‘Til debt do we part

It is commonly called “The American Dream,” to be married with two children, two cars, a dog, and a house with a white picket fence. What this translates to for most people today is two college educations to pay for, two car payments, a mortgage, and numerous charge card bills. 

According to the Federal Reserve, in April 2019, American’s revolving debt, the majority of which is credit card, hit $1.0645 TRILLION. This debt is carried at an interest rate that fluctuates between 12% and 16%, but for many people, they pay as high as 29.99% on their charge card debt.

Then there is debt for what the average American considers a necessity – our home and transportation.   Most of us are so excited when buying a house or new car; we only glance over the contract pages that itemize the true costs we are paying.   We hurriedly say, “Where do I sign?” We are so accustomed to “the easy monthly payment,” rarely do we take a realistic look at the complete financial picture.

Let the buyer beware.

I believe we know, in the back of our mind, that we choose to look the other way. Let’s look at the words themselves. The truth is evident in the meaning of the terms we use so casually on a daily basis.

The term consumer debt stems from the word “consume.” Random House College Dictionary defines the meaning, “To destroy or expend by use; use up,” “devour,” “to spend wastefully.”

The word mortgage is derived from the Latin “mortuus,” meaning death. “Gage” originated from Middle English, meaning “to pledge or struggle.” “Death struggle,” I feel that is an appropriate term for what we today call a mortgage.

If people would plan more before making the step to buy a home, they could save thousands of dollars in their future. By saving until one has a 20% downpayment, they can save the cost of private mortgage insurance. People can opt for a 15-year mortgage and save a phenomenal amount of interest. However, the person who has a 30-year note does not need to refinance to save money. They can make additional payments on the principal to bring down the amount owed quickly. An average family could pay off their home in 5 – 10 years this way and live mortgage-free.

As you can see, those two little words “charge it” have a very costly price tag. We need to think twice before we use our good credit. Patience is a true virtue. We need to control our wants, only a few short months, we could save the purchase amount. This habit, instead of charging, would put one much farther ahead financially. You may miss out on that special sale price, but is it better to be penny-wise or pound-foolish?

A debt-free life is a less stressful lifestyle.

It insulates you from job loss and other financial setbacks. You could flip hamburgers to make the money needed for the bare basics and live comfortably if you were not paying astronomical interest payments. Many Americans are paying dearly by not enjoying the lifestyle they are working so hard to achieve.

One thing is certain, as long as we continue “to spend wastefully,” we will find ourselves in a “death struggle” to meet our obligations. Bankruptcy rates will continue to soar. Unless Americans change their spending habits, the mortgage companies, the charge card companies, and the bankers will be the only ones who ever realize the American Dream.

This is why I am such an advocate for home-based businesses. Taxes are your largest bill.  If you start a home-based business, your intent for profit with a home business can reasonably earn you $300-$700 a month or more in tax savings before you make your first sale. That alone can be enough to keep the American family out of bankruptcy.  With the added savings of the cost of day-care, clothing, and expensive daily lunch purchases, you can likely pocket ANOTHER $2000 savings a month!  

Don’t let debt tear your family apart.  Let Business Untangled, help you make and keep more money!