine which countries have to put in the most money, based on a complex formula — guess who has to put in the most money?
You guessed it. The good ol’ United States of America. You and I are on the hook for a lot of the bailouts given by the IMF.
National and international debt continues to grow, and we can’t control our government’s spending, but there is one simple step investors can take to avoid their own debt time bomb: pay off, and stay out of, debt.
I know, it is boring and it can take some hard work to accomplish, but keep pushing forward to eliminate more debt and build up reserves. Think about it — if you eliminated all your debts, how much would you have left over each month to spend or save the way you wanted?