Should the Government Solve Our Debt Crisis For Us?

Is it the government's job to stop us from having one more drink at that New Year's Party? No. It is just their job to stop us from having that drink and then getting in our car and driving drunk where we could actually hurt someone else with our irresponsible drinking. Yes!

In this case drinking is akin to reckless spending, shopping, retail therapy (whatever you call it), and driving is the equivalent of using our credit cards to achieve the goal ... to get you there. When consumers recklessly rack up their debt and can't pay their bills (including their mortgages), as we can clearly see, the whole economy suffers. This crazy behavior could plunge us all headlong into a recession.

So now think about it ... if consumers can't control themselves and become responsible citizens and are causing harm to others with their behavior (like drinking and driving), isn't it the government's responsibility to force them to stop?

You can't tell an alcoholic to have a few drinks less, or an obese person to just eat less and lose 100 pounds, anymore than you can tell a shopaholic to stop spending and pay off their $100,000 debt.

Our culture has a spending illness and needs to check itself into rehab. But is this really going to happen? No ... so now what should we responsible citizens, who hopefully know better, do to prevent the deleterious economic effects of those of us less responsible?

I remember the old days of lending when banks considered your debt to asset ratio before handing out a credit card or loan. And now ... what happened? Free credit for all? Free candy for all - go gorge yourself and take an antacid in the morning and then do it again over and over. It's fun.

I think it is time to use legislation with market economics and stronger consumer education to put a plan together to curb credit card debt. If the government disallowed usury (excessive interest - which I consider anything over 18%), then credit card companies would be much more careful in screening who have they gave credit cards to and would assess how much debt a person has before they gave them more rope to hang themselves in the debt jungle.

I think it is ridiculous that credit card debt is over $4 Trillion (that is 5 times more than the GDP!). What is even more terrible is that there are millions of Americans who can't ever seem to pay off their credit card debt. A tiny bit of legislation, which I am sure will anger some (mostly those with bad credit), could solve a lot of our debt crisis.

I have never left a balance on my credit cards except for once after graduate school when I was looking for a job. I hadn't worked in several years and was living on student loans and towards the end of the my college career, I charged a little more on my credit card than I could pay off. I quickly corrected the problem in a few months after I started working.

I challenge my readers today. If you have credit card debt, put together a plan to pay it off (or at least pay it down) in the next 3 months and talk to a financial advisor or money coach how you can start living your life debt-free. (A mortgage is ok).