Debt

“Things Are Never Going To Get THAT Bad”

Our recent article, “20 Things You Will Need To Survive When The Economy Collapses And The Next Great Depression Begins“, has drawn some intense criticism from those who believe that the U.S. economy is so strong that it could never completely and totally collapse. In fact, this blog is being accused of officially going off the deep end. Why? It’s not because we are pointing out that the economy is bad. After all, according to a recent Pew Research national poll, 88 percent of Americans rate national economic conditions as only fair or poor. No, rather it is because we are projecting the eventual complete and total collapse of the U.S. economy. There still seems to be a belief among a large number of Americans “that things are never going to get THAT bad”. But they are going to get that bad. It’s just that most people do not realize it yet.

But while times are still good (and what we are experiencing now is rip-roaring prosperity compared to what is coming), large numbers of people are going to continue to live in denial. In fact, those who try to warn people about what is coming are going to be accused of “fear-mongering”. One recent commenter even accused us of totally going off the deep end like many of the Y2K alarmists did….

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“Ok – you’ve officially fallen off the deep end. This blog went from legitimate economic concerns to grand fear mongering. This is the same as Y2K all over again. I have friends who still have bunkers and thousands of dollars of expired canned food and you’re suggesting they go do it again…”

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First of all, it was completely and totally obvious that Y2K was going to be a non-event to anyone with a bit of common sense. There was simply no way that a “computer glitch” that was foreseeable years ahead of time was going to cause the collapse of society.

What is happening with the U.S. economy now is completely different. We have built an entire economic system on ever-increasing amounts of debt and paper money, and anyone with half a brain should be able to see that such a system is not sustainable in the long-term. The collapse of the economy is inevitable due to the way that it was constructed.

As for having “thousands of dollars of expired canned food”, that would not be a problem if you rotated the food that you have stored. You eat the old stuff first and you replace it with new food that you have purchased.

But the commenter above was not the only one to accuse us of trying to scare people….

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“How does the economic collapse lead to a complete halt to all economic activity? More people may be poorer, but they will still have some money to motivate others to produce for a market. The natural disaster scenario seems more plausible for this type of warning. More and more foreclosures don’t. This posting is a bit much for me, seems just some much scaremongering.”

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The commenter is right about one thing – a few bad economic statistics are not enough to run out and start preparing for the collapse of society. After all, the American economy has always recovered no matter what happened before. If we made it through the Great Depression, we can make it through this, right?

Well, the truth is that there are some fundamental differences between what is happening now and what happened during the Great Depression.

During the Great Depression, most Americans were not up to their eyeballs in credit card debt, car payments, student loans and mortgage debt.

During the Great Depression, most Americans either owned their land or had a great deal of equity in their land. As we wrote about recently, today that is not the case. Equity as a percentage of home value in the United States has been hitting all-time record lows.

During the Great Depression, most Americans were not dependent on giant corporations to feed and supply us. Back then, the majority of Americans knew how to live off the land and grew at least some of their own food. Today that is most definitely not the case.

During the Great Depression, America still had the greatest manufacturing base in the entire world. Today we have “offshored” our once great manufacturing base, and we have become a fat, spoiled society that consumes everything in sight but manufactures very little.

During the Great Depression, America did not have a colossal trade deficit. Today we have got the biggest trade deficit in the history of the world.

During the Great Depression, the wealth of Americans was not being sucked dry by dozens of different kinds of taxes. Today we are being taxed in so many various ways that many Americans actually end up spending over half their incomes just in taxes.

During the Great Depression, the U.S. government had debt, but it was not threatening to collapse the entire global economy. Today the U.S. government has piled up the biggest mountain of debt in the history of the world.

During the Great Depression, derivatives were not even an issue. Today, we have created a derivatives bubble that is now well beyond a quadrillion dollars.

Just think about that.

Over 1,000,000,000,000,000 dollars.

