Debt Free

First of all, a moment of thanks for those incredibly brave men, 62 years ago today, that overcame their fears and fierce German fire to successfully establish a beachhead in France. Their bravery and determination changed the course of history and paved the way for our success, both personally and nationally, that followed.

Experian, our friends in the credit reporting business, issued a new report a few weeks ago concerning American's increasing levels of personal debt. In the last two years, Experian reports our personal debt is up a robust 12%. We obviously can't afford it either, as they list the incidence of late payments up 20% during the same time period. What does this say to you? I really have no idea, but it says to me that most Americans were on the border of what they could afford each month and have now stepped over that ragged line. If you take into account that personal incomes are actually up over the last two years, it says that we've lost our collective minds. When Best Buy has a plasma TV sale, we need a new 50” HDTV, and we need it RIGHT NOW!

Now while this level of consumer spending does fuel the economy, and helps many business reach their quarterly sales targets, we really can't afford it. The next time you think about taking the missus out for a fillet and a good bottle of Merlot, stop and think for a second. Are you going to use plastic? If the answer is “yes” for any other reason besides wanting to get some very-hard-to-redeem airline miles, you should reconsider. Have a nice evening with Netflix instead.

Since Diner's Club issued the very first credit card in 1950, our national lust for credit has allowed over 20,000 different credit cards to flourish. They've assisted us in creating the most personal debt ridden society in world history. Although credit spending does fuel the national economy, one estimate indicates that the average consumer ends up paying a staggering 112% more for purchases than if they paid cash. Imagine if we actually did pay for most of the goods we purchased with cash. We could buy twice as many products using the same resources. Think for a second how that would boost the economy! You could still buy that plasma TV, you may just have to wait a few more months.

Bankrate.com reports that 90% of Americans say that credit cards are not a source of worry for them. That must mean that the 11% of Americans who had debts that went to collection in 2003 weren't worried about their debt. Ditto those contributing to the astounding 98% increase in personal bankruptcies experienced by Americans between fiscal 1994 and fiscal 2003. It's great to see we're all enjoying Songe d'Automne.