The G7 and You: On a Much More Personal Level

Ilana Greene
The G7 and You: On a Much More Personal Level

Italy has called for emergency G7 talks, as lending costs soared and stocks plunged across the Eurozone, bringing with it fears of a renewed global recession.

“The situation is very difficult and requires coordinated action. We have to recognize that the world has entered a global financial crisis that concerns all countries,” Italy’s Prime Minister Silvio Berlusconi said, after talks with several European leaders. Italy, along with Spain, plan to speed up implementation of austerity measures in hopes of achieving a balanced budget.

China, recently making headlines for chastising the U.S. to come out and deal with its debt addiction, stated this week that Eurozone plans, such as raising debt ceilings and bailouts, are not enough to save their economy as a whole. Instead, they claimed that concrete steps must be taken to re-balance the global economy. Xinhua, Beijing’s state-run news agency, said the U.S. must slash its "gigantic military expenditure and bloated social welfare costs" and accept international supervision over U.S. dollar issues.

Sparked by prospects of a slow U.S. Economy as well as European dept concerns, hundreds of billions of dollars in value were lost this past week. Whether it is global economics, or your own personal experience, you can’t help but wonder if China is correct. That, maybe, we are indeed a nation addicted to debt.

According to the Federal Reserve, the total amount of consumer debt in the U.S. is nearly $2.4 trillion; 67% of which are loans (student loans, car loans and the like, but the number does not include mortgages), 33% is credit card debt alone. That comes out to about $7,800 for every man, woman, and child in the United States. That’s a lot of debt! While we criticize and deride our politicians for leading us into such an appalling economic situation through overspending and over-borrowing, it seems many of us haven’t done such a good job ourselves of living on credit and way beyond our means.

This may be a good time to look at our own economic outlook and avert any impending personal disasters. There are credit cards of every stripe available today, to best fit any type of credit personality.

Those who realize they already have a propensity to overspend can obtain a secured credit card. With these cards you deposit an amount and when that money is gone, so goes the card! You are left with no choice but to stay well within your means. Even a secured credit card (one where you place no money in the account, but are actually receiving credit from the lender), you can ask to be held at a certain credit limit. This of course takes incredible willpower, and if you have a personality that tends to overspend, it may be a little unnerving for you to purposefully limit yourself.

If you have already gone too far and are now paying large amounts in interest payments, a 0% balance transfer card could save you a lot of money in finance charges. Just be sure to check for how long the 0% rate will apply. It’s always best to solve a problem before it gets out of hand; you don’t want the next G7 summit to be held in your living room.