It's official. Americans are more deeply in debt than at any other point in history. Our credit card balances are increasing at a rate higher than our income. And it is a growing trend that is troubling government policymakers who realize that many Americans will not be able to fund their own retirements.
In the short term, bankruptcy filings are already increasing again. There is increasing evidence that the new bankruptcy legislation will do little to stem the tide of distressed debtors filing for bankruptcy protection.
So how serious is the situation? In the early 1990s, Americans were saving 9% of their income for retirement, investments and other emergency savings. In 2005, the American savings rate dipped below zero. In other words, for the first time in modern American history, we are spending more than we earn.
Sure that is the government philosophy, but the government depends upon the solvency of its taxbase to fund future commitments. Some government officials, including NC State Treasurer Richard Moore have acknowledged that the increased debt and decreased savings of ordinary Americans may have broad implications for the financial health of our state and federal governments.
It is imperative that our government officials take a more active role in communicating the need for living within our means and saving for our futures. Our citizens need to eliminate credit card debt and start saving a small amount every month.