How bad is it really? Updated Family Financial Plan for 2010.

It is time to put this whole financial crisis in real perspective.  That is, just what does it mean to me personally.  I think we do not have the right level of concern because we think it is about banksters, wall streeters, and the government.  That somehow it doesn’t really involve me directly.  Unfortunately, this is the opium being feed to you by MSM and the PTB.  As I have been pointing out in my recent articles, these issues are affecting us all more and more everyday.  I think we can all understand being unemployed and what that means to us.  I think we can understand the cost of health care and the impacts of not having coverage.  I think we can all understand how our retirements have shrunk.  I think we can all understand foreclosures, which BTW  are occurring at a faster rate than in 2009.  So far in 2010 there have been 855,900 foreclosures and we haven’t gotten to the end of February.  On an annualized basis that means we can expect another 5,895,000 families losing their homes in 2010 on top of the nearly 5,000,000 families who lost their homes in 2009!  I think we can understand what facing bankruptcy means.  1,406,000 of us already understand so far in 2010 alone and 9,683,000 of us will by the end of the year.  Are we getting it more personal for you?

No, OK let’s do our house hold financial plan for 2010.  We will assume the average family is four people. OK?

First let’s talk about the Federal deficit.  You and I and our children and our children’s children are going to pay this debt through paying taxes.  It is in very real terms OUR debt.  Currently that debt factored into our family plan as long term debt is: $160,756.  Next let’s look at our personal debt.  That is mortgages, credit cards etc.  On average this short and mid term debt per family stands at: $215,836. Now we need to factor in what we owe on a state and local basis and include our obligations to social security, public retirement plans, school bonds, etc.  These obligations which are short, medium, and long term total for our family about: $709,632.  Our discretionary spending per family is roughly 30% of our income so this short term debt for our family is: $18,521.  So let’s tally up the deficit side of our plan.

  • Federal Deficit                   $160,756
  • Personal Debt                   $215,836
  • Social Obligations*          $709,632
  • Discretionary Debt          $  18,521

Total Debt                           $1,104,475

Now let’s take at our assets.  The average household income is: $ 61,738.  We have on average for a family of four savings of $ 4,136. Final, we have on average about 30% equity in our homes.  The average median value of our homes is $215,900, which by the way has dropped from a 2007 high of $247,900.  So our 30% equity net asset value is: $ 64,770.  Finally, we have about $25,000 worth of furniture, junk, and toys.  So let’s add up our assets.

  • Income                 $61,738
  • Savings                 $  4,136
  • Equity in Home  $64,770
  • Disposables        $25,000

Total Assets        $155,644

Total Assets – Total Liabilities = Net Worth :  ($949,101)

This is real.  This IS your debt.  This is your real net worth. In the strictest definition of fiscal responsibility this is where each and every family is at right now.  In other words, we are all hopelessly bankrupt.  Of course there is the 2-3% of us who control 97% of the available worth that are excluded, but reality…..this is where the AVERAGE family is sitting.  Real enough for you now? Check out this site for a valuable insight to the realities of our collective economies.

Also this post script follow up to the recent article where I suggest they were coming after our retirement plans and savings next.  This is just the tip of the iceberg.


Updated 11:27 AM CST, Mon, Feb 22, 2010

In order to crawl from beneath crushing debt and reach fiscal solvency, Illinois legislators must choose from a series of options that range from bad to worse, according to a prominent watchdog group.

The Civic Federation wants to launch an intervention that includes significant budget cuts and the largest tax increase package in Illinois history, all in an effort to save the state from a $12.8 billion budget deficit.

“Doomsday is here for the state of Illinois,” said Laurence Msall, Civic Federation President, to the Sun-Times.

The group says it would support a state income tax increase from 3 percent to 5 percent. It also recommends the state tax retirees’ pension and Social Security checks be taxed for the first time at the same rate as workers’ paychecks. They want another $1 increase on a pack of cigarettes and to eliminate $181 million in corporate tax breaks.

If implemented, the Federation’s recommendations could shave off $8 billion, but there is a catch.

In order to implement those increases, the Civic Federation says unions should pay more toward their pensions and health care but the unions aren’t interested.

“Illinois’ fiscal crisis has been many years in the making. It was caused by more than 30 years of pension underfunding and many years of spending unfettered by the state’s shrinking revenue resources,” said Msall.

The group’s plan would help alleviate the deficit by 2012, they say.

The state’s red ink has already caused a backlog of unpaid bills to public universities and schools, transit systems and social services.

“The Civic Federation does not enjoy advocating a significant tax increase in the middle of a difficult recession. However, continuing to do nothing would be by far a worse option,” said the Civic Federation in a statement on the group’s website.

And so it goes and goes.  We might want to think about getting  over to the soup line early, huh?  We can sing the Tennessee Ernie Ford Song “Sixteen Tons” on the way.

Here’s Uncle Willie’s Thought for the Day:

Author: redhawk500

International business consultant, author, blogger, and student of life. After 35 years in business, trying to wake the world to a new reality. One of prosperity, abundance, and most importantly equal opportunity. it's time to redistribute wealth and power.

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