Is This True?

I read some alarming financial statistics yesterday. Among a few other frightening facts, I read that 59.6% of Americans spend more than they earn.

Really? So on average 6 out of every 10 people you see are living on credit and racking up debt faster than they can pay it? REALLY?!

I don't even know what to say! I'm stunned. I think working in the field I do gives me a false perception of what the common financial-sense is because we are all educated in that field, have information about finances and have the same general personality and beliefs on number-type things. But I am truly shocked to know that there are THAT many people who are living on nothing. Truly, that's what it is. Credit is nothing.

And what confuses me is...eventually doesn't the gravy train run dry? How do people sustain living on credit? I would think that eventually companies would stop approving people for loans and cards and accounts and all the other ways that people can live on credit. So once you've racked up all your cards and accounts, then what? It takes decades to pay off that kind of debt.

I used to see those commercials for debt consolidation and when I'd hear them talk about people losing sleep I didn't quite understand what the big deal was. To me, debt is my student loans, my house, and cars (which will soon be PAID OFF!!!) So I don't understand how people get so far in debt that it eats away at their time, their sleep and their daily lives. What do people need SO BAD that they can't wait until they have the money for it? We don't use credit cards. We don't open credit accounts unless we have the cash already and are doing it just because its interest free for 12 months. Then we hold the cash and pay it off before interest is accrued. I don't think this is rocket science, and I don't think I ever took a class on it - it just makes sense. If my washer and dryer cost $1,000 why would I want to pay a penny more than that in interest?

I do understand that if your washer/dryer busts(or whatever the unplanned expense is) and you don't have the cash on hand you have no option. But why then would you continue to eat out at restaurants, spend frivolously on unnecessary things while racking up unnecessary costs? Interest is essentially throwing money in the trash can. Literally. Imagine that you bring home your brand new beautiful washer and dryer and after installation you take a couple $100 bills and just throw them in the trash. That's what you're doing when you pay interest. So why wouldn't you pay it off as SOON as possible - meaning avoid the excess expenses until its done? I just don't get it.

I get a lot of people who scoff at me for the fact that we don't use credit cards. And that's fine, scoff away. I know that we are missing out on free flights, free points, extra perks and all of that. But, when you look at the statistics that you spend, on average, 13% more when you use credit cards I think we're still winning out in the end. That's just me. Maybe we'd spend the same, maybe we'd be just as disciplined. But I figure - why risk it? What we're doing has worked so far so no need to change it up for the hope that we'd gain a few free flights.

I guess the part that just gets under my skin is I feel like the majority of the issue here is that we, as Americans, have a sense of entitlement. We think that we need things, we deserve things. Maybe I can't afford this TV today but my neighbor has one and he's no better than I am, I need one too. Maybe my car runs just fine but my best friend just got a cool new one and I need one too. Maybe I don't have any money left from my paycheck but gosh darn it I deserve these new shoes after the hell I endured today. Sure, sometimes I catch myself in this selfish sense of entitlement too. It's hard sometimes to reign yourself in. But where does it come from? Where on earth did we ever get the idea that we just innately deserve these luxuries in life without having to work for them? What happened to the notion that you work for what you want? You work, you save and THEN you earn. Not the other way around.

I guess I'm just a bit perplexed. Please help me understand.