Question: How does US debt and the national economic condition impact my personal finances?
Answer: The United States is, to put it delicately, in a bit of a financial jam. We have become a nation of consumer debtors.
We want everything now, thinking we will pay for it later. Then, we somehow rationalize “how” we might pay for later, but it seldom works out the way we intend.
"Always bear in mind that your own resolution to succeed
is more important than any one thing.”
- Abraham Lincoln |
Consumer debt is at an all time high, with no real sign that consumers understand the need to change their behavior toward spending. Furthermore, our elected officials are not setting a very good example for us to follow.
Whatever happened to the phrase, “Living on less than you make”?
Although many of our politicians fancy themselves as experts on finance, they seem to have little trouble spending tons of money that our nation simply does not have. Corporations continue to receive bailouts as a reward for running their businesses into the ground, while the average Joe is held fully accountable for every penny of debt he acquires.
I don’t pretend to know what the answer is to our nation’s financial crisis. To be honest, I think the problem is so huge, I don’t think anyone really knows what should be done.
It does seem to me, however, that our government should be setting the example they expect everyone else to follow, and we should hold them accountable for doing so.
Although you may not have seen a drop in your pay, no doubt you’ve experienced a sizeable drop in your 401(k) during 2008. This is proof that you are impacted by the state of our national economy. The larger the US debt becomes, the greater risk there is to our financial future.
The national economy is a bit like a set of dominoes – if one piece falls down, (like home values) a lot of others things can be negatively impacted.
As companies struggle, they lay off workers who, in turn, struggle with their own finances and have less to spend at local businesses - so now the local business owner is struggling too – and the dominoes just keep falling.
Perhaps you’ve noticed a lack of a bonus? A drop in the hours you are allowed to work? If you own a house, it has likely depreciated in value in 2008. If you have any stocks, then you already know they are not doing as well as you would like.
Maybe your bank has recently merged with another bank, and while all your money is still safe and sound due to FDIC insurance, you have yet to see how this merger will affect your bank accounts’ fee or rate structures.
No matter who you are or what you do, you are being negatively impacted, in some way, from the growing US debt. It is my opinion that the best way to minimize the impact is to make certain you diversify your investment holdings, as well as creating alternative sources of income.
Knowing you have other income sources in the event of an unexpected job loss, provides a tremendous source of stress relief during hard times. In fact, that is one of the main reasons I wrote the book, 10 Days to New Income.
In conclusion, the best way to minimize the negative impact of a growing US debt is to eliminate your own household debt. The less debt you have the greater opportunity you have to shield yourself from an economy in recession.
Create your debt elimination plan today. You can use on of our many DTI calculators to get started. Forget about what everyone else is doing and focus on yourself, focus on your financial future.
The rewards are definitely worth the extra work.
|
"Rather go to bed supperless than rise in debt."
- Benjamin Franklin |
|
Debt is NOT your friend. It's not a wonderful "tool" for building wealth. That's a myth.