Counting at one dollar per second, it would take 32 million years to count to one quadrillion.

In fact, renowned investor Warren Buffett has warned that derivatives are “financial weapons of mass destruction” that could bring down the entire world economic system.

And he is right.

When derivatives collapse, there is not enough money in the world to fix the mess that will be created. All of the governments in the world working together would not be able to print money fast enough to even make a dent in the colossal wave of red ink that would be created.

The truth is that the U.S. economy (and the world economy for that matter) is teetering on top of a giant pyramid of debt and paper that is on the verge of coming down like a house of cards.

But if you do not want to believe this blog, perhaps you will listen to some of the top financial experts in the world who are also warning that a complete and total economic collapse is coming.

For example, Gerald Celente, the CEO of Trends Research Institute, is forecasting that we are going to see a devastating economic collapse by the year 2012. It would be easy to dismiss him, except for the fact that he has a sterling track record of forecasts going back 3 decades, and he has appeared on almost all of the major news networks who have no problem relying on him as a source. What Celente says is on the way for America is absolutely bone chilling….

But if you don’t want to listen to Celente, perhaps you will listen to Peter Schiff, the president of Euro Pacific Capital. He accurately predicted the recent financial crisis, and he is also forecasting that a depression is on the way. Schiff is convinced that we need to allow the current “Ponzi economy” to collapse so that something more substantial can arise from the ashes….

Jim Rogers is another financial expert that is forecasting a major economic collapse. Jim Rogers was a co-founder of the Quantum Fund, and is a college professor, author, economic commentator, and creator of the Rogers International Commodities Index. He says that civil unrest is on the way and that now is a good time to take up farming if you want to make it through what is coming….

The truth is that the vast majority of Americans have no idea just how vulnerable the U.S. economic system is. A new Gallup poll has found that 44 percent of Americans believe that they could barely go a month before experiencing severe economic hardship if they lost their jobs.

How long could you go if you suddenly lost your job?

Right now the U.S. economy is being kept afloat by unprecedented U.S. government intervention and spending, but we all know that the U.S. government cannot keep spending money like it is water forever without very serious economic consequences. To give you an idea of how desperate things have become, just check out the following graphic about the U.S. national debt that was featured in the Chicago Tribune….

Anyone who believes that such a tidal wave of red ink is sustainable please raise your hand.

The truth is that the U.S. economy is caught in a death spiral.

Already there are some areas of the United States that are literally dying.

For those who do not believe this fact, the following is a challenge for you….

Head down to Detroit and buy one of those houses that are on sale for less than a thousand dollars (in fact there have even been reports of some houses selling for a single dollar in Detroit), and try to live there for a month.

You will quickly learn what it is like to live in an area that is literally dying economically.

When people are hungry and they can’t get jobs they get desperate.

So far this year in Detroit, car thefts are up 83%, robberies are up 50%, burglaries are up 20% and property destruction is up 42%.

What is happening in Detroit is a preview of what is soon going to happen all over America.

So doubt it all you want, but all the doubting in the world is not going to stop what is coming. The U.S. economy is dying so you better start getting ready.

The Silent Entitlements Monster: Social Security, Medicare And Interest On The Debt Will Gobble Up Every Single Tax Dollar By 2020

There is a silent monster that looms menacingly over U.S. government finances. Every politician knows about it, but very few of them ever want to talk about it. This silent monster grows larger every year, and yet nobody seems to know quite what to do about it. Those who have closely analyzed this monster all seem to agree that one day it will create a financial tsunami of a magnitude that is absolutely unprecedented, but there is vast disagreement about how to escape this financial tsunami or if it is even possible to escape it. The name of this monster is “entitlements” – Social Security, Medicare and other social Ponzi schemes that the U.S. government has locked itself into funding. It would be hard to understate the seriousness of the problem that entitlements present. In fact, according to an official U.S. government report, rapidly growing interest costs on the national debt together with spending on major entitlement programs will absorb approximately 92 cents of every dollar of federal revenue by the year 2019. By 2020, that figure will be up around 100 cents of every dollar of federal revenue. So that means that interest on the debt and spending on entitlement programs will eat up everything the U.S. government takes in before a penny is spent on anything else. That is a recipe for national financial suicide.

