Nowadays, the term debt-free has almost become obsolete. People think they need to live on credit to be able to survive. When I was a child I remember how my parents would save up for large purchases and vacations. The only loan they had was of that on their house. Also the price of the house was only $12,000. Most people did not live beyond their means even those that were wealthy. The values of hard work were instilled in the young people until things changed around the 1970s and 80s. This is when credit cards were sent out nationwide to everyone even those that didn’t ask for them. The marketing campaign of why wait when you can have it now was on. People started buying stuff on credit cards and paying for it later. Gone were the layaway plans of the past, because why wait when you can charge it and have it now.
Now the younger generation doesn’t understand living a debt-free lifestyle. As soon as they get out of school they went to go buy a brand-new car and already start the cycle of debt. The average kid graduating from college has $30,000 in consumer debt, not including student loans. This year, Student loans nationwide surpassed the $1 trillion mark and are continuing to rise. These young people don’t understand that they’re setting themselves up for filing bankruptcy. Recently, it was reported that the average American has an income to debt ratio of 154%. Astoundingly, it was less than 50% in 2008 when the financial collapse happened. So that poses the question, how could the economy be getting any better if Americans are deeper in debt than they were four years ago? It is true, people are once again spending like drunken sailors, the only problem is, it’s not their own money. With QE1, QE2, QE3 and now QE4 it’s become apparent the only thing driving the economy is the printing of money. This allows the banks to push this liquidity into the economy to give an appearance of a recovery.
It’s time that Americans and especially the younger generation wake up and smell the coffee. The US is a debt driven economy and the only way that can change is for people to get out of debt and become debt free. I’m sure this conversation is falling on deaf ears as most young people will at some point in time have no other choice except to file bankruptcy. Our elder Americans are probably embarrassed with the current situation as they used to try to instill in young adults the values of saving and living debt-free.