Our National Debt

The other day, I started reading America The Broke. Even though it's four years old, it's just as relevant as ever... perhaps even more so. Me and my husband are seriously considering taking $1000 of our tax returns this year and investing in gold. It's not a new idea from this book... I asked my grandma earlier this year if she'd consider moving my inheritance from Microsoft to gold because I'm a little bit wary of what might happen to the stock market... but this book paints quite a scary picture. Especially chapter 3. If you can't afford to buy the book and your library doesn't have a copy, go down to Barnes and Noble and read just that. It's something that could happen.

I remember as a kid I didn't care very much for Ronald Reagan. I now know more about him and I respect him as a Christian, but he did a very bad thing with our national debt and deficit. Even as a kid I knew it. I was quite happy in the Clinton years when we started to have a surplus (don't get me wrong though, there were plenty of things he did wrong)... and I'm pretty nervous now as Homeland Security and the Iraq war continue to rack up the debt today.

I know more than I want to about being in debt. All we have right now is a car loan, mortgage, and a student loan... that and the medical bills from when my kids had to go to the ER last summer when we were waiting to get approved for health insurance, but there was a point in my life when I had more debt.

Back then, I was making a lot of money. The debt was manageable, but we were still trying to pay it down. We could have saved a lot more and spent a lot less, and sometimes I want to kick myself for not being more financially frugal back then. Because when I got out of the military and my husband became the breadwinner, we took a 66% pay cut. And the debt was swallowing us alive. I couldn't imagine if today we had credit card bills to pay right now, with no job and living off temporary assignments and unemployment (if it ever comes through).

After learning of Dave Ramsey, I grew to hate debt. I realized how much of our income every month was being wasted in interest. I imagined how much cash we could have freed up if only we didn't have a mountain of debt in front of us. We have since tried to keep an emergency fund... which is a good thing because almost every time we got one last year, dh would lose his job again.

This book talks a lot about our national debt. While it's not the same as personal debt, we still have to pay interest on it. A lot of interest. This book says that on average, every person in America pays $1000 a year to pay interest alone. I don't know about you, but I would rather have that money go towards something useful like roads, or even the schools... or you could always put that into the taxpayer's pockets.

The problem is, our country thinks that it can buy whatever it wants, pay for whatever it wants, and we'll be okay. It doesn't work that way. In my personal budget, I have to make choices as to whether I buy clothes, take the kids to Jamba Juice, or buy something else. I can't buy everything that I want. And neither can the government. Our politicians think that they can, but we pay for it... and will continue to pay for it until it gets fixed.

We want to pay for an expensive war, give senior citizens social security, give medical help in the forms of Medicare and Medicaid (which I currently receive), pay for the roads, pay for education, pay for welfare, prisons, farm subsidies, and on and on. Many of these are noble things. Who doesn't want to help the poor? Who doesn't want to help the elderly? But the problem is, we can't afford everything that we want to fund.

This book is a quick read and I'm just starting the last couple of chapters where it gives suggestions on what we can do to improve the situation, but right now, this book is scary. It's no wonder that foreigners are buying up our assets, when we have this massive debt. It's no wonder that so many other countries of the world hold us in contempt. We're like some lazy cousin who is mooching off everybody else, promising to pay them back later, while they are working hard and loaning money to us.

We used to be a nation that loaned to other nations. Even the Bible says that you should be one who lends to others, and not one who borrows. We used to be more self-reliant as a people. Now we're a people that builds houses on barrier islands known for hurricanes, and expect the government to bail us out when it gets destroyed. Now lenders get the government to bail them out, after they gave out bad loans that they probably shouldn't have been giving out in the first place.

Perhaps one day something will happen to make us a nation of people that rely on ourselves and try to foresee circumstances in which we might need to be prepared. Until then, wanna buy some gold? Just in case we end up with runaway inflation... you never know. Wouldn't be a bad idea to stock up that pantry with food, just in case the prices start skyrocketing as well.

Is Our Country Headed Toward Economic Ruin?

I wrote in my last post that my dh didn't have a job... but this article is not about our economic picture. I'm happy to say that 1 week upon arriving back from my parent's house for our unexpected Christmas break, my husband has found a temp-to-hire position working at the headquarters of a large grocery chain around here. I'm really proud of him and his skills. When I left the military 4 years ago and my husband took over as breadwinner, it took him over a month to find a job. He lost 3 jobs last year, and each time it has taken him 1 or 2 weeks to find another. Every time he has gone on an interview and blown away the competition. I guess that working hard and improving your skills pays off, eventually. And he's still going to college in the evenings (he's taking 12 units this upcoming semester... completely amazing). The pay for his new job isn't spectacular for a permanent job, but it's pretty good for a temp position... and usually you can expect to get a raise when a company hires a temp permanently.

I'm worried, however, about this country as a whole. It's something that both me and my husband have been predicting for years. Just like the housing bubble. Any logical person could have looked at skyrocketing housing prices years ago and could have told you that it couldn't last forever. When you have to have an income of $90k a year and put down well over $100k to buy a house, something has to give. Just like the dot-com bubble. Remember in the early days of the web, when companies made their money from advertisements, and those companies paying the advertising were also making money that way? I personally made a little pocket change just from putting advertisements on my computer. But it was all a big Ponzi scheme, and eventually, it had to end.

I'm so serious about this, that I called up my grandma today and asked if she would consider moving my inheritance that she currently has invested in Microsoft into gold. She said that she'd consider it. I really do not have confidence in the near-term future of the stock market... near term being the next 5 years, probably less. I believe that in the grand scheme of things... as in... 30-40 years from now, stocks are still a good investment, but I fear that we are headed for an economic downturn of 1930s proportions. I'm doing my best to prepare for it, both mentally and educationally.

