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Tuesday, August 23, 2011

What about our personal debt crisis?

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A Reach Out Job Search Guest Post by Jesse Langley

While the recession recovery has been much slower than anticipated, more Americans are going back to work. 

Recent numbers showed a tenth of a percent drop to 9.1 percent, as companies created over 177,000 new jobs in the month of July. (Editors note-Michigan's unemployment rate as of August 2011, stands at 10.9%)

However, the stock market has been fluctuating greatly due to the recent national debt crisis and downgrade of the credit rating to AA+. The government is in trillions of dollars of debt, but what about the average Joe? How does he make ends meet in a volatile economy?
In the midst of the worst economic times since the Great Depression, Americans and jobs have become scarcer and harder to obtain. Many long-time employees, especially in the manufacturing industry, have been laid off and benefits packages have been cut.
College graduates are entering a job marketplace in which even finding a job, whether or not it applies to their degree, is a positive outcome. These hard times have also widened the gap of the social classes in America
The government is also at a crossroads in terms of taxation, as many call for higher taxes on the elite but most middle and lower class citizens can hardly afford to pay the taxes they have currently, as many are underemployed. Federal officials borrowed past their means and finally felt the effects. The same can be said for the average American. 

The downfall in the stock market, banks, automotive industry and economy as a whole back in 2008 affected many areas of our lives. The mortgage crisis caused rampant foreclosure that is still a problem. 

According to RealtyTrac, 1 in 111 American homes received foreclosure notices as of recent figures released in June. However, unsold homes and foreclosures are dropping, with a housing market rebound projected for early 2012. 
Mortgage rates also plummeted after many banks made unsafe investments on at-risk mortgages. The automotive industry had to have two of the Big 3 bailed out by the government. Thankfully, car sales are trending upwards as GM, Ford and Chrysler try to play catch up to Toyota and Honda. It truly was the perfect storm, and America wasn’t the only country affected. 

Those looking to get back to work, whether unemployed or underemployed, can opt to go back to school to earn a higher degree or earn that college degree they always wanted. However, with funds short and an influx of good candidates on the market, job seekers face the dilemma of furthering their education for the future while maybe becoming overqualified for the jobs they are applying for now. But with school becoming more and more expensive each year, how will they pay for it and prevent becoming saturated in debt?

The average credit card balance, according to TransUnion, is nearly $5,000. Americans are racking up high credit card bills trying to pay for necessities such as food and gas, while leaving out excessive spending like there was before the economy tumbled back in 2008. It is safe to say America also has a “personal debt crisis.” 
Overspending, especially during the holiday season before 2008, was common, as credit card debt was a big issue. Now, with many out of work and unable to pay for mortgages and credit card bills used to keep their families afloat, personal debt has soared. 

But families aren’t the only group involved in this growing personal debt crisis. Student loan debt is projected to top $1 trillion this year, and paying for school is not just a worry for recent college graduates. As college tuition rises, so do the amount of money students are borrowing to pay for education. 
Record student loan debt along with high unemployment, especially for college graduates the past few years, leads many experts to predict student loans may lead to another financial crisis. For those under 24, the unemployment rate was more than 15 percent for the first quarter this year, almost double the national average. 

For all the negative news, it is clear an economic recovery won’t happen overnight. However, if consumer confidence grows slowly but surely, Americans will eventually be able to pull through these tough times like they always have—with grit, determination and strength to chase their dreams.
Writer's Bio: Jesse Langley lives near Chicago.  He divides his time among work, writing and family life.  He is an advocate for online education and has a keen interest in blogging and social media.

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