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How to Have a Debt Free Life

Posted on 21 September 2012

In this world where advertisements, media, and other source of social information are popular, many people are being deceived into thinking that they can get anything free of hassle. In magazines, in radio, in Internet advertisements, and other form of channels, people get the message that they can purchase anything they want now, and pay later. An enhanced version of this is the consolation of debts into just one affordable monthly payment. People are even being led on to believing that good debt exists.

 

The Reality

The real score is that, there is no such thing as a good debt. This is just a plain figment of businessmen’s imagination. A debt is a debt. If you owe someone something, you need to pay that sometime in the future. Again, good debt does not exist. You may say that there is a better debt, one which is used to pay bad debts, but it is still a debt; money that still needs to be paid in the future.

At times, reality hurts. All of us live in a debt ridden world. We are all encouraged to purchase things on credit. This is because most businessmen see this as profitable business. While some may think that this is out of the goodness of the hearts of these lenders, but in the end, it’s all business. They want to make money, and they are simply taking advantage of your desire for things that needs to be bought by money.

 

Debt Free Living

With the kind of environment that we are living in, it may be hard to completely live without debt. For instance, if you want to purchase a home these days, you need to have a mortgage loan so that you can buy one outright, especially if you are still starting on your family or your career. However, this does not mean that you have to be on debt for the rest of your life.

This idea points now to the relevance of a better debt. Most often, mortgages serve as temporary debt. It is an affordable amount of loan which may be paid back in a few years time. At times, it may be necessary to borrow money in order to pay off a currently existing debt which offers a higher interest.

This calls for the need to search for a good money lender. The Internet is a place to find such helpful information. As a matter of fact, it can provide you things that you simply want. For instance, if you are looking for plain entertainment, sites such as http://www.slots-casinos.org/ allow you to enjoy a virtual game center in playing casinos. With this said, the Internet is a host to reliable information online. Searching for the best lender in your area will surely lead you to the best one in your area. It is also important to understand the terms and conditions of your venture, so that you will be guided accordingly.

The Battle Against Debt

Posted on 11 May 2012

The Battle Against Debt

Improving economic development and
abundance has infamously led to the alarming and escalating levels of different
types of debts, both personal, and as a company. These days, debts can be seen
in every town, in different countries all over the world. Year after year,
millions worth of debt are being reported, most especially in the rather
underdeveloped locations, as well as in third world countries.

<h2> Why We Incur Debts
</h2>

One reason contributing to the
existence of debts is the modern lifestyle that many people are being
accustomed to. People often believe that the products and even services that
are being offered to them is an opportunity to have a good life. However, this
turns to an opportunity of piling up debts.
While it may seem attractive and easy to acquire money by applying loans, this
can often become a trick, trapping people into believing that credit cards,
mortgages and loans can be paid off easily. Reality is, it can lead to a
whirlpool of long lasting financial trouble. While it may be easy for lending
firms and banks to accommodate you during application, never expect them to
provide you support when it comes to the time of collection.

<h2> When Debt Takes its Toll
</h2>

Debt, no doubt, can have an impact on
our overall condition, our health, stress level, and other things. It often
results to a wide range of issues and health complications, which includes
depression, and other mental troubles which can even lead on to cardiac arrest
and other more serious health conditions.

At the same time, the extra effort
and time spent on work may also involve getting the individual failing to
ignore his health condition. This usually happens when he or she starts to
forego of the healthier food and allows intake of unhealthy food to his or her
body, and at the same time forgetting exercise.

Debts can come from many different
sources. Some people pile up debts because they couldn’t control their fun when
playing casino games. On the other hand, people who have succumbed to this
troublesome situation have found it beneficial to quit going to real casinos,
and playing online casinos, such as the one at http://www.australia-casino.org/
instead. In this way, they will miss the urgings and the persuasions of other
players, thus being able to think clearly on the decisions that need to be
done.

In order to avoid battling against debt,
saving money as early and as often as possible should be done. This will ensure
financial security as well as stability no matter what. There is also a need to
eliminate unnecessary expenses and cost. This will greatly help in making sure
that you don’t get trapped by paying debt. As early as possible, teach younger
children the value of saving money. This also means recognizing priorities in
life. The other ‘wants’ can definitely wait when cash is already available on
hand. This is the easier thing that can be done to avoid this bloody battle.

How Many Members of Congress Could Pass Econ 101?

Posted on 22 August 2011

In July 2011, the debate over the country’s then-$14 trillion national debt reached a fever pitch amid competing claims about the economic wisdom of cutting government spending and raising taxes. Congress will return to the merits of a deficit reduction plan later this fall, but will first consider a variety of proposals aimed a spurring job creation and revitalizing the country’s stagnant labor market.

In both the jobs and debt debates, there have been no shortages of competing claims about how a particular piece of legislation will impact the economy. These appeals to economic expertise beg the question: How many member of Congress have an academic background that provided them with a basic understanding of how the economy works?

