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InsIde thIs Issue
Free Yourself From Consumer Culture by Buying Lasting, Quality Items
Crying “Halt” to the Madness of Debt By Joel Bowman
Vol. 1, No. 6August 2016
We’ve been ruminating of late on the mad, mad world of money and the financial pressures that keep ordinary folk from enjoying the life they’d rather have.
Nobody desires to be poor… behind on repayments…up to their ears in debt. At least, that’s not the goal. Yet, so many people are scrimping and scraping just to get by.
What gives? The news wires tell us that record
numbers of Americans are dependent on food stamps to meet the minimum daily calorie intake. The last figures we saw were around 45 million recipients…or about one in seven people.
They also tell us the labor force participation rate (the percentage of Americans over the age of 16 who are either working or looking for a
job) hasn’t been this low since the late 1970s.
That’s half a century of steady, sustained, workforce deterioration.
Which means lots of people struggling to pay bills…to save “escape” money…to live well.
It also means a lot of sleepless nights. A lot of furrowed brows. A lot of heightened cortisol levels (sometimes called the “stress hormone”).
And not a lot of independence. How did it come to be this way? Not by accident, say we. Look closely and you’ll discover
there’s an entire system…worth hundreds of billions of dollars…that actively works to ensure the good life is beyond the reach of most people.
This is a system that deplores independence. One that actively agitates against it.
And the stakes are enormous. Just think…
What might happen to Big Pharma if average, workaday folk realized they could get better quality care abroad for a fraction of the price they pay their local healthcare provider (and the dozens of parasitic “administrators” riding the poor Doc’s coattails)?
What might become of Big Banking if ordinary citizens discovered, en masse, the ease and efficiency of free market money? What would happen to the billions of dollars
collected in fees and hidden charges if, like you, a critical mass of individuals learned a little bit about Bitcoin?
What might happen to Big Education if people took full advantage of the wealth of open-source, learning tools currently available to them (many mentioned in past editions of this publication)?
In order to emancipate oneself from this system, it is necessary to understand how it works.
Let’s take a little trip down memory lane…all the way back to 1972.
You may recall it as the year Don McLean drove his Chevy to the levee only to discover it was dry…when Neil Young poured out his heart of gold… and Johnny Nash finally saw clearly after the rain had gone…
Back then, a new car set you back $3,853. Rent averaged $165 per month. And a year’s tuition to Harvard University could be yours for $2,800.
Those same items today will set you back: $33,560 for a new set of wheels… $1,500 for rent…and $60,000 for four years (boarding) at Harvard Crimson.
Swap your debt burden for a simpler way of life.
Turning the Garage into Base Camp for a Freewheelin’, Nomadic Lifestyle
Escape a Bricks-and-Mortar Lifestyle for Freedom on the Road
How to Upskill Online to Earn from Anywhere
Take the First Step to Opening a Bitcoin Account
2 Independence Monthly | August 2016
AUGUST 2016 Volume 1 | Number 6
Editor-in-Chief: Joel Bowman Managing Editor: Cleo Murphy Copyeditor: Morgan Ormond Contributors: Andy Fleming, Tom Kerr, Bryan Danger, and Erica Mills
© Copyright 2016 Walden Publishing All Rights Reserved. Reproduction, copying, or redistribution (electronic or otherwise, including online) is strictly prohibited without the express written permission of the Publisher. Copies of Independence Monthly are furnished directly by subscription only. Annual subscription is $59.
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Some quick back-of-the-envelope math reveals…that we’re not as good as we thought we were at quick, back-of- the-envelope math. Reaching then for the calculator, we find…
That’s an increase in prices of 771% (auto), 809% (rent), and a staggering 2,042% (college)…
“Yes, yes…but the average wage back then was only $11,859 per year,” you tell us.
“Wow,” we reply, astonished. “That’s an oddly accurate number to have committed to memory.”
And it’s true. Wages have risen. A bit. The median salary in the U.S. per person for 2015 was $26,695…a 125% increase since those glory days of the early 70s.
Maybe that seems like a lot, but if wages increased at the same pace as the aforementioned goods and services, they’d have to go to…
$91,432 to track the increase in auto prices…
$95,939 to track the surge in rent prices…
and a whopping $242,160 to keep up with tuition.
And yet, fewer than 2% of Americans earn a cool quarter million dollars per year.
Of course, nobody uses “individual income” nowadays anyway. The preferred metric is “household income,” perhaps owing to the fact that it now takes multiple wage earners just to keep the lights on.
So if wages haven’t risen to keep pace with costs…how are Americans able to maintain the lifestyle to which they’ve become accustomed?
The answer, of course, is debt. Debt plugged the gap. Debt filled
the hole. Debt kept the party going. Ah…but debts need to be repaid. At the beginning of 2016, the
average American owed $15,355 on his credit card…$26,530 on his car…$47,712 in student loans…and $165,892 on the roof over his head.
Some folks say America’s fixation with debt is cultural. There may be some small truth to that…
When we first moved to the U.S., many years ago, we spent a fair amount of time on campus at a small college in Annapolis, Maryland. Everyone we knew there had credit card debt…and lots of it.
We couldn’t understand why people didn’t just pay cash for what they wanted…or, if they didn’t have the money, either forgo the item until they’d saved enough to buy it “properly” or simply make-do without it.
There were plenty of things we wanted to buy…but couldn’t (which, considering the objects of our desire at the time, is probably just as well.)
Then, one day, we saw some representatives from the local banks trolling around the quad. They were handing out pre-approved credit card application forms to anyone who would take them.
And plenty did. All of a sudden, students who once
couldn’t afford to take their noses out of their textbooks were sporting spiffy new clothes and shouting rounds of drinks at the local bars.
The real hangover, of course, would come many years later. And by then, it would be a doozy.
At this point, you might fairly be wondering…
What were these kids thinking racking up credit card loans before they even graduated with a job to repay them?
What were the banks doing handing these kids credit cards in the first place?
Why was nobody paying attention to the build-up of debt in the system?
It’s easy to blame imprudent youth…or predacious banks…or negligent overseers.
But the truth runs far deeper than that.
Astute readers will have noticed, perhaps with a wince, that U.S. national debt surpassed $19 trillion earlier in the year. That’s close to $60k per man, woman, and child in the Union (or, if you like, $160k per taxpayer.)
This fish rots from the head, yes. But that’s no reason to shirk our individual responsibility, is it now?
In other words, just because the U.S. government wants to jump off a financial cliff, it doesn’t mean we have to follow.
At another moment in his pre- Independence Monthly life, your rambling editor managed a financial
You can avoid credit card debt by paying with cash.
3Independence Monthly | August 2016
publication from an outpost of his own choosing in Taipei, Taiwan.
Partly we moved there to “keep an eye on emerging trends in the Far East”…partly we went for the dim sum…and partly because it was somewhere between Dubai (whence we’d just come) and Buenos Aires (to where we were heading).
During our time on the tiny island, the research company for which we worked released a “Big-Budget Movie,” all about the gross indebtedness of the world’s largest economy. (You might have seen it: I.O.U.S.A.)
Basically, it was a warning of the “road to financial