Midweek Infographic – Attack Of The Debt Monkey

I previously posted about the number of Americans in debt. There are far too many people who carry over balances each month whether it be credit cards, personal loans or student loans. Not only do American citizens borrow far too much, but the government also spends at an uncontrollable rate.

Today’s infographic takes a look at how much the average American spends and how the addition of government debt is crippling us today. What kind of example can be sent when our own government borrows at all time highs. Will we ever get our nation’s debts under control?

debt monkey infographic

From 1970 to 2010, while the population growth has increased 51%, personal debt has grown 226%. That number seems high (and it is), but it’s nowhere near the hike in government debt. Since 1970, government debt has increase 551%, double the personal debt increase.

In terms of dollars, personal debt and government debt combined was $13,771 per person in 1970. By 2010, that number had risen to $51,724. Compare this number to the median salary in 2010 of $26,400 and you begin to see just how out of control spending is. Personal debt and government debt is almost twice what the average American makes per year.

Controlling your personal finances can be difficult at times, but still manageable with commitment and restraint. So, how do we control the spending of the government then? Some members of congress claim that they have the people’s interests in mind, but do they really? Aren’t they all just politicians in the end?

With the presidential election approaching quickly, it’s important that we look at all of the facts. Is the government stimulus helping? It doesn’t seem like the economy is much better off, even after QE 1 and 2, home buyer programs, cash for clunkers, and last but not least, the massive bank bailout.

READERS: Do you think that the multiple stimulus plans have kept us from disaster? How do you feel about the debt level?

Comments

  1. There is really something to be said for our government setting an appropriate role model for us.. While our country continues to spend money we don’t have, I don’t think we would expect citizens to behave any differently..

  2. Add the bailouts into the equation and the example the government sets is even worse. People see these large corporations making terrible decisions, then coming out clean on the other side thanks to the tax payers.

  3. I’m not qualified to answer your question, but that won’t stop me! I think stimulus plans are largely short-sighted. If we’d take a look at the real problem, using that money to tackle debt would be a better solution.

    • I think as consumers and tax payers, we are more qualified than we think. It’s very true that stimulus plans are only short-term support points. Personally, I think the government should have given each tax payer a portion of the money it used to bailout the banks. They could have mandated that people use the money to pay down mortgages, credit card debt or invested the funds in a savings/retirement account. If people would have been given the opportunity to apply cash to their mortgages, this would have indirectly helped the banks by reducing the number of foreclosures and short sells.

  4. Not to get all political, and I am in no way an expert, but I have never understood the stimulus plans. I don’t think that they have helped. Maybe I’m wrong.

    I think that government and people all need to live within their means- period. Government and personal debt levels are crippling. It’s crazy.

    • Stimulus plans only help temporarily by places false bottoms on markets. It’s just a way for politicians to buy more time and hopefully get reelected before the economy declines again. Just look at the most recent examples:

      Bank bailout – The financial crisis would have unfolded quicker and the bottom perhaps a little worse, but I believe our recovery rate would have been much faster had we let certain banks fail instead of bailing them out.
      First-time home buyer credit – temporary bottom to the housing market with short-term construction increases and home sales/prices.
      Cash for clunkers – worked at the time but experts say “it manufactured sales that would have unfolded naturally in 2010, leaving a hole in demand that will take months to regain” – Forbes
      QE – Intended to fuel borrowing, but numbers aren’t anywhere near where they need to be for solid economic growth.

  5. First time visitor to your blog- Really enjoyed your post.

    I’ve been working with homeowners via the HAMP program when it first started. It was a major disappointment to say the least. A lot of homeowners were put on a 3 month trial period to “prove” that they can afford the lower payment before they were switched to a permanent modification, but sometimes this lingered on for over 6 months. At the end of the day, the banks denied them for lackluster reasons.

    At this point, consumers just need to understand and realize that the only way they can get their finances under control is by themselves. They can’t depend on anyone else.

    • That’s so true Kevin – ultimately, we are the only ones responsible for our personal finances.

      I actually wrote an article on refinancing through HARP 2 a couple of weeks ago. I had a great experience and it was initiated by my bank. I would’ve continued making my mortgage payments at my current rate, yet they offered me a 20 year loan at 215 basis points lower and covered some of my closing costs. The whole process did take 3 months though.

      Thank you for the visit and the comment – I really appreciate it.

  6. I agree. Thank you for writing that. I will definitely return to your site to read more and recommend my people about your posting.

  7. Just bought a new Canon! Super excited to start using it.

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