The answer, it turns out, is not many. Publicly available data show that over three-quarters of members of Congress—nearly 8 out of 10—lack an academic background in business or economics. That includes 8.4 percent who majored in an economics-related field, and 13.7 percent who majored in a business or accounting-related field. Over half  majored in either government-related fields or the humanities.

Download a research brief with the full results.

Are Wealthy Americans Paying Enough in Taxes?

Posted on 22 April 2011

In an April 13th speech describing his plan to reduce the country’s then $14 trillion debt, President Obama singled out the wealthy as a large part of the solution.

“In December, I agreed to extend the tax cuts for the wealthiest Americans because it was the only way I could prevent a tax hike on middle-class Americans,” said the President. “But we cannot afford $1 trillion worth of tax cuts for every millionaire and billionaire in our society.” The President later pointed to “millionaires and billionaires” again, and called for policies that would raise taxes on “the wealthiest 2 percent of Americans.”

So who is this wealthy 2 percent, and how much do they currently pay in taxes?

In 2008, the income cutoff to be in the top 2 percent was about $253,000. The top 2 percent of taxpayers provided 46 percent of all federal income taxes (see chart below). The bottom 50 percent of taxpayers—representing nearly 70 million tax returns—provided 3 percent of all federal income taxes.

For more, be sure to check out our national advertisement on “taxing our way out of debt.”

 

How Will Congress Answer the $283 Million Question?

Posted on 21 January 2011

The New Year kicked off with a worrisome bang for United States policymakers: On Thursday, January 13th, two major credit-rating agencies—Moody’s and Standard & Poor’s—warned that the United States’ stellar AAA credit rating is at risk if we fail to get our $14 trillion national debt under control.

Credit ratings can seem abstract and complex. To put it simply, the loss of our AAA rating signals to investors that we’re less able to pay back our debts—which holds serious personal consequences for every one of us.

Consider the country of Spain, which saw its own AAA credit rating downgraded in the fall of 2010. Foreign borrowers, worried about Spain’s ability to pay back its debts, demanded higher interest payments to compensate for the greater risk of lending the country money.

How much could just a one percentage point rise in interest payments cost the US? The Congressional Budget Office estimates that, over the next ten years, that yearly one percentage point rise would cost us an additional $1.033 trillion in interest payments, on top of the $5.079 trillion we’re already paying.

That’s an additional $283 million, every day, for the next ten years.

That’s bad news for taxpayers counting on lower taxes, but it could also mean bad news for anyone who owns a home—higher interest rates on our debt could mean larger payments on your home mortgage.

We’ve been warned before, most recently in July of 2010, when a top Moody’s analyst worried that “the U.S. appears to have ‘no plan’ to deal with its fiscal situation.” In the months since, the “plan” put forth by the President’s fiscal commission failed to get the votes needed to send it before Congress for consideration—hardly reassuring for credit analysts already wringing their hands about the country’s spending habits.

In short, this recent warning means it’s time for Congress to get cracking on the hard but necessary work of cutting spending (because, after all, we can’t just tax our way out of this one).

In Search of a Consensus on Deficit Reduction

Posted on 10 December 2010

A recent Gallup survey shows that Americans favor reducing the deficit as a strategy for economic growth—as opposed to other frequently discussed options including increased taxes on the wealthy or additional stimulus spending.

Yet, three days later after that survey’s release, the President’s Commission on Fiscal Responsibility announced that it couldn’t muster the votes to send a deficit reduction plan to Congress for consideration.

Is there a disconnect between the worries of the American public and those in the position to do something about it?

Other research from Gallup suggests that it’s not cut and dry. Polling from earlier this year shows the public’s concerns about the national debt are rivaled only by their concerns about terrorism. Yet at the same time, a majority of the public is not willing to cut benefits that are driving our long-term debt crisis.

It’s not surprising that members of Congress would be hesitant to vote in favor of a deficit reduction plan that reins in Social Security, Medicare, etc.

Americans are concerned about the debt, both because of its sheer size and the personal consequences of not taking action (read more about personal consequences here). What they’re not yet on board with are the needed changes to “sacred” government programs necessary to put our country on firm financial footing.

There is an upside to taking action now: The deficit commission’s plan to reduce the national debt makes clear that it’s possible to make small, gradual changes to entitlement programs in the present, and avoid drastic cuts in the future.

It’s a bargain worth considering. As we wrote earlier this year, the consequences for you and your family of failing to make these changes now couldn’t be more serious: “Money in the bank and savings will be worth less; take home pay will be lower because of higher taxes; and promised benefits will be slashed as the glide path of entitlement reform becomes a cliff.”

Value Added Tax: Government Spends More, You Pay More?

Posted on 22 October 2010

On December 1st, the President’s Commission on Fiscal Responsibility and Reform will deliver their recommendations on how to reduce the US national debt. The Commission is said to be considering not only spending cuts, but also new revenue sources. According to one recent Reuter’s article, a value added tax (VAT) is likely to be in the mix.

So how exactly does a VAT work, and what does it mean for your wallet?

Think of it like this: unless you live in a state like Delaware or Alaska with no sales tax, you’re probably accustomed to paying a bit extra on most retail and grocery purchases you make. With a five percent sales tax, you buy a hamburger for $1, but the final price you pay for that burger is $1.05. The restaurant then passes that extra 5 cents on to the state government.

