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National Debt: How Are Americans Contributing?

Hailey MacDonald, Editor-in-Chief

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If you turn on any news channel, open up any online news source or even read the daily paper, you’re bound to see something regarding money. Whether it’s the recent stock market numbers, lottery information, tax cuts or the national debt, it always seems to be a large topic of conversation within our nation. After all, money is what makes everything possible. It’s what allows us to purchase food and water to keep us alive, puts a roof over our heads and to get whatever we want or need. It is said by the US Treasury that there is about five trillion dollars circulating around the Earth at any given moment. This is excluding broad money, which consists of checking accounts, savings accounts, and other digital sums that are not physically withheld within the bank. If you were to add the amount of physical circulating money and broad money, the sum of money on Earth would surpass eighty trillion dollars.

One problem that comes with money, however, is debt. By definition, debt is typically money that is owed or due. Most people, businesses and countries around the world have some type of debt, whether it’s related to credit cards, loans or other financial lending. However, the United States’ national debt increases significantly by the minute. Recently, it has spiked to over twenty trillion dollars, which is around one quarter of the total amount of money existent in the entire world. The national debt accounts for the spending of the U.S. Treasury, American citizens as well as the government. If the debt were to be split up between the entire U.S. population, it would cost each American over $57,000 to pay it off. Yet, the average American yearly income is just shy of $60,000. There are almost 42 million Americans living in poverty, and of that, 41.7 million receive food stamps. The United States’ poverty level is often talked about, especially recently as it is being investigated by the UN (United Nations). Over the past few months, the UN has sent investigators to different poverty-stricken cities in the US to examine living conditions. They found many dangerous and even rare diseases present in Alabama specifically. The most significant is hookworm, a disease that consists of worm eggs, which is spread through human stool when not properly disposed of in a public outdoor area. The worms then hatch and travel to find another person to latch onto, and the cycle continues. Hookworm was common in the US over a century ago, but it wasn’t seen much after that. “In my study, we have a very poor, disenfranchised population here that is being neglected,” said Dr. Rojelio Mejia, a pediatrician and infectious disease specialist at the Baylor College of Medicine who led the hookworm study. “Everybody was African American and living below the poverty line.” (Article by www.npr.org).

Yet, many are unaware of what the poverty line is, and where the line is drawn. Poverty, or the state of being extremely poor, varies through time. It changes due to current costs of living and other financial statistics that are frequently changing, and it also varies depending on family size. As of 2017, a single person would be considered living below the poverty line if they make less than $15,060 annually; a two person household making less than $20,290; a three person household making less than $25,520; and the list goes on.

Yet, America is still referred to as the “world’s richest nation.”

What led our country to being so far in debt, and why isn’t this issue being discussed? There are many factors that contributed to the debt numbers spiraling out of control, and the American population is not completely to blame. However, citizens are vastly contributing to it. To start, the American population’s use of broad money is what drives a lot of out of control spending. Many people do not have access to the amount of physical cash that they need at any given time; therefore, they are often forced to purchase food, clothing and other life necessities using credit. The idea of credit, first referred to as buying on margin, originated in the early nineteenth century and quickly became a way of life for most Americans during the Roaring Twenties. If you did not have the cash that you needed to purchase something that you wanted or even needed, you could “borrow” money from the bank and pay the money back sometime in the future. This concept was well-abused during this time period, and it was potentially one of the many things that led to the stock market crash in October 1929, known as the Great Depression.

Nowadays, as of October 2017, Americans have accounted for almost one trillion dollars in credit card debt. The average credit card debt for one American adult is over $3,000, and the average U.S. household has a total of $15,654 in credit card debt alone. More than ⅔ of American adults own at least one credit card, but the majority of card holders have at least two. Credit card debt increases each year, and has increased 11% in the last decade.

