What Would Happen if We All Paid Off Our Debt?
This was a fun article from US News & World Report, via Yahoo News. One thing that’s important to note is that, while parts of the economy would decline, other parts would get a slice of the dollars—and it’s not as if the dollars not spend on “immediate consumption” would disappear from the market. The economy would *shift* in its purposes and uses of money. So it’s not necessarily true that “all the consumer spending would just go away” or all those dollars would disappear out of the economy. But the *market* as a whole would shift—and that would be such a good thing.
It’s no secret that consumers are saddled with debt. Combined, in the United States, individuals owe more than $12.6 trillion dollars. Since approximately 24 percent of households are debt free, and there are around 114 million households in the U.S., the average household is saddled with?
Approximately $145,000 in debt!
I’m about to combine averages and medians for simplicity’s sake, but bear with me: According to the Census Bureau, median household income is $51,881 per year. If the average household did nothing but pay down debt, it would take 2.8 years to pay it all off!
Naturally, it’s absurd to expect an entire household’s income to go to debt. Even if 30 percent of the income were dedicated to debt payoff, it would take 9.32 years.
That seems like a long time.
However, let’s think about the ramifications. If we, as a society, buckled down and committed to paying off debt. What would really happen?
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