American Middle Class Debt

Introduction

The American Middle Class is escorting the world into economic debt. What we are doing and what we should be doing are two completely different things. Debt is the number one cause of poverty worldwide. The American middle class is leading the way for the rest of the world as to how they should live their lives and spend their money, and we are doing a very poor job of it. With the rest of the world scared as to what is going to happen next with America’s economy it is time to start showing them that we can lead the world through the 21st century and exactly how to do it. Through wise spending and saving America, China, Europe, and the rest of the first world could create the strongest world and regional economies we have ever seen.

Argument

America has been paving the road for the rest of the world when it comes to economics. We are quickly falling behind and making major mistakes that are creating a road no one else will want to travel on. 43 percent of American families spend more each year than they earn, and the average household carries about $18,500 in revolving debt. This debt is money that is owed to a creditor who sets your monthly payment based on the current balance. Credit cards or retail store cards are examples of revolving credit. Each month your balance varies based on your shopping activity from the previous month and any unpaid amount rolled over or “revolved.” All the while personal bankruptcies have doubled since 1995. Credit is not a financial tool, if you ask most “informed Americans” they will tell you get a credit card use it wisely, put your gas on, and pay it off every month. This is great advice, except the fact that over 60 percent of Americans that actually have credit cards do not pay them off monthly. Statistically speaking you will miss a payment or not pay your card off in full at some point, and that is why a bank is willing to lend this money to you. Credit cards are great financial tools for private banks, not individuals. The average adult that is over 18 years old has over eight thousand dollars on some combination of credit cards. They are paying a little over one hundred dollars a month in interest and the payment they are making is right over three hundred dollars a month. They are paying three hundred dollars a month because they could not take three months, have a little restraint, and buy that thousand dollar television they wanted. Now they are paying fifteen hundred dollars for it, if not more.

Analysis

Save your money, invest in a plan, and stick to it. Why rely on anyone when people notoriously let others down. Think about it, if you paid someone their paycheck but you did not have enough to feed yourself, would you give them money to feed their mouth? Probably not. So do not rely on someone to feed your mouth when you want to retire. Take care of yourself and if you do it right, you can take care of others as well.

College is a rising trend, and something that is looked at as a “must do” if you want to be successful in life. The average college student graduates with over twenty thousand dollars in debt and even with over fifteen years of schooling they usually do not really have a good idea of what to do with themselves after they graduate. So they get married, buy a new car, buy a new house, buy new everything to go along with that new job that pays about forty thousand dollars a year. Everything looks really nice but everything is on a line of credit because for some reason the closer you got to your credit limit the higher the bank raised it so you continued to spend. Well let’s look at a better way to start out that young successful life that just graduated college and is on top of the world.

First you must create an emergency fund that would cover the monthly bills for three months. This is somewhat of a safety net in case you lose your job so that you are scrambling for the first thing you can get. Then pay off those student loans and credit cards as fast as you can because your goal is live without debt and never worry about debt again. Once you have your debt paid off, you need to start saving for retirement. Put money away every month for the rest of your working years, spread it across a few really good long term mutual