And unfortunately, the problem is only going to get far, far worse when you project things out beyond the year 2020. Right now, interest on the debt and spending on entitlement programs like Social Security and Medicare eat up only about 10 percent of GDP. By 2080, they are projected to eat up approximately 50 percent of GDP. In fact, things are even more dire than the chart below indicates. This chart is based on previous government figures that projected that mandatory spending will exceed government revenues at some point between 2030 and 2040, but the latest government figures now project that this will happen right around 2020. So as mind blowing as this chart is, keep in mind that it actually understates the problem we are facing….

This week, there was news that the Social Security system is in much worse shape than previously projected. According to the Congressional Budget Office, this year the Social Security system will pay out more in benefits than it receives in payroll taxes. This was not supposed to happen until at least 2016.

Now it is happening in 2010.

It turns out that the “recession” that we have just been through has hit Social Security revenues really hard.

And unfortunately, as waves of Baby Boomers start retiring, these “Social Security deficits” are going to get even worse.

So where will the money come from to pay the benefits that are owed?

For now, the money will come from the $2.5 trillion Social Security Trust Fund that has been accumulated.

But keep in mind that the $2.5 trillion figure is extremely misleading.

There are not $2.5 trillion dollars sitting around in a bank account somewhere to pay these benefits.

The truth is that the Social Security Trust Fund does not contain any actual assets.

The only assets the Social Security Trust Fund has are IOUs from the U.S. government.

So basically the U.S. government owes the Social Security Trust Fund $2.5 trillion dollars, and now it turns out that the Social Security system is going to start needing that money.

So where will the U.S. government get that money?

Well, they will borrow it of course.

The reality is that the Social Security program is simply not sustainable.

Back in 1950 each retiree’s Social Security benefit was paid for by 16 workers. Today, each retiree’s Social Security benefit is paid for by approximately 3.3 workers. By 2025 it is projected that there will be about two workers for each retiree.

As a society, we simply have not been producing enough new workers to sustain the current system.

Of course the politicians all say the right things to make us think that they are going to do something about this crisis. For example, Barack Obama recently had the following to say about the massive deficits the U.S. government keeps piling up: “It keeps me awake at night, looking at all that red ink”.

But the truth is that neither political party would dare propose a dramatic restructuring of Social Security or Medicare that would significantly reduce benefits.

Why?

Because it would be political suicide.

Say what you want about old people – the truth is that they vote more than the rest of us do.

Anyone who would dare “take away” their Social Security or Medicare would suddenly find hordes of old people voting against them in the next election.

But something has to be done.

The 2009 Financial Report of the U.S. Government was recently released, and it basically says that the U.S. government is facing financial Armageddon if something drastic is not done….

Absent a change in policy, under this scenario, the interest costs on the growing debt together with spending on major entitlement programs could absorb 92 cents of every dollar of federal revenue in 2019.

Keep in mind that this is before anything is spent on defense, health care, education, homeland security, job creation or anything else.

The following chart was pulled right out of the report. These aren’t the projections of some Internet wacko. These projections are in an official U.S. government report. The implications of the chart below are absolutely mind blowing….

Keep in mind that the U.S. government and the U.S. economy are already on the verge of financial oblivion in 2010. So what is going to happen if these projections are anywhere close to accurate?

In addition, the report also admitted that the present value of projected scheduled benefits exceeds earmarked revenues for entitlement programs such as Social Security and Medicare by about $46 trillion over the next 75 years.

$46 trillion!

Either the U.S. government is going to have to radically slash Social Security and Medicare benefits or they will have to come up with tens of trillions of extra dollars from somewhere.