There is a reason credit card debt is on the rise each year. To start, the cost of living has significantly increased over the past decade. In fact, the cost of living has well surpassed income growth for Americans annually for the past thirteen years. In the past decade, medical expenses have increased by 34%, food prices have increased by 22% and housing has increased by 20%. This means that many Americans are not able to afford the bare necessities of life and survival without borrowing money from larger companies. However, in turn, they are just spending more money due to their interest rates.

It is no doubt that American consumerism is vastly contributing to our nation’s debt. In a survey regarding credit card use by Harris Poll in November 2017, 41% of responders attributed their credit card use to unnecessary spending/buying. At the same time, only 17% of responders claimed to use their credit card for a personal emergency. Through this evidence, it is reasonable to infer that around half of credit card use is due to impulse spending. However, overspending and increasing prices are not the only things that contribute to the rise in credit card debt.

When a consumer uses a credit card, they are able to buy the item without actually paying; they just receive a bill for everything they bought on that specific card at the end of the month. It’s not absolutely necessary to pay the balance at the end of each month, however it is encouraged to pay it off as soon as possible because interest accumulates on the amount of money borrowed. Therefore, in addition to the amount of money you must pay the bank back, you pay an interest rate due to the time the bank spent without the money that you borrowed. The average household with credit card debt annually pays over one thousand dollars in credit card interest alone. In the same survey conducted in November 2017, only 18% of those who responded to the survey claimed to pay their credit card bill in full at the end of each month. With that said, it can be predicted that around 80% of Americans accumulate interest on their credit card, spending hundreds of additional dollars each year. Yet, the unfortunate part is, credit card debt isn’t even the largest contributor to our nation’s debt issue. Our total personal debt as a country is eighteen trillion, and credit card use accounts for only one trillion of that.

The next contributor to the ever-increasing debt is auto-loans. Each American household has nearly $28,000 in debt relating to car sales. This is not including the payment of gasoline, insurances, necessary car equipment and other various vehicle necessities. The next highest contributor is student loans. Student loans are not only a big problem for students, but for many adults as they are forced to continue to pay off their student loans well into their adult years due to the rising prices of colleges and universities. This concept is especially difficult for the upcoming college generation, who seem to be facing the highest tuition rates yet. Student loans account for over 1.5 trillion dollars of the national debt, resulting in almost 46.5 thousand dollars per American household.

Last but not least, the highest contributor to the national debt is mortgage. Mortgage, or loans made by the bank when a consumer is purchasing a house, has added an additional 14.8 trillion dollars to the national debt as of December 2017. Each American household has approximately $173,995 in mortgage debt; however, mortgage debt is unavoidable. The average price for a house in the United States has doubled since the beginning of the century. Two decades ago in January 2000, the average price for a house was $200,300. More recently, as of October 2017, the average price of a house is $400,200. Yet, the average household income has only increased five hundred dollars since the beginning of the century. Therefore, it is easy to see how Americans have little control over their mortgage debt.

It is not entirely possible to avoid credit card debt because people need to feed their families, pets and themselves. It is not entirely possible to avoid auto-loan debt because, for the most part, cars are necessary to be able to travel diligently to work, school and other commitments. It is not entirely possible to avoid student loan debt because in order to make money and be successful in the future, you must spend a large sum of money to get to that point. It is not entirely possible to avoid mortgage debt because otherwise, the majority of Americans would be homeless.

However, it is possible for us to help our countries issue with our national debt if, as a whole, we work together to cut out a lot of unnecessary spending and wasting. Before you buy something using a credit card, ask yourself if it is really necessary. Instead of throwing away your old shirt, coat or mittens because they don’t fit you anymore, donate them to a local Savers or even a homeless shelter for children. Instead of throwing away old canned food that you found in your cabinet because you don’t think you’ll ever eat it, donate it to a local cupboard or shelter. Something that may seem small to you may mean the world to someone else, and our nation’s financial burdens really do effect everyone that you see. It is never too late to start being mindful about your actions, and to realize that everything you do, or buy, has a consequence.

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National Debt: How Are Americans Contributing?