The national debt is just under $20 trillion, a truly staggering number which the average person cannot really even begin to comprehend. The federal government’s reckless spending habits will destroy this country if they are not brought under control right now.
This problem is abundantly clear to anyone with two cents’ worth of smarts (that excludes most of the Democratic Party, and many in the Republican Party right now). But there is another debt crisis that Americans have largely been ignoring, and it is now reaching extremely dangerous levels.
Folks, it’s wake-up time.
Reuters reports that total U.S. household debt just reached a new record level in the second quarter of 2017; the total debt now stands at $12.84 trillion.
Total U.S. household debt was $12.84 trillion in the three months to June, up $552 billion from a year ago, according to a Federal Reserve Bank of New York report published on Tuesday.
What’s driving the increase in debt? The loosening of lending standards, allowing those with lower credit scores to get a credit card. And, predictably, when a person with a bad credit history gets a credit card, they can wander right into insane amounts of debt. It is extremely easy to do, and millions of Americans struggle with this ball and chain every single day.
Some of the other kinds of debt that Americans have include things that have become so common we hardly think about it any more:
Mortgage debt was $8.69 trillion in the second quarter, up $329 billion from last year, the report said. Student loan debt was $1.34 trillion, up $85 billion, while auto loan debt came in at $1.19 trillion, up $55 billion.
Debt is everywhere, it’s the pestilence that’s spreading, but the disease that few wish to truly address.
For those drowning in credit card debt, that means delinquent payments. How many payments are in delinquency right now? Only about 4.8% at the moment; that’s about $616 billion in debt that is late.
That’s a lot of money, but what if the delinquency rate were higher? It could be, especially if there is another recession. If the stock market, which is currently on a huge upswing, hits the inevitable correction, it would mean that many whose jobs depending on those inflated numbers would lose their jobs.
The delinquency rate would increase as well, because without jobs debt cannot be paid off. If that rate is doubled or tripled, that’s trillions of dollars that the big banks will not have paid back. Their lending cannot continue if others do not pay back what they have borrowed.
The entire economy is centered around debt right now. It is an incredibly fragile system that will fall apart if certain components are taken out. If the artificial fueling of the stock market stops, as it inevitably must, there will be a market correction back to normal.
If that is the case, are you prepared to possibly lose your job? I bet that many of our readers were laid off during the Recession, and have since been rehired. The idea of being unemployed again is not a pleasant thought at all.
But it is even worse when one has the ball and chain of debt. And credit card debt is one of the worst kinds of ball and chain there is, along with auto loans for vehicles and houses that we truly cannot afford.
Folks, if you are in debt, I implore you to work as hard and fast as you can to get out. That will require, as Dave Ramsey puts it, “gazelle-like intensity,” as if you were a gazelle being chased by a cheetah in the fight of your life; in this scenario, you’re the gazelle, and debt is the cheetah.
When the correction comes, those with debt will be hit the hardest, and at this rate it is only a matter of time before either the U.S. national debt is called, or the economy corrects itself. I’m getting my family prepared, are you?