Debt, Debt and More Debt

I know what your thinking, oh great their talking about it again. When will they ever stop talking about that dreaded four letter word, debt? Well, when our nation is completely debt free, government, business and personal, I will cease talking about it. Translation, I will never stop talking about it. This time we are going to focus on credit card debt. One of the worst kinds of debt out there.

Nerdwallet had a blog post recently stating that the average household with credit card debt has a little over $16,000 in total. Astonishing right? Well it gets a little more interesting. The average household pays a total of $1,292 in interest each year on their credit card debt. With the Federal Reserves decision to raise interest rates this amount could increase to over $1,300 a year. So, you want to see how much your sacrificing over the long term for the short term? Even if you don’t here we go.

We will invest this amount each year at three different interest rates, 8%, 10% and 12%, over five different time periods, 5, 10, 20, 30 and 40. The results shocked me and I’m sure they will shock some of you too.

 8%10%12%
5$7,579$7,887$8,207
10$18,716$20,591$22,672
20$59,124$73,999$93,091
30$146,361$212,526$311,801
40$334,701$571,829$991,082

When you look at the above table you can see why the Bible warns against having debt.

The rich rule over the poor. The borrower is servant to the lender. Proverbs 22:7 (WEB)

Some also there were that said, “We are mortgaging our fields, and our vineyards, and our houses. Let us get grain, because of the famine.” There were also some who said, “We have borrowed money for the king’s tribute using our fields and our vineyards as collateral. Yet now our flesh is as the flesh of our brothers, our children as their children. Behold, we bring into bondage our sons and our daughters to be servants, and some of our daughters have been brought into bondage. Neither is it in our power to help it; for other men have our fields and our vineyards.” Nehemiah 5:3-5 (WEB)

We tend to look at debt lightly in this country and forget to realize that it is bondage. We no longer have control over our finances and future financial health because we mortgaged it in order to feed a want today. That small consumption is much bigger than we realize. A theme on this blog is to show you that small amounts can become large treasures over time. Can you imagine all the good you could do with that treasure if only you sacrificed a little today?

I will leave you with a few more interesting facts. The average household with debt has $132,529 in total including their mortgage. It is estimated that by the end of 2016 total household debt will surpass the amount owed before the Great Recession. Oh how little we’ve learned from the latest disaster. The definition of insanity is repeating the same actions and bad decisions over and over again but hoping for different results. I’m not saying a recession is right around the corner but whenever the next one hits, consumers will get crushed once again. It is a sad, sad story that I hope will change soon. We can all do better than this, we have to do better than this.

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