Page 52 - Workbook1E

What’s the Big Deal?
The abuse of easily obtained credit and the common lack of savings have put a record number of American families on the brink of financial disaster. Since home equity loans have become one
of the few ways to get tax deductions on interest paid, they’re also being used to consolidate consumer debt. This places homes and the very substance of our cities and society in jeopardy.
The Trouble with Debt
It used to be widely believed increased consumer spending—no matter the source of funds—strengthened the economy. Government leaders even encouraged this naive idea. As a result, Americans are less financially stable and continue to buy more than they can afford.
Unfortunately, now any type of economic downturn sends thousands of people into bankruptcy. The rise in mortgage foreclosures contributed greatly to the failure of savings and loans and several state and national banks. Huge increases in mortgage foreclosures have already affected nearly every community and have had a devastating domino effect on the economy.
Is All Debt Bad?
You may wonder if all debt
is “bad” debt. No. There is
a place for the proper use of credit. Carefully managed credit is a powerful and
useful tool—used to finance industry, obtain an education, build cities, and create new business opportunities. But mismanaged credit can quickly lead to uncontrolled debt, which can destroy families and communities.
“Think what you do when you run into debt: You give another power over your liberty.”
~ Benjamin Franklin
48 Workbook 1: Building a Spending Plan that Works