And remember, the $46 trillion figure is just the “present value” of those future payments.

Because of inflation, the “actual value” of those future payments will be far greater.

In a section about Social Security and Medicare, the authors of the report confessed that “it is apparent that these programs are on a fiscally unsustainable path”.

Obviously something has got to give.

These programs cannot keep on paying the same level of benefits.

It is financially impossible.

But what are we going to do? Millions upon millions of elderly Americans rely on these programs.

Are we going to reduce payments to a level where they can only afford dog food to eat and a shack to live in?

As a society, we are really between a rock and hard place.

If we continue on the same path, the United States government is going to go bankrupt.

But any politician who tries to cut benefits or raise taxes will likely face the wrath of the voters at the ballot box.

So for now the U.S. government just continues to spend even more money and continues to go into increasing amounts of debt – apparently hoping that somehow everything will just turn out okay.

But things are not going to turn out okay. We are headed for a financial mess of horrifying proportions.

The truth is that it doesn’t matter how much the U.S. government cuts spending in other areas if it does not get entitlement spending and interest on the national debt under control. If those expenditures are not addressed, it is absolutely guaranteed that the U.S. government will be swamped in red ink for many years to come.

But until severe financial pain starts happening, a large percentage of the American people are not going to be motivated to do anything about this problem.

But by then it will be too late.

79 Percent Of American Voters Say They Think The U.S. Economy Could Collapse – And They Are Absolutely Right

An overwhelming majority of American voters now believe that the United States could experience a total economic collapse. According to the latest Fox News poll, 79 percent of U.S. voters believe “it’s possible the nation’s economy could collapse”, and the poll found that this belief in the fragility of the American economy cuts across the entire political spectrum. The truth is that the American people, at least on some level, know that a day of reckoning is at hand. For decades, America has been enjoying the biggest party in the history of the world, but unfortunately that party was fueled by a gigantic mountain of debt, and now the bills are starting to come due. Unfortunately for those trying to do something about this economic mess, the American people are starting to realize that the U.S. economy is now basically a house of cards, and that could lead to massive financial panic when things really start to fall apart.

Normally when a poll is taken, you can see big differences in the responses based on the party affiliation of those being surveyed. But in this poll everyone seems to agree – the U.S. economy could experience a complete and total collapse.

Not only did the poll find that 84 percent of Republicans believe the U.S. economy could fall apart, 80 percent of Independents did as well, as did 72 percent of Democrats.

Only 18 percent of the respondents to the survey believed that the economy is “so big and strong it could never collapse.”

It is very rare these days when a large majority of the American people will agree on something.

But unfortunately, they are completely and totally correct.

The U.S. economy is in a death spiral.

So how in the world did we get here?

The answer can be summed up in one word.

Debt.

The United States has piled up household, corporate and government debt at a pace that is mind blowing.

Once upon a time, the United States was the wealthiest nation in the history of the world.

But that was not enough for us.

We had to have more.

So we went out and squandered the wealth of this nation but that wasn’t enough either.

So we started spending hundreds of billions and then trillions of dollars that belong to future generations.

All of this to fuel the greatest party the world has ever seen.

And it has been a great party.

But you can turn out the lights because the party is almost over.

It is very easy to blame the U.S. government for getting into so much debt, but they are not the only ones who have been piling up debt at an insane pace.

In fact, millions of individual Americans have been living beyond their means for decades. Just check out the chart below which shows the growth of household debt since the mid-1960s….

Now tens of millions of Americans are massively overextended and are crying to the U.S. government for help. But nobody forced them to get mortgages that they couldn’t afford. Nobody forced them to max out their credit cards. Nobody forced them to fill up their garages with luxury vehicles.

In large part, we did this to ourselves. U.S. credit card debt per household only crossed the $1,000 threshold in the mid-1980s. Now it is over $8,000 per household….

