There’s something inherent about debt. In the back of our minds, a little voice says “owing somebody money is not a good thing.” The federal government just doesn’t have that little voice.
The US National Debt is over eleven trillion dollars right now. That’s not counting unfunded liabilities totaling an additional forty-five trillion. (A good example of an unfunded liability is knowing you have a tax payment on April 15th, but not yet having the money for it. You can A: cash-flow the payment on the 15th, or B: pay it with debt like a credit card, but you’ll worry about it when the time comes).
You and I owe banks.
Credit card companies, peer lenders, mom and dad, or the auto finance company. The federal government owes bond-holders, and that is only so long as bond holders want to buy and hold bonds.
The government owes governments
Who buys these? Actually, other governments do. They’re most popularly-held by Middle Eastern countries and the Chinese government according to an article at ABC News that I read last night. I guess it makes sense to keep their largest customers consuming. That’s just good business for them.
All of us here understand that it’s really hard to get out of debt if interest-only payments are a whopping part of the budget. In fact, interest payments are the US Government’s fourth largest expense behind national defense, Medicare-Medicaid and Social Security. Remember, that’s interest. Not principal.
My last post was about staying motivated during your debt repayment journey. I don’t know about you, in light of this information, I feel much better about my journey. It’s starting to look like a leisurely stroll in the park compared with what Congress has to deal with.
