Posted on 02/19/2018 6:43:14 PM PST by SeekAndFind
How long can our debt levels keep growing much, much faster than the overall economy? We haven’t had a year of 3 percent growth for the U.S. economy since the middle of the Bush administration, but we keep borrowing money as if there is no tomorrow. Much of the focus has been on the exploding debt of the federal government, and that is definitely something I plan to address once I get to Washington. But on an individual level, U.S. consumers have been extremely irresponsible as well. In fact, one new survey has found that more than 80 percent of all American adults are currently in debt…
It’s no secret that America is a nation that runs on debt, but it may surprise you to learn that the overwhelming majority of U.S. adults owe money in some way, shape, or form. According to new data from Comet, here’s how many Americans have debt at present:
- 80.9% of Baby Boomers
- 79.9% of Gen Xers
- 81.5% of Millennials
For most of us, it starts very early. We were told that going into debt to get a college education would not be a problem because we would be able to pay those loans off with the good jobs we would get after graduation.
Unfortunately, those good jobs never really materialized for many of us, and now millions of former college students are absolutely drowning in debt…
A study released Friday by the Brookings Institution finds that most borrowers who left school owing at least $50,000 in student loans in 2010 had failed to pay down any of their debt four years later. Instead, their balances had on average risen by 5% as interest accrued on their debt.
As of 2014 there were about 5 million borrowers with such large loan balances, out of 40 million Americans total with student debt. Large-balance borrowers represented 17% of student borrowers leaving college or grad school in 2014, up from 2% of all borrowers in 1990 after adjusting for inflation. Large-balance borrowers now owe 58% of the nation’s $1.4 trillion in outstanding student debt.
In addition to owing more than a trillion dollars on student loans, Americans are also now carrying more than a trillion dollars of auto loan debt and more than a trillion dollars of credit card debt.
Corporations have been incredibly irresponsible as well. Corporate debt has doubled since the last financial crisis, and corporate bankruptcies have been rising steadily in recent years. All it would take for the dominoes to really start falling is some sort of a major economic downturn.
Local, state and federal government debt levels are all at record highs as well. It is now being projected that our national debt will hit 30 trillion dollars by 2028, and those projections are probably too optimistic.
My guess is that we will almost certainly hit the 30 trillion dollar mark far sooner than that.
We can’t keep doing this to ourselves. Our incessant greed is literally destroying the future, but anyone that tries to warn about the collective insanity that has descended upon our society is mocked and ridiculed.
Let me ask you a question.
Would you willingly choose to give yourself cancer?
Of course not, but that is essentially what we are doing to ourselves as a society.
Debt is economic cancer, and as Lance Roberts has pointed out, if we continue to allow debt levels to grow like this eventually it will kill our entire economy…
Debt is, by its very nature, a cancer on economic growth. As debt levels rise it consumes more capital by diverting it from productive investments into debt service. As debt levels spread through the system it consumes greater amounts of capital until it eventually kills the host.
Debt is addictive, because it does boost our standard of living in the short-term. It is so easy to keep going back for one more “hit”, but every time we do it just makes our long-term crisis even worse.
Most people out there seem to think that our economic problems have been “solved”, but that is not true at all.
The truth is that our long-term problems just continue to grow with each passing day, and that is one of the reasons why I am so determined to go to Washington. We are at such a critical juncture right now, and if something is not done the prognosis is extremely negative.
If we stay on this current path, the very best that we can hope for is a “soft landing” and a greatly reduced standard of living for future generations of Americans. Here is more from Lance Roberts…
The processes that fueled the economic growth over the last 30 years are now beginning to run in reverse, and when combined with the demographic shifts in the U.S., the impact could be far more immediate and prolonged than the media, economists, and analysts are currently expecting. Sacrifices will have to be made, the economy will drag on at subpar rates of growth, individuals will be working far longer into their retirement years and the next generation of Americans will lead a far different life than what the currently retiring generation enjoyed.
It is simply a function of the math.
I am sorry for not writing more lately. I have been working night and day to get ready for May 15th. With Donald Trump in the White House, this is our opportunity to take our government back. If we miss this window, we may never have this sort of opportunity ever again.
America is drowning in debt, but of course our problems go far beyond that. Our economic, political, cultural and spiritual problems go very deep, and we desperately need to change course as a nation.
Unfortunately, most of the population is in a deep state of sleep, and my hope is that we can wake them up while there is still time to turn things around.
Actually, 100% of all adults owe $20 trillion.
Um 100% of Americans owe someone else money, ever heard of the Federal Debt ?
