A Thousand Here, A Trillion There: The Devastating Effects of Debt
It all started with a credit card. I was a new high school graduate with big dreams of going to college in style. My tastes were fairly simple. All I wanted was the best, and soon I had it. I was shopping in upscale department stores and boutiques, spending more than my $4.25 per hour job afforded. Soon, I was in debt and fully appreciative of my dad’s wise advice: “Lisa, stay out of debt!”
Our nation, led by both major political parties, hasn’t heeded that wisdom and is now deeply, deeply in debt, the size of which is almost unimaginable. Not only is that debt in the trillions of dollars, but the interest rises each day. For decades some of our leaders have bemoaned the size of the national debt and warned us about the dangers, but those warnings have had all the impact of the boy who cried wolf.
After all, until recently, prosperity has been the rule, not the exception. There isn’t a connection between our everyday lives and this debt, in spite of all the scary rhetoric. Or is there? What gives?
The best way to understand how the national debt will ultimately affect all of us is to first narrow the focus and examine the impact of debt on a single family. I’ll call them Family X, and their debt is overwhelming. When paychecks arrive every Friday, that money does not belong to Family X. Instead, most of it goes to pay the mortgage or rent, medical bills, student loans, car loans, credit card debt, and other obligations. The family is in dire need of a new washing machine and dental exams, but those must wait. Dreams of going to college and developing the children’s talents through piano lessons, sports teams, and the like, are left unfulfilled. In fact, you could say their debt has crushed every dream. Mom and Dad no longer make promises to their children they know they can’t keep.
Over time, other household appliances break down, and there is no money to fix or replace them. Daughter A needs braces, but those are out of the question. After many months and years, the house begins to look run down, and vehicles are in need of maintenance and repair. If this family owns their home, foreclosure might be just months away, forcing them to move to a less safe neighborhood. Medical and dental issues are ignored, treatments are postponed, and the overall health of the family declines. Unless an employer covers the entire cost of their health insurance premiums, Family X must go without that safety net.
When an emergency occurs, the only choice is to pull out a credit card, thus digging the hole of debt a little deeper. Out of necessity, the family purchases the cheapest products, often of poor quality, and it isn’t long until this former middle class family resembles one from the Great Depression. A comfortable retirement is out of the question, and if hopelessness were a disease, each member would be infected. At some point, a tipping point is reached beyond which they will likely never recover. Bankruptcy and a “fresh start”, begin to look more and more appealing, and in fact, inevitable.
Debt devastates and enslaves. Can our federal government possibly fare any better?
The first obvious parallel between Family X and America is that no matter how much income is collected, it will never be enough. Taxes, no matter how burdensome, will never be enough for debt repayment and the up-keep of our national infrastructure, military, and the multitude of government programs and obligations, much less provide for the ever-increasing, future needs. Plans for new roads, bridges, and improvements to National Parks have already been put on hold.
Eventually, the debt load will begin to affect our national security. The wages of military personnel is likely to decline relative to the cost of living, benefits are already being reduced,and when weapons and vehicles break down or malfunction, there won’t be enough money in the budget for repairs or replacements. America’s leadership in military innovation will be in jeopardy.
Promises that our government leaders have made to senior citizens, college students, struggling families and others will go unfulfilled. Social Security, Medicaid, and Medicare are anything but secure. Eventually, millions of Americans will be left to struggle with fewer and fewer benefits. Funding for law enforcement and education will necessarily be decreased, and money promised to towns and cities will begin to dry up, affecting us on the local level as well. Initially, those cuts will be in marginal areas, affecting few people, but over time, the cuts will become deeper and more noticeable.
When Family X is unable to make their monthly house payment, the day will come when the bank demands the keys to the house. Our country is in debt to other nations, and when those foreign nations decide to hold out their hands for repayment, what will America do? Might our leaders hand over mineral rights or federal lands as payment? Individuals and families must repay their debt at some point, and our nation’s due date is approaching.
As individuals, we have no control and little influence on the decisions made in Washington. “New” money is being printed at this very moment, as though it will somehow make the pit of debt less deep . (If only generating money on the family printer were the answer to Family X’s hopeless dilemma!) Our elected leaders are rushing heedlessly down this slope, with no apparent concern or awareness that their decisions may result in tragedy for our nation.
We are currently in a small window of time in which we can prepare our families for the day our nation’s debt reaches the tipping point. One important step is reducing your reliance on government support as much as possible. Setting aside a few months worth of food, learning how to produce some of our own food, and seeking out alternative sources of water and energy are all simple ways we can position ourselves and our families to be somewhat buffered as our nation’s economy continues to decline. Paying off our own debt, saving money, investing in hard goods and precious metals, staying up to date with dental and medical issues are other ways we can provide a layer of personal security in the face of an increasingly insecure future. Preparedness has never been a smarter choice than it is now and debt has never been more foolish.
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