Monday, June 1, 2009

United States Debt Now $668,621 Per Household

Unfortunately that number is no mistake, American debt is now just under $670,000 ($668,621) per household.

This should put that into a bit of perspective.

"Because it's pretty hard to identify what the weighted-average interest rate is for this debt, I show a few different scenarios. That way you can decide for yourself which scenario you find most plausible. The interest rate is shown, along with two different time horizons for each scenario. I then provide the amount of money that would be needed to pay off the debt per household, per year.

Scenario #1: 5%
30 years: $43,469
50 years: $36,603

Scenario #2: 3%
30 years: $34,092
50 years: $25,971

Scenario #3: 0%
30 years: $22,274
50 years: $13,364

So in the hopelessly optimistic best case scenario, each American household would have to pay $13,364 per year for 50 years. That is, of course, assuming that the federal government closes the deficit (fat chance), and each household does not incur additional debt (doubtful). And recall: it does not include state and local debt.

for extra context you should know that the average household income just above $50,000 a year (that number was from before the markets cut in half).

The scenario's quoted above is very simplified. It does not take into account inflation or population growth, both of which are all but assured. It also does not take into account future deficit spending which given the current government is also all but assured.

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