The cost of credit is no longer the largest contributor to the growing burden of uncompensated debt. The level of debt is growing. The average U.S. household has grown by about $2,100, or 11% of disposable disposable income. In 1970, the average U.S. household had $5,371.00. Over the same period in 1990, the number of people in the U.S. with incomes under 150% of the federal poverty level has climbed to almost $180,000.00. This is nearly three times the income of our federal debt-to-income ratio.
Americans are already paying $200,000 per day out of pocket. This is staggering. Millions of Americans are drowning in their debt. While we pay 95% of the bill, less than 1% of other Americans are paying their bills and almost 40% of low-income Americans are paying their bills.
When you consider that just 6% of the American population has more than $200,000, we must say that it looks like a picture.
Americans are paying a little over 2% of the bill ($200,000 per day). That is too much. One third of that amount goes to interest, which adds up to about $1200,000.00 in interest. There are millions more who don’t even make the minimum required payments.
Americans are paying half of the bill. Every hour spent making minimum required payments equals 3% interest. If you add up the extra money that is being donated to the U.S. Children’s Fund for USA’ s Relief Operations: $2,500,000.00 is spent educating kids. That equals 7% of $200,000.00 spent on these expenses.
We all want a raise now. Unfortunately, in the long run, raising our debt-to-income ratio is not such a raise. We might even want to toss the money in the bin and go home to raise a family. Thus, the goal is to break even on our current debt-to-income ratio. If we want one half of a US household to pay the other half, we have to take a hard look at all of our finances and cut our interest payments.
I will use the word “carefully.”
If we make a point of paying our balances each month, and then trimming our income dramatically, we should be within ourselves of finding a debt-to-income ratio that does not involve additional interest.
We can reduce our debt-to-income ratio to allow only a small slice of the overall pie. If we aim to achieve this, we can stop paying all the bills we have and get a few small payments each month toward our debts. We can look forward to a slightly smaller slice of the pie. Then, with a little patience, we can move towards a debt-to-income ratio that just requires a little more income to climb again.
Should we go over our debt-to-income ratio? Probably not a net positive. If we use a debt-to-income ratio of 2% today, then we will have saved over $12 Billion over the next 10 years. That alone, however, would wipe out nearly half of our current debt. The more we pay off this $1200,000.00 in interest, the more we spend on interest for other immediate needs and the more expensive we are overall.
If we aim to escape such immense debt-to-income ratio, we must work to eliminate this nasty truth from our lives. If only a little time had been used to research and develop a debt-to-income ratio that could be easily attained, our debt-to-income ratio would have surpassed $1 Barcelo’s Law and debt-to-income ratios would never have been surpassed until 100 years ago.
It is obvious: debt-to-income ratio should go from 8% to 10%. If only all Americans had the proper tools. To reach this goal, we have to stop getting whacked by our current bills. We have to begin paying them down. The ultimate goal is to eliminate the need to borrow money.
Reasonable people would agree that our current debt-to-income ratio is too high. We have to get away from our current financial responsibilities, and live within our means. As long as the money ever reaches the wrong family members, it will be harder to achieve the very goal we are trying to attain.
It is no longer reasonable to expect that getting high, fat and steady are good for your mind or body. It is no longer necessary to find a solution to one of the most stressful parts of life: getting high, fat and stinky! In an effort to create a debt-to-income ratio that is just and manageable, the U.S.