FACING THE FACTS ABOUT DEBT
by Barry Cameron
- Our nation soon will be $16 trillion in debt. The U.S. government is living way beyond its means — it is insane and can’t continue without cataclysmic results. But the government is essentially doing what the average American citizen is doing.
- A tsunami of student loan debt will be upon us soon as graduates leave college and enter the workforce with an unimaginable and unsustainable albatross of debt. The average debt load of 2012 graduates will hit “a record $28,700, projects Mark Kantrowitz, publisher of Finaid.org. That amounts to a $330 standard monthly payment. To handle that easily, he estimates, one would need a salary of $40,000. Unfortunately half of all recent grads are either unemployed or underemployed, as an AP analysis found.”1
- Some erroneously put their faith, finances, and future in the stock market. A May 8 headline in USA Today shouted: “Invest in Stocks? Forget About It.” But barely a week later, people frantically tried to buy stock in Facebook’s initial public stock offering (IPO). “Facebook raised about $16 billion through the sale which gave the company a market value of about $104 billion,”2 making Mark Zuckerberg one of the richest people in the world. People ignored the fact Facebook was “trading at 100 times its earnings,” and experts said, “now’s not the time to buy Facebook.”3
- According to Newsmax, “Through a combination of procrastination and bad timing, many Baby Boomers are facing a personal finance disaster just as they’re hoping to retire. Starting in January , more than 10,000 Baby Boomers a day will turn 65, a pattern that will continue for the next 19 years.”4
- Money magazine reports, “More Americans are retiring in the red. . . . Not so long ago ‘debt’ was a four-letter word when spoken in the same breath as ‘retirement.’ Before waltzing into their golden years, older Americans paid off their loans, then celebrated by burning the mortgage. How things have changed! Now a third of folks 65 and older have a mortgage vs. 20 percent two decades ago, according to recent census data. Median balance: $56,000. Meanwhile, seniors 65 and up carry an average $10,235 on credit cards, think tank Demos reports.”5
- One of the more popular loans today is a reverse mortgage, a practice by which homeowners 62 and older may borrow against the value of their home for living expenses. But imagine the inevitable catastrophe of thousands, if not millions, of seniors (Baby Boomers) living off a reverse mortgage, when the money runs out. Not only will they have to leave the home and find some place else to live, but there won’t be an inheritance for children or grandchildren.
- CNNMoney.com reports that, “More people are finding that rooming with a parent or a twenty or thirtysomething child helps ease economic pain. As of 2010, 4.4 million US homes held three generations or more under one roof, up 15 percent from two years earlier. . . .”6
1 Kim Clark, “Help Free Your Grad From Debt,” Money, June 2012, 29, 30.
2 Gary Strauss, et al., “Facebook shares jump, then fade on first day of trading,” USA Today, accessed 17 May 2012 at www.usatoday.com/money/perfi/stocks/story/2012-05-17/facebook-trading/55056312/1.
3 Matt Krantz, “Experts say now’s not the time to buy Facebook,” USA Today, 18 May 2012.
4 The Associated Press, “10,000 Boomers to Retire Each Day for 19 Years,” 27 December 2010, accessed 18 May 2012 at www.newsmax.com/Newsfront/RetirementCrisis/2010/12/27/id/381191.
5 Karen Cheney. “Don’t Let Debt Weigh You Down,” Money, May 2012, 29.
6 “Generations Join Forces to Ward Off Financial Woes,” Money, June 2012, 26.
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