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The Stimulus Package Passed: Should You Factor In An Extra $10,000 to Your Debt Snowball?

By Erik Folgate

According to the House Minority Leader in Congress, the American people will be taking on an average of $10,000 in debt per person due to this stimulus package that just passed.

“With a price tag of more than $1 trillion when you factor in interest, it costs every family almost $10,000 in added debt. This is an act of generational theft that our children and grandchildren will be paying for far into the future.”

This was a completely partisan quote by a Republican that did not agree with the economic recovery bill that just passed in the House of Representatives, but if you divide the cost of this bill by the amount of taxpaying Americans in the United States, his numbers are roughly correct about the debt that is being passed onto us. I know, the title to this post was a little silly, but not really when you sit down and think about it.

For those of us working very hard to eliminate our personal debt, the government has just handed each of us an extra $10,000 in debt to add on to the total we already have in our own personal debt. Sure, we won’t get monthly loan coupons in the mail from China, the U.S. Treasury, or whoever we borrow this money from, but we will pay this money back in the form of tax increases and/or increasing our spending to stimulate the economy. In a perfect world, this package will generate enough income tax from job creations, but if it doesn’t generate enough money to repay the money we are spending for this plan, the only way for the local, state, and federal government to recover the money is to increase income, capital gains, property, and sales taxes.

Maybe I will put an extra $10,000 in my debt snowball with an asterisk next to it. Great, now my debt snowball is going to look like baseball’s statistic for the homerun leader.

Erik Folgate
Erik and his wife, Lindzee, live in Orlando, Florida with a baby boy on the way. Erik works as an account manager for a marketing company, and considers counseling friends, family and the readers of Money Crashers his personal ministry to others. Erik became passionate about personal finance and helping others make wise financial decisions after racking up over $20k in credit card and student loan debt within the first two years of college.

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  • El Cheapo

    The numbers are quite scary indeed!!

    Why not just cut a 10K check to every eligible US taxpayer? Let’s say the average person who receives this spends half and saves the other half. 5K will go towards banks or stable investment vehicles (thus shoring up assets and capital), though a small minority would keep it under mattresses. 5K would be used for consumer spending and have the classic multiplier effect throughout the economy. Plus we could cut out the inevitable pork from spending measures written by lobbyists….

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