But the corporate world should shoulder plenty of the blame as well. Corporate debt has been exploding at an exponential rate while profits have remained relatively flat. There is no way that this ratio of corporate debt to profits is sustainable….

And of course the biggest culprit of all is the U.S. government. They have piled up the biggest mountain of debt in the history of the world, but are we not at fault for continuing to elect leaders who keep putting us into so much debt? However, there are some signs that the American people are starting to wake up about this. According to the Fox News poll, by a nearly three-to-one margin, voters believe that the national debt (65 percent) is a greater threat to America’s future than terrorism is (23 percent).

So will this change anything when the next elections come around?

We will see.

Meanwhile, the damage has already been done. The U.S. Congress recently approved an increase in the federal government debt cap to 14.3 trillion dollars. In 2010, the United States government is projected to issue almost as much new debt as the rest of the governments of the world combined. Thanks to the horrifyingly bad management of our finances by our nation’s leaders, the legacy that we are leaving to future generations is the biggest mountain of debt that humanity has ever seen….

Unfortunately, instead of learning from the past and trying to reduce debt, the U.S. government just keeps spending money and piling up debt faster and faster.

But if they stop all of this reckless spending the U.S. economy could plunge right into a depression of unprecedented magnitude and pretty much everyone would be voted out of office.

But if they keep on with all of this reckless spending the long-term consequences will be catastrophic beyond anything that any of us can even imagine.

Either way, this thing is going to end really, really badly.

Whether you want to face it or not, there is no economic future for the United States under the current system.

Enjoy things while they are still relatively good, because this is as good as things are going to get. Incredibly hard times are coming and we all need to start getting ready.

Virginia Hands Out 6996 Traffic Tickets In One Weekend In An Effort To Raise Revenue For The State Government

In the old days, police officers wrote traffic tickers primarily to keep people safe and to prevent citizens from breaking the traffic laws. But in the new Amerika, all of that has changed. Now traffic tickets are primarily viewed as a revenue raising tool for state and local governments. For example, a federally funded ticketing blitz in the state of Virginia resulted in a total of 6996 traffic tickets being handed out this past weekend. This most recent ticketing blitz is part of a campaign code-named “Operation Air, Land & Speed”. Last Saturday and Sunday state troopers were ordered to absolutely saturate Interstate 95 and Interstate 81 and to issue as many traffic tickets as humanly possible during those two days. Why? Well, it turns out that the state of Virginia has a 2.2 billion dollar budget deficit that they are trying to deal with, and so they need to find some quick sources of cash.

You see, state and local governments all over the nation are massively jacking up traffic fines and are starting to write a lot more tickets in an attempt to “enhance” their streams of revenue.

In other words, state and local governments across the U.S. are broke and so they need some suckers to prey on.

Not that it was ever a good idea to break the traffic laws. But now even a minor violation can put a massive hole in your wallet. For instance, driving as little as 15 miles an hour over the speed limit in Virginia can get you a reckless driving charge that can carry a fine of up to $2500.

So why the hefty fines?

Well, the law increasing the traffic fines in Virginia clearly admitted why they are so high….

“The purpose of the civil remedial fees imposed in this section is to generate revenue.” (Virginia Code 46.2-206.1)

Are you starting to get the picture?

But this kind of thing is not just happening in Virginia.

“Sobriety checkpoints” in the state of California are increasingly bring used as revenue raising operations. It turns out that these sobriety checkpoints are far more likely to seize cars from unlicensed motorists than they are to catch drunk drivers.

So how profitable are these “sobriety” checkpoints?

Well, research done by the Investigative Reporting Program at UC Berkeley with California Watch discovered that impounds at “sobriety” checkpoints in 2009 alone generated approximately 40 million dollars in towing fees and police fines.

That is what you call a source of revenue.

In Detroit, even the police admit that the fundamental nature of police work is changing. Just consider the following quote from from Police Chief Michael Reaves of Utica, Michigan….

