Our nation is in dire financial straits.
However, the nation's situation is only a reflection of our personal failures
in our inability to "Just Say No" to ourselves. We must have
everything and we must have everything now. We have become a country of
consumers instead of a populace of producers. Let's face it, too many families
are drowning in debt.
We are spoiled. No one wants to wait and save
money for purchases. The American consumer is deeply in debt and not talking
about it. Consumer debt rose two-hundred twenty five percent from 1976 to 1986.
Visa billings doubled last year from two-hundred billion to four-hundred
billion. Total household debt has soared to 93% of annual income.
USA Today has reported that for the last five
years, finances have been the number one subject of most New Year's
Resolutions. It used to be weight. Something is definitely amiss.
These statistics have been building for years
but it is no longer just the baby-boomers problem. My generation just embarked
down the same ruinous path. Many students come out of school not knowing how to
balance a checkbook. College is where you start learning firsthand about
finances and credit because the credit companies are sending out cards by the
buckets to students.
Citicorp just spent ten-million marketing
credit cards to high-school kids. Sixty-one percent of all college students are
carrying a card, and thirty-two percent of those got it before college. However
a recent survey showed that fewer than thirty percent of the students polled
could say what interest rate they were paying on their cards. It's like not
knowing anything about guns and toting an Uzi. But the credit card companies
understand about teaching children habits that will carry over into adulthood.
Now credit cards aren't the root of all evil,
but we must look at it realistically. The typical family
pg.2
is holding
between eight and twelve credit cards, and each card has an average balance of
$1500. These were accumulated by no more logic than just who sent them one.
They are horrible and dangerous financial tools. There are over forty-three
million Discover cards, over twenty-six million Sears cards with more than
seven hundred thousand applications per month. In 1994 Sears made more money on
credit cards than they did on the sale of merchandise. So Sears is not a
merchandiser; it is a credit operation with some stuff out front.
What exactly can the irresponsible overuse of
credit bring about? Worst case scenario; how does bankruptcy sound? Typically
bankruptcy filings are over nine-hundred thousand, annually with a new record
set every year between the years of 1983 and 1992. The increase of filings in
the last fifteen years is over one-hundred fifty percent, with ninety-four percent
of filings non-business personal filings. Think you're not in danger of this
situation? Here's something to think about. A recent study done on the typical
bankruptcy by the University of Texas in conjunction with The University of
Pennsylvania confirms this. Published in the Wall Street Journal the study
noted that the typical bankruptcy was not a guy under a bridge or a real estate
high roller but rather "Well educated, middle-class baby boomers with big
time credit card debt." Wake up America!
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