Debt just waiting for a rainy day

Kids, pay no attention to your parents and grandparents.

Not when it comes to debt, anyway.

We older and allegedly wiser beings have burdened you with an IOU note that now exceeds $22 trillion. Even though the economy is expanding like never before, we’re piling on the national debt at a rate of $1 trillion a year.

To a roomful of shaking heads recently, esteemed economist Dr. John Mitchell noted cryptically to his Chamber of Commerce audience that even though debt grows, it doesn’t seem to slow down the surging economy. In fact, hardly anybody seems to even talk about the federal deficit anymore, the difference between revenue and spending.

Perhaps in the highest and most hallowed echelons of modern economic theory, owing an inconceivable amount of money is no reason to keep us all awake at night. But at the very least, we believe it’s setting a sordid example to those who conclude that maybe debt really is OK. Because it’s not.

Talk to any financial planner and the first thing you’ll typically hear is that you can’t get ahead until you clear up what’s holding you back. Yep, debt.

When a significant amount of your hard-earned money is going to interest — not touching the principal of the debt you’ve taken on — you’re putting the handcuffs on and squeezing them uncomfortably tight. At some point, circulation is impaired and other serious problems result.

Back on the federal body, Dr. Mitchell extolled the virtues of overall economic health despite the increasingly excessive spending by our government. Never before has our nation seen 126 consecutive months of economic expansion, but the good times just keep rolling. And Dr. Mitchell is predicting a similarly rosy 2020.

You can credit President Trump if you wish, but at least acknowledge that this steam engine was building up speed years before he took office. The way the U.S. economy has been constructed makes it not impervious, but much harder to stop or significantly slow down even as global political and fiscal conditions fluctuate.

Yet every economic expansion in U.S. history has hit a wall, strongly suggesting that ours eventually will, too. And when it does, when our nation is making massive interest payments with less revenue coming in, maybe then a basic truth about debt will hit home.

Fiscal wisdom in your home now will likely lessen that painful impact.