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Friday, October 08, 2010

Debt Solutions

Unless you've been living under a rock somewhere, you've noticed in the past couple of years an enormous growth in the "debt industry." (I'm not sure it is an industry, but it sure is behaving like one!) The radio and TV ads, the pop-up ads on the Internet, and even ads in newspapers. They all ask you if you're fed up with credit card debt. Basically they want you to agree with them on the definition of the problem ... for which they conveniently have a "solution."

They purport to give you hope by telling you they can help you. Many explain that a new law, a little known law, or simply your "rights" make it possible to settle your debts for less than you owe. Some of the nastier ones cast the lenders and creditors as villains in some kind of an evil scheme that victimized you, the debtor.

It's fair to say that having too much debt is a bit of a problem. Americans are carrying more (personal) debt than any other people group in the history of the world. We have big mortgages, big car payments, big credit card balances, etc. But is debt really the problem? Or is it maybe a symptom of the root problem?

It's like being obese. We all think the problem is the extra weight we're carrying around. We use the bathroom scale to measure our weight and try to track that. But at the end of the day, how much you or I weigh isn't the point. Rather the point is what we eat. Obesity is a symptom of the bigger problem ... our eating habits. And so it is with debt I think.

Americans live large. As a nation we've lived large for quite some time now. We're involved in everything everywhere. It seems that no matter where there's a conflict (war), disaster or even political event - the U.S. is involved. We are perhaps the most influential country in the history of the world (that hasn't had sovereignty over those it influenced).

As individuals, we tend to live just about as large. Even the poorest of our citizens will have satellite TV, a nice car or other things they really shouldn't afford even if they can. Compared to Germans, for example, we live on a spectrum that is more like a polar opposite.

Consider the German culture is to define their lifestyle within the confines of their finances. They look at how much money they have and then determine how they will live. Americans on the other hand, do it quite differently. How much money we have is not really part of our decision criteria. We seem to define how we want to live, and then spend the rest of our time trying to make our finances obey our lifestyle. And as the popular Dr. Phil would say, "How's that workin' for ya?"

I've become a big fan of Peter G. Peterson, a respected business leader who put $1 billion of his wealth into a foundation ( dedicated to fighting the national debt. He backed the movie, I.O.U.S.A. that really was a documentary on America's unbridled spending and unprecedented debt. He's been campaigning to make the national debt a key issue on the political agenda of our nation, and even of the world.

Recently, Peterson produced a five-part follow-up called "I.O.U.S.A.: Solutions." Here he talks about what needs to happen to put America back on firm financial footing. Check that out at

We Americans seem to be trapped in some kind of time warp that is disconnected from reality. We're living large. We're living much, much larger than we can afford. Somehow, we need to find room in our budget to retire the astronomical debt this nation (and its people) carries.

But more importantly, as Peterson points out in his solutions piece, America and the Americans need a whole new thinking process when it comes to finances. The paradigm must shift to whether or not we have the money to pay for a war, assist the poor, advance an agenda, etc.

So it would seem that the best "debt solutions" have yet to appear in the American culture. For the true debt solutions will have to come from an extremely significant revolution in our thinking about money and how we live.

Are you ready?

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