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tunabudget - making the case

Dollar Bills

The U.S. Debt Burden 2020


What’s your debt burden? If you live in the United States of America, the U.S. is a great example of excessive and ever-increasing of debt levels; many other countries may be in even less favorable circumstances. But, Americans, in particular, have demonstrated a strong propensity of taking on as much consumable debt as possible, notwithstanding the Great Recession of 2008. Ever increasing debt and stress levels for individuals and families will become increasingly acute, consider these facts:  


  • US total debt of $75,298,790,759,897 ($75.3 trillion), includes household, business, State and local governments, financial institutions, and the Federal government

  • US total unfunded liability of $127,487,065,564,632 ($127.5 trillion), includes Social Security, Medicare, Federal debt held by the public, plus Federal employee and Veteran benefits

  • The U.S. national (Federal) debt level was $23,151,986,478,553 ($23.2 trillion), or $70,105 for every citizen, or $187,378 for every tax payer

  • Personal debt of $20,238,347,144,522 ($20.2 trillion) includes all personal obligations: mortgage debt, consumer debt which includes car loans and short-term revolving credit card debt

  • Mortgage debt is $16,034,624,570,462 ($16 trillion)

  • Student debt is $1,659,303,765,015 ($1.7 trillion)

  • Credit card debt is $1,104,760,228,742 ($1.1 trillion)

  • Of the 330,243,558 citizens in the U.S., 36,692,311 people (11.1%) are living in poverty, and 35,916,356 (10.9%) people are receiving food stamp assistance

  • 28,151,373 (8.5%) people are without health insurance

  • 137,618,674 people (40.6%) are receiving Medicaid and/or Medicaid benefits from government

  • The gross debt, as a percentage of Gross National Product (GNP) was 121.58%


Seasons of Default and Restructuring


Tunabudget believes we live in a time where individuals and families are increasingly under grave assault and great pressure, or will be for the foreseeable future; the burden of heavy debt is likely to increase over the next decade or two. It’s well past time for everyone to stop, see and understand the true condition of their finances, where they are headed, and how to successfully manage the same. Have debt levels throughout the world reached unsustainable levels and ever-increasing trends? If not now, when? Regardless, Tunabudget believes there must needs be seasons of default and restructuring to reset debt obligations; call it financial forest fires. And yes, life will go on; new trees will grow and hopefully everything will be fine. Depending on when such seasons occur, individuals and families need not be in ‘just survive’ condition; they need to be strong now in order to better survive when the so-called fires come. Family relationships and even those with neighbors (which is everyone) need to be cohesive and civil-minded people, who have the wherewithal, and are willing to offer assistance not only to their immediate family members, but as well as caring for the poor, the elderly, the disabled, and those less fortunate. Such ‘seasons’ may be good for society, as the best of humanity comes out, just like new trees emerging after a forest fire.


The Reality of Debt’s Heavy Burden


So, what will happen to you if and when inflation, hyper-inflation, stagflation, or a depression develops? Is the ever-increasing level of consumer, commercial, and government debt really sustainable? For how long? Forever? How well is it really going for people, their cities, States, or governments? How much of the prosperity in the world has been or is being fueled by ever increasing debt levels? Is the world living off a credit card? Do government officials and people believe it’s a good thing to (continually) increase borrowings in a low rate environment? And if, for whatever reason, interest rates happened to increase unexpectedly and sharply, then what? Are governments borrowing new money just to pay the interest expense on existing debt? Again, what would happen if borrowings and all the refinancing’s stopped or were delayed? How would you handle debt loads if your retirement income was materially curtailed? Do people even care? Do you see it coming? Will you and others be caught off guard? Are there things you should be doing now before times become more urgent? Will despair become an unwanted close companion day and night? If applicable, will you experience the crushing burden of an overwhelming, too heavy and unwarranted debt burden? Will you just give up on yourself and your family? Bottom line, regardless of if or when a season of default and restructuring comes, do you really see and understand what’s going on with your own finances and the economy today, and how will it affect the future of your family, your spouse, your parents, your neighbors? Are you ready for a downturn, and potentially higher interest rates? What if your household income were materially reduced? Can you and your family handle it? Or, are your debts repaid, or at a modest level?  Will you be willing to share your resources and skills with others if you are prepared? If not, why not? 


Seriously, consider the trillions in debt obligations owed out there. Who is responsible for its repayment? Who has benefited from it? Have you? Is it someone else’s fault and doing? Will debts forever be ‘rolled-over’ and refinanced? What about the overall increasing debt levels? Will overwhelming debts ever be repaid, especially when ‘no one’ even wants to talk about it? Will interest rates come off their historical lows and rise suddenly and even sharply? Will defaults not then emerge, everywhere? What happens when more individuals, companies, and governments are unable to repay or refinance their debts and possibly go into default? How will that effect unemployment rates? Will there be a lot of anger, depression, in-fighting and pointing fingers because of the justice or burden of debt has entered the house? Have you experienced it already in the past, or are you experiencing it now? Will the debt burden come to you if something doesn’t change? How does it feel when the heavy burden of debt hangs over one’s head, when heavy debt can’t be repaid? What is the toll on the heart of a husband, a wife, a father, a mother? What will they do if the debt burdens are too heavy? How will they communicate and treat each other, especially after so many good years of ‘good times’? What will society do? How will this affect younger people, especially those with the added burden of education debt? Will there be dismay, abandonment, contention, and despair? Will people suddenly realize they’re in a mortgage that they can no longer afford? What if the real estate market tanks and they’re upside down in the mortgage and can’t sell? Will the household income be reduced because of a layoff, being fired, a spouse becoming unable or unwilling to work as much in order to take care of a child or family? Who even wants to talk about this stuff? And why is that? Is it better to do nothing about it, and just wait and see what happens?


