Living within our means


How many of us itch to spend our paychecks within a matter of hours? Raise of hands?

I always wonder what compels we Americans to overspend?

According to the International Monetary Fund (IMF) the average American is over $53,000 in debt (2012 levels):

The Federal Reserve Banks puts it more to a modest $43,000 per person (2012 levels), irregardless, it seems Americans tend to have a sense of the “I want it now” entitlement and be damned the future consequences on our national economy:

Total_Household_Debt_By_Composition_NYFED_Q1_2012.PNG

According to Daily Finance:

Americans have increasingly been paying down their mortgage and credit card balances. But even as total consumer debt has diminished by approximately $100 billion (down to a mere $11.4 trillion), more than $1 trillion of our current debt load is delinquent, and nearly $800 billion of that is overdue by more than 90 days. And while owing less is a good thing, the study shows that we’re burning through our savings to pay our debts down. The overall net worth of the average American is down nearly 40% from 2007 to 2010.

Much of that decrease has come from the steep decline in home values. The National Association of Realtors recently released statistics on the sales of existing homes in May 2012, which showed mixed news. Overall, home sales are down, but the median sales price is up to $182,000.

Credit card debt may be the third largest form of debt in the U.S., but it’s decreasing. Americans paid off 5.2% of outstanding credit card debt in 2012, which is 12% more than in 2011, but 8% less than in 2010.

However, with that being said, student loan debt is on the rise at a cost of $904 billion.  Each year the cost of tuition goes up making it harder to even afford higher education.

Each of us has a personal responsibility towards our country’s future and that includes future generations.  I haven’t even touched discretionary credit card spending.  How are we using our plastic money? Is it to buy the next electronic gadget? To pay for basic living expenses or the cost of tuition?

And when you’re married you bring not only your debt into this new partnership but you take on that of your spouse. Though you can say any debt brought into the marriage belongs to the spouse, how many of us here in the USofA really practice this?

In the end we have to take responsibility for our irresponsibility.  Create a sensible budget, know what you are getting into before signing away your credit.  And if married or thinking about getting married by God hash these details out or get a pre-nup. As unromantic as this sounds it could become sound investment advice for your future earnings.

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