Argh, beat me to it !
one of the most freeing things ever is paying off all debt. When you are no longer paying interest you have more available cash. That extra cash accumulates and earns interest. Now you can start paying cash for big ticket items like home repairs and cars.
Count me in - I spent almost $6 at Aldi today, and I didn’t want to walk out with a pocket of change. So now I owe $5 and change to the bank on that credit card. Now, if you had posted yesterday....
Yes, that’s me. A baby boomer that just sunk myself in about 50 grand worth of debt at about 3%. I have surplus in my IRA to cover it, but after the recent stock market drop, it’s still making 10%, if it fully recovers, it will be 18% or better this year. So yes, why not.
But we do own a rather valuable home and several toys, all paid for. I do know some boomers 100% in debt, meaning they own nothing that’s free and clear.
In preparation for early retirement I reduced debt to mortgage only and that is comparatively small.
In 6-7 years I will have no debt.
Except what Uncle Sugar has generously run up in my name.
It depends on how you define ‘debt’. Everybody owes this month’s utility bill, for the gas and electricity they have already used. Even those who pay their CC bill in full every month still usually have some sort of balance that has not yet been billed.
Now it just seems to me that if I can borrow mortgage money at 3 to 4%, but my index fund investments are growing at 10-11% Compound Annual Growth Rate (CAGR) I am making 7% per year on someone else’s money.
The 10-11% CAGR of stocks has been going on for the last 30 years. It is not a flash in the pan.
That's a silly exaggeration. A $100,000 loan to buy a 4 plex with good cash flow and a $100,000 loan to buy a year long around the world vacation are different animals.
Misleading. The article doesn’t claim that most Americans are in overall debt; just that they owe money to someone else in some way. At current interest rates, it often makes financial sense to use OPM, even if you have the cash to purchase the item in question. Yes, the country has a huge debt problem, no doubt. The sensational statistic isn’t necessary to make the point.
Our only debt is a modest mortgage. We have a home that we can afford and have extra money left over.
My wife needs a new, used car. I’m considering taking out a loan for it because the money is earning far more in the mutual fund than the interest charges.
The other day, I was at a work seminar. Some yahoo loan guy was encouraging people to take out loans for everything. Insanity
We paid cash for our current home in 2008 and are debt free other than normal living expenses.
I read the article, and they don’t define “debt”. But as Code Toad correctly points out, we all owe money, much of it spent on things we didn’t and don’t approve of.
And that varies. Many leftists think every cent spent on the Military is a waste, and I think every cent spent on the NEA, EPA, PBS, NPR, Social Security, and a host of other things is a total waste.
But...it was our money, taken from us against our will and with the ostensible stamp of approval, spent at the Federal, State, and Local level.
And they wonder why we don’t want to add UN to that list.
I do not have any debt except my monthly bills. I own my house and my automobiles.
We made a concerted effort to pay off our mortgage early. Every month we could, we simply added $100 to pay down our principal on our mortgage, and eventually it turned to every month, and we paid it off in 15 years instead of 30.
We didn’t buy a big house, we purchased a small 1962 era mass-produced Ranch, and have lived in it. We could have got a mortgage for a house 3 or 4 times what it is worth, but we didn’t. We buy new cars, each one of us probably every five years staggered, and we pay cash because we save for it. But we don’t buy top of the line cars.
We lived with furniture for many years we found in front of houses in our neighborhood and refinished.
We don’t have, and have never in our entire lives had cable. We have one cell phone between us.
You get the idea.
We live within our means. We have structured our lifestyle so that if something happens to one of us, lose or job or become disabled (that will obviously be a trial that will throw any plans into a dumpster) we can still live on one income. We have many places where, if we had to, we could cut back even more.
I read a story today about some guy who they say committed robberies so he could pay rent. I am quite skeptical when I hear these things, because I suspect that in many cases (though not all, to be sure) you would find a lot of things that got a higher priority in finances than rent did. When I see people who live in section 8 housing with an EBT but they have cable and internet, smoke cigarettes, have a car, 60” television and buy lobster at the supermarket, yes...that pisses me off. I don’t have anything against people who want those things or do those things, but I bitterly resent that they do it on my dime, when I have endeavored to live within my means.
I think a lot of people live beyond their means, and value stuff and status more than they value fiscal responsibility, simple as that in many cases.
FWIW-
Two things happened in 2008: 1. husband was forced to retire 2. The crash. We have not recovered. Our debt is still way below most, but wish it was gone.
Ding ding ding ! albeit debt free shy of the IRS cartel ....
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