Total U.S. household debt just surpassed $14 trillion for the first time ever, and credit card debt hit a new record, as well. These scary debt stats come from the latest report from the Federal Reserve Bank of New York.
As economist Heather Boushey noted… “In the abstract, more debt signals optimism. But in reality, families are using debt as a mechanism to pay for things their incomes don’t support.”
The optimism comes in because the stock market can’t seem to stop hitting new records, and the economy is prospering, so it’s time to spend, spend, spend – even if it’s money you don’t have.
Then the reality sets in as 8.36% of credit cards are now delinquent. Almost 5% of auto loans are at least 90 days overdue. And at least 12% of student loan borrowers are delinquent or in default.
For the moment, let’s ignore the fact that most people have forgotten that the balances in your market-based retirement accounts are “paper” – not “real” – wealth which will vanish with the next market crash.
Let’s focus instead on the lessons most people have forgotten from the last debt crisis. Americans were feeling flush from rising stock market and real estate values, and they were in hock up to their eyeballs.
Then the Bubbles Burst and…
- Banks jacked up interest rates sky high with no warning
- Charge card accounts were closed and/or limits severely reduced
- Home equity credit lines were yanked
- Many people and businesses found they couldn’t get access to credit at any price
Why do banks do these things to you? The answer is: Because they can.
The ensuing aftermath of the crisis caused many people to lose their homes, their jobs and even their marriages.
Could a similar scenario happen again any time soon? No one knows for sure, but we do know that history tells us we are past due for both a major market crash and a significant recession.
There Are Three Lessons to be Learned Here:
- Don’t spend more than you make. This one is obvious but often ignored.
- Have a safe and liquid rainy-day fund equal to two years of your household expenses.
- Don’t give banks and finance companies so much power over your life!
This last lesson is much less obvious because most people believe they have no choice.
But that’s yet another lie perpetrated by Wall Street and the big banks.
Six Reasons to Tell Banks and Finance Companies to Go Take a Hike… and Become Your Own Source of Financing!
- You can access the equity in your policy whenever you want and for whatever you want – no questions asked and no nosey applications to fill out.
- You cannot be turned down for a loan.
- You can set your own repayment schedule, and if you hit a rough patch, you can skip payments as needed without worrying about collection calls, repossession or black marks on your credit report.
- Your policy continues growing even on the money you borrowed – IF your policy is from one of a handful of companies that offer this amazing feature.
- You get a competitive interest rate that’s generally below market regardless of your credit rating.
- Your policy can do double duty, providing you with a ready source of cash you can access as needed AND a guaranteed, predictable retirement plan alternative.
The only caution is that if you borrow from the policy and never pay back the loans – or at least the loan interest – the policy could lapse and result in an income tax liability on any gains.
To avoid that happening, work with a Bank On Yourself Authorized Advisor who can help monitor your policy loans.
Remember, it wasn’t raining when Noah built the Ark!
He got the message then got to work. He didn’t say, “Yeah, that makes sense. But the sky looks pretty clear for now. I’ll start on it later. Maybe tomorrow.” Tomorrow never comes, does it?
The cash you stash in your Bank On Yourself policy can be that ark, ready to set sail at the least sign of trouble. But it doesn’t work as well if you start building it in the middle of a financial storm!
The unexpected doesn’t wait around for us to get our act together. The unexpected just shows up when it does. Please note that I said when it does, not if it does. As smart as we are, we can’t anticipate everything that will happen in our lives. We can only be like Noah: Get the message, then get to work.
And the very best way to start building your ark is by requesting your Analysis and referral to a Bank On Yourself Authorized Advisor here now.
There’s no cost or obligation, so do yourself and your family a huge favor and click on this button now, while it’s fresh on your mind: