Families and governments should avoid going into debt
How far are you in debt?
How much does you and your family owe?
Most American families probably owe a mortgage on their home. I would suspect that a high percentage have at least one car payment. And most probably carry credit card debt. Throw in some student loans and you may be done for most families.
According to www.nerdwallet.com, the average U.S. household has $15,263 in credit card debt, $147,591 in mortgage debt and $31,646 in student loan debt.
If you combine all debt for Americans, we collectively have $853,600,000,000.00 in credit card debt, $7,840,000,000,000.00 in mortgage debt and $994,000,000,000.00 in student loans.
Since 2010, the credit card indebtedness has dropped – not because of repayment but due to defaults. It went from an average of about $19,000.00 per household in 2010 to $15,263.00 now.
These figures originate from the New York Federal Reserve’s Household Credit Report and the Aggregate Revolving Consumer Debt survey.
American families are up to our noses in debt.
I have Christian friends who don’t believe in any kind of debt (some make exceptions for mortgage debt). If they can’t pay cash for something, they don’t buy it.
On Oct. 10, Dave Ramsey will be in Tulsa with his daughter and author Jon Acuff to present The Legacy Journey, which is a roadmap to successful personal finances using principles from the Bible.
Ramsey has the third most popular radio show in America (behind Rush Limbaugh and Shawn Hannity).
He is on KCFO AM970 every weekday from 1-4 p.m. and his weekly column appears in every issue of the Tulsa Beacon.
Sometimes it is a real struggle to avoid debt. A loss of income due to a layoff or a health issue can wreck a family’s finances.
It costs a lot to live these days. In Tulsa, families are having to cope with rising water rates, sewer rates, trash rates, electricity rates, natural gas rates, home owner insurance rates, property taxes, gasoline prices, grocery prices, restaurant prices and a host of other categories of price increases.
I don’t know how poor people do it.
And those who are retired or are on fixed income have seen the interest income on investments dwindle down to almost nothing. Stock dividends have shrunk and bank savings accounts are paying as low as one-tenth of 1 percent.
The squeeze is on.
Yet, Mayor Dewey Bartlett and our nine city councilors want to borrow $918,700,000.00 for an improvement package that includes streets and a whole lot more.
We need good streets. You have to have taxation to pay for good streets. But do you need to go into debt to improve the streets?
Tulsa has been passing the Third Penny sales tax extension since the 1980s. There is actually money from years past that has not yet been spent.
Why not follow the example of Oklahoma City and adopt a pay-as-you-go strategy on streets? When the sales tax money comes in, that’s when you should contract for the improvements. That way you can avoid exorbitant bond fees and interest costs.
But city officials reject that argument because “we must have this money now” and “interest rates are historically low.”
Rates are low but at the rate the Federal Reserve is printing money, interest rates could skyrocket at any time. This is like a family buying a new car with a 3-percent loan for 84 months. Even though the interest seems very low, chances are the car will need some major repairs before the note is paid off. Maybe it would be better to drive you clunker a year longer and save up a down payment or maybe even pay cash for a newer car.
Why can’t we apply the logic we use in personal finances to municipal funding? Wouldn’t that be a “conservative” approach?
Of course, by using bonds someone is going to make a lot of money on bond fees and some bank or banks is going to make money on a bond package, too.
Some Tulsa County officials seem to have the same mindset. They want a new permanent sales tax to fund a new juvenile detention center and to expand the county jail.
While those projects are justifiable, why create a new county sales tax when an existing sales tax – the .6-cent Vision 2025 tax – is going to end up with a surplus of perhaps $150,000,000.00 by 2017?
It is very easy to spend someone else’s money. In Tulsa, with the help of the chamber, it is easy to talk voters into borrowing money that will be repaid by the taxpayers so elected officials can spend it.
A state senator told me that Oklahoma state government only owes about “a billion dollars” and that is “great” compared to other states. But if you add the overall debt from the state, the counties, the cities and school districts, Oklahoma is flooded with debt.
A family-style approach would be better. Let’s start paying for things as we get the funds and stop borrowing billions of dollars.
• The preacher was wired for sound with a lapel mike, and as he preached, he moved briskly about the platform, jerking the mike cord as he went.
Then he moved to one side, getting wound up in the cord and nearly tripping before jerking it again. After several circles and jerks, a little girl in the third pew leaned toward her mother and whispered, “If he gets loose, will he hurt us?”
• A preacher who was “humor impaired,” attended a conference to help encourage and better equip pastors for their ministry.
Among the speakers were many well known and dynamic speakers. One boldly approached the pulpit and, gathering the entire crowd’s attention, said, “The best years of my life were spent in the arms of a woman that wasn’t my wife!”
The crowd was shocked! He followed up by saying, “And that woman was my mother!”
The crowd burst into laughter and he delivered the rest of his talk, which went over quite well.
The next week, the pastor decided he’d give this humor thing a try, and use that joke in his sermon. As he surely approached the pulpit, he tried to rehearse the joke in his head. It suddenly seemed a bit foggy to him.
Getting to the microphone he said loudly, “The greatest years of my life were spent in the arms of another woman that was not my wife!”
The congregation inhaled half the air in the room. After standing there for almost 10 seconds in the stunned silence, trying to recall the second half of the joke, the pastor finally blurted out, “…and I can’t remember who she was!”
• When Adam stayed out very late for a few nights, Eve became suspicious and upset. “You’re running around with other women,” she charged.
“You’re being unreasonable,” Adam responded. “You’re the only woman on Earth.”
The quarrel continued until Adam fell asleep, only to be awakened by someone poking him in the chest.
It was Eve.
“What do you think you’re doing?” Adam demanded.
“Counting your ribs,” said Eve.