“When I first started in this job 30 years ago, police work was never about revenue enhancement, but if you’re a chief now, you have to look at whether your department produces revenues.”

Sgt. Richard Lyons of Trenton, Michigan is even more blunt about what is happening in his community….

“They’re trying to use police officers to balance the budget on the backs of drivers, and it’s too bad. The people we count on to support us and help us when we’re on the road are the ones who end up paying the bills, and they’re ticked off about it. We might as well just go door to door and tell people, ‘Slide us $100 now since your 16-year-old is going to end up paying us anyway when he starts driving.’ You can’t blame people for getting upset.”

But some localities are converting to even more automated ways of making money from drivers.

For example, “red-light cameras” have become huge revenue raising tools in many areas of the country. In Los Angeles, revenue from red-light cameras has doubled from $200,000 a month in 2007 to $400,000 a month at the end of 2009.

California Governor Arnold Schwarzenegger wants cities and counties in his state to take things even farther. He wants them to install speed sensors on existing red-light cameras. Speeders caught by these sensors would face fines ranging from $225 to $325.

Don’t all of us wish we could start a business that could make so much money from each customer?

California state officials believe that these speed sensors would raise more than 300 million dollars for the state of California by the end of 2011.

All of this is enough to make one want to drive like a grandmother.

Except then they would get you for going too slow.

Seriously.

The reality is that you have to be very, very careful out there now because the nature of driving in America has fundamentally changed.

Whether it is rapidly increasing traffic fines or all of the toll roads going in everywhere, American drivers are increasingly being viewed as a big fat revenue source.

And as the current economic collapse gets even worse, drivers are going to be preyed upon even more by state and local governments.

If you have not already done so, now is the time to change the way that you drive. Don’t give state and local governments an excuse to take even more of your hard-earned money from you than they are already.

Has The United States Become A Nation With No Economic Spine?

What are hard working Americans who have scrimped and saved and have done everything “right” financially for decades supposed to think about all of these “bailouts” and of the massive financial mess in Washington? How are people who have handled their own finances admirably supposed to feel now that the foolishness of others is leading us all towards a horrific economic collapse? Well, a reader named “Mae” recently left a comment that I think does a good job of communicating what a lot of hard working Americans are feeling right now: My situation is this – we have lived our lives playing by the rules: never carried debt on a credit card that we couldn’t pay off by the due date. If we couldn’t afford the item, we didn’t buy it. We always had a Christmas Club which enabled us to pay cash for the holiday. We payed ourselves first after every paycheck whether it was $10 or $100, whatever we could afford. We made double payments on our mortgage when we could which helped us to pay off our modest home 10 years early. We knew that we couldn’t afford to “have it all” so we made our choices early on and stuck with it. We sacrificed the fancy vacations in order to do large home repairs (like a new roof) ourselves. We didn’t buy expensive cars and now own one outright and carry a small loan on another. That’s our only debt besides monthly bills. We chose jobs that provided health care benefits. We did everything right…we saved and saved and saved to have a decent retirement but of course last year took half the value of our 401k.

Now, I’m expected to sit back and watch Bush, Congress and Obama bail everyone out because they didn’t have the fiscal discipline to manage their money?? I’m supposed to feel bad for people who bought homes they couldn’t afford? or cars they couldn’t pay for? or $1000 cell phone bills? or $20,000 in credit card debt? HELL NO! I’m livid! If I ran my checkbook the way Washington is running the national checkbook, I’d be thrown in jail!

All we can do now is educate as many people as possible about what is happening and hopefully vote all these s.o.b.’s out of office and replace them with fiscally conservative candidates who will vote for term limits. The days of a career politician are over. I don’t know if we can turn any of this around – it will take a lot of hard work to make the tough decisions, but they have to be made if we’re to survive. How many people have the guts to work through this? Not many…we’ve become a spoiled, selfish, arrogant and hypocritical nation with no spine.

