A GOOD FOUNDATION

 

I remember an old story about two men who decided to build a house. One was wise and built his house on a rock foundation but the other was foolish and built his house on sand. When you have a good foundation you will enjoy a long life out of your house. On the same token if you have a poor foundation you will be plagued with problems from the get-go. The same principals also apply to having a good financial foundation. Recently I read an article that gave some interesting facts about the economic foundation of this country.

 

The total federal debt stands at $8,985,362,378,553.90. That's $8.985 TRILLION. When you divide up that debt, every man, woman and child in the U.S owes $29,672.26! That fact should alarm all Americans but our problems are getting worse. Recently our country's national debt limit was raised to $9.815 trillion. Our debt has been rising $1.44 billion every day since September 2006. That's $60 million per hour. I hope that these numbers show that time is not on our side. When we start to add up all of the liabilities such as social security payments, Medicare, and government pensions, add all those IOUs together and you have a Federal debt quagmire that's approaching $55 TRILLION. If we could sell every house, car and all other valuables in this country we would not have enough to pay off this debt.

The average U.S. household owes $112,043 for mortgages, credit cards, car loans, and all other debt. Meanwhile, the average personal savings rate is a mere 0.6%. One thing that kept us afloat was a rising housing market; as long as home prices were rising it helped offset the debt problem. But now that prices are falling — and mortgage money is becoming tighter — it's fair to say that the day of reckoning is coming home to roost for the average American citizen. When the debts grow faster than the appreciation of value, we will start to feel the pinch.

While some will tell you that America is strong economically, we need to remember that we are the biggest debtor nation in the world. For far too long we Americans have been building our financial house on sand. Most parents understand the importance of providing a good safe house for their families, our financial house is just as important.