Root Causes


Suppose or imagine that there will be seasons of default and restructuring. What would be the real root cause(s)? Greed, selfishness, power and control, pride, drug and pornography addictions, coveting? And what is most impacted by all that - the individual, and the family unit? Tunabudget believes the key to long-term prosperity is dependent on the vitality of the family unit. Where the individual and family unit goes, so goes the sustained ability to repay debt at every level. So, where are people headed today; are they headed for even more troubled times? Which way will society go? Will it continue to depend on the government for assistance? Will society’s members become more self-reliant rather than live with a sense of entitlement? Hopefully changes and corrections can be made by the masses, and no doubt, most assuredly will. But in today’s society, by and large, because people want their stuff and they want it now. Debt levels will continue to increase until the creditors say no more, and demand repayment. Much of the world lives on a credit card, and society is only as strong as the individual and family units therein. When or if the burden of debt becomes exceedingly heavy, its crushing effect will eventually have to take its course on each person, especially those heavily obligated thereunder, putting those individuals and families at even more risk. Are people really even aware of the root causes adversely affecting their financial well-being? 


Dependency and Entitlement


Despite the ever-increasing number of strong individuals and families, too many people are dependent on some form of a government benefit or hand-out.  And, many people believe their sense of entitlement is a “right”, regardless if they’ve paid into the system or not. Local and State governmental debts and budgets everywhere are at enormous levels and are unsustainable in the event of a crisis. The unfunded Social Security and other commitments of government are likely unsustainable. How sustainable are they really, and for how much longer? Will individual, corporate, and government debts forever be increased, rolled-over and refinanced? But, at what rates? And will governments always be able to afford the increased debt service requirements, without raising taxes or cutting critical spending? Will all of the funding and benefits people receive today always be available? What if they were cut back 2%, 5%, 10%, 30%, 50%, or more? What if inflation hits? Or worse? As excessive debt levels ever increase, together with the potential for increased interest rates, doesn’t this suggest that a certain day of reckoning is out there? When will it come? Are you prepared? Do you care?


And what will happen to those that are actually dependent on some sort of government benefit? How will they react when their benefits run dry or are cut significantly? How will they react if they have a strong sense of entitlement, or they think it’s even a human-right to receive those benefits? Do you feel like you should depend on any government assistance for your own financial well-being in that sense? Do your debt levels support your exposure to any potential downturn of government benefits? So, what’s the big deal? What’s the real risk out there? 


Economies of throughout the world are inter-connected, including the United States. Cities are connected to States, businesses are connected to families, and families are connected to individuals. And when the debt burden becomes overwhelming, and it can turn that way ‘overnight’, it can have a ripple effect that will spread everywhere. The debtor that owes (excessive) debt has a ‘payable’ and may be unable to pay that debt on the required terms. The creditor that owns the debt has a ‘receivable’. But when the cash dries up, events of default will occur. Debtors and creditors may have to sell or liquidate collateral and/or restructure the debts temporarily or permanently to more favorable terms in order to effectuate as much repayment as possible. What this says is that with society’s exceedingly high and ever-increasing debt levels, eventually people won’t receive the expected amounts at the expected time – it’s a painful haircut. No one’s income is guaranteed forever. And anyone who thinks that they are entitled and expects to get everything owed to them in a season of default or restructuring will be sorely mistaken. So, why take the risk and not prepare for a potential financial forest fire? 


How Will You Handle a Financial Forest Fire?


Are people remotely prepared to deal with the effects of an excessive debt burden, and do they even know how to restructure their debts?  Will they just cave in to bankruptcy and liquidation? Will they throw themselves, their spouses, their children and loved ones away, and give up? How many people have already done so? Regardless of how much stress, how severe and how long such a season(s) might be, the likelihood is that millions of individuals and families will have to learn how to survive in their relationships with the crushing burden of debt. They will also have to negotiate work-out plans with their creditors, a difficult and expensive process. If not, they’ll likely be forced to go through bankruptcy and possibly painful collateral liquidation proceedings. Certainly, there is a place for that too, right? The increasing risks of a financial forest fire, leading to a season of default and restructuring are real, and could continue for some time - even decades until creditors who demand justice and debtors who want mercy are reconciled. Who will have prepared beforehand vs. those who will have to experience the crushing burden of debt? Where are you today? Where will you be when and if you encounter a financial forest fire? How will you handle it?

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