As a consumer, you’re still paying extra for a VAT, but it’s much stealthier than your state’s sales tax. With a VAT, the restaurant will pay a tax to the federal government on the ingredients they purchase to make your burger. Since a ten percent VAT means that a burger is ten percent more expensive for a restaurant to sell, the restaurant responds by charging you more for your burger (with full pass-through of the tax, the price you pay rises to $1.10).

You don’t see this tax as a line-item on your receipt, but you’re still paying more money for many of the items you’re purchasing. It’s a stealth tax—and that’s the point.

Congress risks political backlash if they make significant cuts to entitlement programs where we’ve promised more than we can afford. Raising income taxes is similarly unpopular. Instead, our elected representatives can use the VAT to raise the price of most products that the middle class purchases—and collect hundreds of billions in additional government revenue that spares them from reining in excessive spending.

Can We Tax Our Way Out Of Debt?

Posted on 22 September 2010

The former director of the President’s Office of Management and Budget (OMB) made waves on Tuesday, September 7th, with this provocative thesis in The New York Times: Congress should extend the Bush tax cuts for the next two years, for Americans of all income levels, and then end them completely.

Why is this controversial? President Obama has made clear that he’s in favor of extending only the tax cuts for individuals making less than $200,000 a year (and families making less than $250,000 a year)—but doing so permanently.

The President and his former appointee both hold concerns about our country’s rapidly rising $13 trillion national debt. And rightly so: there are serious personal consequences for all Americans from out-of-control deficit spending.

There’s a difference of opinion as to what percentage of our total taxes wealthy Americans should shoulder. Some favor a “soak the rich” approach to debt reduction. As the above chart shows, the top one percent of income earners already pays 40 percent of federal income taxes.

The chair of President Obama’s debt commission (and former chief of staff to President Clinton) Erskine Bowles, recently warned that Congress can’t tax its way out of a national debt crisis. You can read elsewhere on this website why he’s right.

Instead, Congress needs to stop spending its way to over $3.5 billion a day in new debt. No one has suggested these spending cuts will be easy; but unless we start soon, higher taxes for everyone won’t be one unpleasant option – it will be the only option.

Warning: Debt Disaster Ahead

Posted on 27 August 2010

In an interview on August 25th, 2010, a top executive at the well-known credit rating agency Standard & Poor (S&P) gave a stern warning to Congress: pay attention to the recommendations of the President’s debt commission–or else.

You see, right now the US has a credit rating of AAA; that’s a bit like having a perfect personal credit score (aka FICO score) of 800.

But–just like your credit card company would be worried if you charged 10 new flat screen TVs and didn’t pay the bill–credit rating companies like S&P and Moody’s have become increasingly uneasy with the US government’s balance sheet.

It’s not difficult to understand why: The federal government is currently accumulating over $1 million in new debt every 30 seconds. In the time it takes you to read this news update, another $4 million will be added to the country’s debt.

The situation gets even worse in the future. As the above chart demonstrates, the amount of money the government has to spend is growing far more slowly than the rate at which Congress is spending it. The consequence: a shocking $674 trillion national debt awaits the US at the end of that chart.

This disastrous spending path is the reason why both S&P and Moody’s have warned us multiple times to get our fiscal house in order.

If we fail to do so, the consequences for you and your family couldn’t be more serious: money in the bank and savings will be worth less; take home pay will be lower because of higher taxes; and promised benefits will be slashed as the glide path of entitlement reform becomes a cliff (Click here to learn more about the personal consequences of the debt).

Is the United States Bankrupt?

Posted on 12 August 2010

The United States is bankrupt.

That’s the provocative thesis from an economics professor at Boston University. He cites as proof a recent report that the US government needs double the funds it currently has on hand to cover all the spending promised to future generations.

That might sound a bit confusing, so think of it in personal terms.

We all make plans for future spending–perhaps for our children’s college education, or for our retirements. But no one would suggest that the time to start saving is the day you turn 65, or the first day of college. Financial planners advise that you start saving now based on your anticipated future expenses.

Unfortunately, our representatives in Washington have ignored that advice. Congress has made plenty of costly promises to future generations–most recently, through the new health care law–without considering how they’ll pay for them.

We’re on track to fall far short of making good on our IOUs when they come due. Yet instead of cutting back, Congress continues to spend and accumulate debt at an incredible pace: $1 million every 30 seconds. Much of that money is owed to foreign governments like China and Saudi Arabia.

What’s the solution? For starters, acknowledge that we can’t borrow or tax our way out this pickle. Our debt is already on track to exceed $26 trillion in the next ten years, and there are serious consequences to accumulating debt of this magnitude.

And–according to the economist above–defeating this debt with higher taxes would require doubling everyone’s taxes right now and keeping them high indefinitely into the future. (See why else higher taxes won’t work).

There’s an old saying: If you find yourself in a hole, the first thing to do is stop digging. That’s exactly what the big spenders in Congress need to do: STOP.