When it comes to our financial well being, the one thing that has ruined more people and causes the most stress is DEBT! This may be the nastiest 4-letter word in the financial world. It’s a silent killer and the emotional toll that debt causes is devastating.
Regardless of our income, taking on debt can be a problem. We only need to remember the financial meltdown of 2008 to know why. Most people think that 2008 was caused by the greed of Wall Street, lax Federal regulations, corrupt mortgage lenders, or the banks, but it really had more to do with many of us being so overextended. We were taking out loans for 100% percent of the home’s value, overstating incomes, and thinking that things would just keep going up and up. Taking on a bunch of debt seemed like a good idea because we would just sell our rapidly appreciating house to cover it all. It wasn’t sustainable, and at the first sign of weakness, all of it came crashing down! It was the worst economic disaster since the Great Depression of 1929. Consider the consequences from all that debt in 2008:
1. Real estate lost over $4.2 trillion dollars in value, with over 4,000,000 Americans losing their homes. 22 2. The stock market lost over $11 trillion, and the average American lost 1/3 of their net worth. 23 3. By 2010, 46.2 million Americans were living in poverty, the highest number ever recorded in 52 years of publishing that report. 24 4. 8.8 million jobs were lost, resulting in over $19.2 trillion in lost incomes. 5. Fannie Mae, Freddie Mac, Shearson Lehman Brothers, Countrywide Financial, Bear Stearns, American Home Mortgage, New Century, Washington Mutual disappeared, and bailouts saved companies like GM, Merrill Lynch, and Chrysler.
DEBT: THE SILENT KILLER
