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Greece’s Lessons for Us

Greece has receded from the headlines – for now. But it will be back, because the latest bailout did nothing other than postpone the day of reckoning. Meanwhile, I thought it worthwhile to show what their debt debacle can teach American consumers.

Although there is very little practicality in comparing the finances of a country to those of an average individual, a rough comparison may help some of you put your own debt loads into perspective.

Greece owes their creditors 323 billion euros. Their gross domestic product puts them at a debt-to-income ratio of 177%. Meaning, the country owes 1.77 euros for every one euro their economy produces (hence the need to cut spending or increase revenue in Greece).

While 177% sounds like a lot, the average U.S. household actually has a debt-to-income ratio of 370%. This is based on the average U.S. household owing about $204,992 in mortgages, credit cards and student loans, while only having a median household income of $55,192.

Luckily for Greece, a default or debt restructuring would actually give them a chance to wipe away many of their debts. But the average American may have a harder time doing so through personal bankruptcy, as certain debts like student loans are often non-forgivable.

A country in economic peril can have their debt restructured, forgiven or simply default. Default is always the worst option (for a nation and individuals), as it essentially closes you out from further borrowing in the near term. Eventually, though, it does allow for a recovery and reentry into capital markets for nations and individuals alike.

Perhaps the most challenging obstacle for Greece today is that they do not have the option to simply print more money. They gave up that option when they joined the euro currency bloc more than 15 years ago – and the European Central Bank is in no hurry to give breaks to a problem-prone place like Greece.

But even if the Greeks had their own currency, printing money is not necessarily the best option when your economy can’t handle the new influx of currency. New funding can encourage inflation and a host of other non-ideal outcomes.

So given that neither you nor I can print our own money, what can we learn from Greece’s debt reckoning? The No. 1 takeaway, without a doubt, for the average person is that getting out of debt requires a committed lifestyle change.

Sure, Greece may look less leveraged on paper than the U.S. consumer, but the reason credit markets have abandoned that Mediterranean country (and not individual Americans) is because Greece has shown almost no willingness to adjust their spending to help manage their debt load.

In the absence of massive social and economic reforms, Greece will never be able to pay back their debt load, even at only 177% of their GDP. As individuals, we must be absolutely committed to adjusting our lifestyles (or increasing our incomes) to continue to service and pay down our personal debt loads.

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Wes Moss, CFP, is the chief investment strategist for Capital Investment Advisors and a partner at Wela, both in Atlanta. He hosts “Money Matters,” a live financial advice show on Atlanta’s News 95-5 and AM 750 WSB Radio. In 2015 and 2014 Barron’s Magazine named him as one of America’s top 1,200 Financial Advisors. His newly released book, You Can Retire Sooner Than You Think published by McGraw Hill, is available on Amazon, iTunes and at your local bookstore.

Wes writes weekly about personal finance in the “Bargain Hunter Section” for, the site of The Atlanta Journal-Constitution. Wes is also the editor and writer for’s Personal Finance blog. Connect with Wes on Twitter at @WesMoss365 and on Facebook at Wes Moss Money Matters. You can also visit his website, to learn more about Wes, and take his complimentary Money and Happiness Quiz.

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