The Credit Card Trap: How U.S. Credit Card Companies Are Sucking The Financial Life Out Of The American Consumer

There have been very few things more damaging to American consumers over the past couple of decades than credit card debt. Easy credit has enabled many of us to live absolutely fabulous lifestyles, but outrageously high interest rates, ridiculous penalties and predatory fees have sucked the financial life out of millions of American families. It is very easy to blame the rapidly exploding debt of the U.S. government for the economic collapse that we are now experiencing, but the truth is that tens of millions of Americans have created their own personal economic disasters by overusing credit cards. The temptation of easy credit has been too much for millions of Americans to resist, but now all of that easy credit is proving to be incredibly difficult to pay back, and massive debt problems are literally tearing many American families apart.

It is hard to underestimate how devastating credit card debt can be to a family.

According to the credit card repayment calculator, if you owe $6000 on a credit card with a 20 percent interest rate and only pay the minimum payment each time, it will take you 54 years to pay off that credit card.

During that time you will pay $26,168 in interest rate charges in addition to the $6000 in principal that you are required to pay back.

That does not even account for any penalties or fees you may have to pay.

Are you starting to get the picture?

The reality is that credit cards are one of the greatest inventions for sucking the wealth out of middle class American families ever invented.

Just consider the following facts….

*According to the United States Census Bureau, there are approximately 1.5 billion credit cards in use in the United States.

*At the end of 2008, the total credit card debt piled up by American consumers was over 972 billion dollars. This is an amount that is greater than the GDP of the world’s 122 poorest nations combined.

*78 percent of American households had at least one credit card at the end of 2008.

*The top 10 credit card issuers control approximately 88 percent of the credit card market.

*The average U.S. college graduate leaves school with more than $2,000 in credit card debt.

So is Congress doing anything to protect American consumers?

Well, some of the key provisions of The Credit Card Accountability, Responsibility and Disclosure Act, commonly known as the CARD Act, go into full effect for all credit card providers on February 22nd. In particular, starting on the 22nd limits will be imposed on when credit card issuers can raise rates on existing card balances.

But the truth is that this new law doesn’t really do much to protect us. U.S. credit card companies will continue to be able to engage in highly predatory practices. The following are just three examples….

#1) According to Pamela Banks of Consumers Union, the nonprofit publisher of Consumer Reports, there are no current federal laws that cap credit card interest rates. In fact, CNN is reporting that interest rates on some major bank credit cards are now as high as 36 percent.

#2) New laws only address the existing fees charged by credit card companies. So credit card companies are working hard to invent all kinds of new fees and penalties that will get around the new laws so that they can keep sticking it to American consumers. For example, Citibank is now charging some consumers with a fee if they put less than $2,400 on their card annually.

#3) In anticipation of the CARD Act going into effect, many credit card companies have been aggressively bumping up the minimum payments for many of their customers. Chase, one of the biggest credit card providers, recently increased the mandatory minimum payment for many consumers by 150 percent. MBNA, Citibank and Bank of America have announced that they are doubling minimum monthly payments on credit card balances for many of their customers. These increases have been absolutely devastating for many families who are on a tight budget.

The bottom line is that we all need to get out of debt and we all need to stop using credit cards. It is financial insanity to end up paying two, three, four or five times as much for an item as it cost in the store. We have been making the big banks rich by spending money that we do not have.

So if we are going to accuse the U.S. federal government of horribly wasting our money, we have got to be certain that we are geting our own financial houses in order.

But for many American families it is already too late. It is hard to pay off debt if you don’t have a job and you are about to lose your home. In fact, many American families find themselves literally being torn apart by financial stress.

Unfortunately, economic times are not going to get any easier. If you are able, get out of debt while you still can. Now is the time to tighten our belts and to prepare ourselves and our families for what is ahead.

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