In Debt we Trust?

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I came across a statistic the other day that gave me pause and made me reflect upon what so many people are doing wrong when it comes to their finances.

According to recent surveys, about 50% of Americans die completely broke.

Even worse, most people pass away not only with a net worth of zero but addled with significant debt. In many cases, that debt obligation is then left to their families as a further burden.

More than 4 out of 10 American families (43%) spend more than they earn each year.

In fact, total revolving debt has now topped 1.021 trillion dollars in America, the highest point ever. This includes auto loans – which have grown exponentially in recent years – and credit card debt. Reportedly, about 171 million U.S. citizens now have access to a credit card, a number that accounts for about half of the total population and also a record high.

Even more shocking, the New York Federal Reserve recently announced earlier this year that total U.S. household debt (including all revolving debt and mortgages, student loans, etc.) reached $12.73 trillion dollars – also a record high.

While two-thirds of that $12.73 trillion is made of mortgage loans, student loans, and auto loans have skyrocketed, despite having alarming numbers of defaults. Even seniors, long considered a bastion of fiscal conservatism, are taking on more debt than ever, as they struggle to pay for expensive medical care and the cost of living in their golden years.

The average American household now owes about $75,000 in debt. Although those numbers are skewed higher when a family owes a mortgage (considered good debt), too many households have lower debt but with sky-high interest rates that shackles them to steep monthly payments and growing balances.

70 percent of all car buyers now finance their purchase with an auto loan.

While education is a noble goal, the average college senior now graduates with about $30,000 in student loans, which is the fastest kind of U.S. debt and has reached epidemic levels for Millennials.

Medical debt is choking us, too, as 60% of U.S. bankruptcies see medical bills as a significant factor for the financial insolvency.

Even your wonderful, special day – your wedding – comes with an average $26,989 bill for the average married family – most of it paid for with debt.

But still, the greatest financial evil is credit card debt. Consider that the average American household now is plagued with $15,956 in credit card debt, with an average interest rate of 12.83%.

The numbers on paying that off are not pretty. If you made the minimum payments on that $15,956 starting at 25 years old, you’d be 65 by the time you saw the balance go to zero -with a total payoff of $2,629,618.

Even a small $5,000 balance can be toxic for your finances. If you paid minimum payments on that debt at a 22% interest rate, it would take 10 years and $44,235 total to pay it off completely!

The debt problem is so rampant in America that some have even described us as a modern-day nation of debt slaves.

If you think that sounds drastic, consider the Oxford Dictionary definition of slavery: “a person who is the legal property of another and is forced to obey them,” which is an accurate descriptor for people whose every move, decision, and waking hour is “owned” by their creditors.

Or, we can heed the words of early President Andrew Jackson, who is on the $100 bill, when he said, “Those in debt are slaves.”

Even the Bible commonly references money and debt. According to Forbes Magazine, “Money and possessions are the second most referenced topic in the Bible – money is mentioned more than 800 times – and the message is clear: Nowhere in Scripture is debt viewed in a positive way.”

Regardless of the source or the semantics, Americans are living under the yoke of debt like never before – and dying broke because of it.

But it doesn’t have to be that way. The good news is that each and every one of us have the tools and resources to start working our way out of debt and towards a brighter financial future.

So what’s the solution to get us out of debt slavery?

There is a very clear three-step process to get out of debt and take control of your finances. It’s as powerful as it is simple, and will finally empower you to break the shackles of your financial servitude.

WARNING: it’s not going to be easy, it’s not going to be fun, and at first, you probably will feel like your moving a mountain one pebble at a time.

In fact, most people start with good intentions to pay off their credit cards, get out of debt, and change their financial destiny, but far too many fall short. People throw a lot of money (and a lot of stress!) into their credit cards and debt at first, only to see their debt level remain about the same – or even go up – over time if they don’t stick with this plan.

While you’ll need to do the hard work and make the difficult sacrifices, you CAN do it. Once you’re debt free, you might even be able to be able to accumulate a significant net worth by the time you happily grow old, leaving plenty to your family instead of passing on your debt woes.

Are you ready to become emancipated from debt?

Look for part two of this blog where we cover the three-step plan to break free from debt slavery.

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