111Millionaire
Today
is a
GreaT
d ayHere are the facts:
We are borrowing at a record pace.
We owe more now than at almost any time in recent
history. In December 1995 a record 18.8% of after-tax income
in North America went to repay consumer installment debt.
In the USA, alone, Money Magazine^28 reported
installment debt, including auto loans and credit card balances,
recently topped a record $1 trillion – a full one-third increase
in the past two years.
Late payments on credit cards reached 3.3% last year, the second highest
delinquency rate in a decade. Home mortgage delinquencies hit a two-year high in the
third quarter of 1995, the last period for which figures are available. In fact, over the past
10 years, as mean incomes stagnated, total household debt, including mortgages, has soared
from equaling 80% of annual disposable income to 93%.Getting credit is easy, paying it off...ain’t.
Most financial planners will tell you that depending upon your stage in life your
monthly debt payments for everything except your mortgage should not exceed 10% to
15% of your take-home pay. If you’re shelling out 20% or more, you’re well into the danger
zone.^29“Rule One. You must know the difference between an asset and a liability and buy
assets. The poor and middle class acquire liabilities, but they think they are assets.
An asset is something that puts money in my pocket.
A liability is something that takes money out of my pocket.” *
Robert T. Kiyosaki* Kiyosaki, Robert T., Rich Dad Poor Dad, (Tech Press, Inc., 1997), 53.