Glenn Beck has been talking about the economy a lot recently, which I find interesting, but what he says really only confirms what I already believe. He recommended the book "The Forgotten Man" which I checked out from the Greater Phoenix Digital Library and started reading. It's about the great depression. I'm not sure how things will play out, but I'm trying to learn a little bit about hyperinflation as well... boy that would be fun to go through... NOT.

This article was interesting. Forget the fact that whoever wrote the article is completely out of touch with reality (who seems to think that feeling the middle class squeeze means shopping at Whole Foods and buying cases of Pelligrino)... read some of the accompanying message board postings. You probably won't want to read them all because it goes on for 123 pages at last count, but it truly enlightening. There are SO MANY stories of people who are having difficulty making ends meet, and only a few people that don't feel that way.

I guess a lot of people charged their Christmases this year. Tsk, tsk. I guess that it is okay if you are able to pay off that bill this month, but a lot of people won't be. Unfortunately, the good times on credit cards only last for so long. The income limits might rise for a while, but eventually you have to pay. Like the Bible says, there is pleasure in sin for a season. But is debt a sin? The Bible says that the borrower is slave to the lender.

Interestingly, I found this passage in the Bible as I finished reading the Bible last year (well, I actually finished it on January 1st, but who cares about one extra day):

Woe to him who increases what is not his! Until when, then, shall he load the pledges on himself?
Shall not those who strike you rise up suddenly, and those who shake you awake, and you become a prize to them?
Because you have stripped many nations, all the rest of the people shall strip you; because of men's blood, and the violence of the land, of the city, and of all who dwell in it.
Woe to him who robs evil booty for his house, to set his nest on high, to be delivered from the hand of evil!
You have planned shame to your house, to make an end of many people, and are sinning in your soul.

~ Habbakkuk 2:6b-10
Isn't that what we as a country are doing? And have been doing? The very act of buying on credit is increasing what is not ours! And we as a nation have been stripping other nations for years! Just think of all the Chinese sweatshop workers that labor away to make our clothes and toys. They don't get much out of the deal. They have a job, sure, but not in any sort of condition that we would work in.

It is rather difficult and in some cases impossible to get by without any debt in this country... we had to take out a car loan last year after our old one decided to die; neither of us knows anything about cars so we need something reliable for dh to get to work in. We do have a mortgage, although we tried to go the more modest route, and we have student loans... mine is towards the end of getting paid off, and dh's loans have saved us through some job losses. But should we really be charging Christmas gifts on credit? Or vacations? Things that are unnecessary.

If people stop buying, the economy is going to slow down. That is what we hear. But guess what? People can't spend beyond their means forever! Eventually people have to pay or they lose it.

While on vacation, I got to see many of my relatives. It is interesting to see how your relatives turn out. They're the one set of people, other than your closest friends, that you can say that you've known for decades.

I remember visiting my Aunt and Uncles, a long time ago, and they lived in a little trailer on a piece of property that didn't have electricity. They had it hooked up to a generator. Later on, they lived in a motor home for a while. They've had their share of difficulties, but guess where they live today? A very nice, gorgeous home.

Another Aunt of mine, when I was younger, I thought that they were rich. Always having huge birthday parties, redoing their homes with nice things, getting great presents for their kids. Found out later they were financing and getting home equity loans. They eventually lost their house. Currently my Aunt lives in a trailer.

My parents didn't have much money when I was growing up. We went for years without health insurance because we couldn't afford it. My grandma would always bring home clothes from the Navy Thrift Shop and my mom would make me try them on twice a year. They weren't always the latest fashions, and around 3rd grade or so I didn't really like them. My mom would save money through coupons and refunding, and that's how we funded my first trip to Disneyland in the 4th grade. It was my first time out of state. They're doing pretty well now. They paid off their home, then decided to buy a Harley for dad, remodel the kitchen, and replace the windows in the house, so they took out a small mortgage again for that. But they're doing okay. They were able to take us out to eat a couple of times, weren't worried about how much propane we used in our "guest house" while there (we stayed in their trailer), don't obsess over coupons like they used to, and don't really worry too much over the cost of things like when the VCR goes out all of a sudden. They can afford it.

Too many people nowadays live like my Aunt and overspend, rather than my other Aunt and Uncle, and my parents, who don't look like they have too much initially, but since they're not overspending, end out a lot better in the end. And that, unfortunately, is why our country may be headed for a huge wake up call.

If everybody paid their fair share of the national debt today, we'd all have to cough up over $30,000. That's for every mom, every dad, every grandpa, and every baby. It would be over $120,000 just for the people in my house. That's what my home mortgage is. But that's what we all owe, and it's getting bigger every day. I just can't see this going on forever.

Despite this, I think that we personally (as in, my immediate family consisting of me, dh, dd and ds) can make it through. Dh has a lot of skills, I've learned a lot about coupons and frugality, and we're mentally prepared to hold on in the bumpy years that may lie ahead. More importantly, I know that no matter how things get down here, there is always a better day ahead. And I've read history. I know that times get better eventually. That is, unless we're headed toward the last days spoken of in Revelation... and even they get better after Jesus comes back and begins the millennial kingdom. I also know that historically, we live lives that even kings and queens wouldn't even dream of back in the middle ages. And most people in Iraq would love to trade places with us. It's all a matter of perspective.