A few days ago, after listening to The Rush Limbaugh Show, a friend called me with the answer to America’s debt problem: Oil.
Apparently, we’re sitting on a lot of it. All we have to do is sell our oil and pay off our debt. Problem solved, right? Well, let’s think about this for a minute.
Someday I might be okay with America using a nonrenewable resource that’s absolutely essential for our way of life to pay down debt. But right now, the idea scares me.
Here’s my issue. The United States is a junkie.
Some say we’re addicted to oil. I say we’re addicted to debt.
As I write this, our national debt is about $15.6 trillion dollars. That’s roughly $50K for every man, woman and child living in the United States. If you were to include all debt, e.g., national debt, student loans, credit cards, mortgages, etc., the average U.S. resident is burdened with over $180K in debt. Sadly, that figure includes the children.
We have to get our income, our expenses, or both under control before we start selling off assets.
For instance, if you were to tell me you wanted to take out a home equity loan to pay off your credit card balances, I’d ask you one basic question: How’d you find yourself in credit card debt?
Were you just a spoiled brat doped up on instant gratification?
Or was an uncontrollable event, such as a medical illness, the catalyst for your financial downfall?
If you’re an undisciplined spendthrift, you’ll borrow money on your home, pay off the credit cards, and quickly find yourself back in debt.
Keep repeating the process, and you’ll eventually run out of assets. Except then, you’re bankrupt AND homeless.
You have to deal with your addiction first.
Let’s look at another example just to nail the point home.
You probably didn’t know this about me, but I’m pro-liposuction IF you’re in tippety top physical shape and you only need to remove a little fat in trouble areas.
Because if you don’t correct your eating habits and sedentary lifestyle, you’ll gain all the weight back. Not only will you have subjected your health to the risks of surgery, but you’d have paid a large sum of cash only to find yourself right back where you started.
The quick fix is rarely the way to go.
What do you think?
Would you sell assets to pay down debt without addressing the issue that led to the debt in the first place?