Why do Americans continue to dig themselves into a hole?Back in the day, people set money aside for personal purchases and saved for surprise expenses. Today, the average American household carries $8,565 in credit card debt, a 15% increase from the year 2000.
In total Americans have $2.56 trillion in consumer debt, up 22% since the year 2000 according to the Federal Reserve Board. For some reason, debt is increasing as most American's incomes are not. We have grown into a consuming society that believes it is OK to be in debt, in order to have that new phone, new outfit, or new car.
Disposable income that must be used for debt (credit card payments, car loans, mortgage interest, principle) is up to 14.5% from 11% just 15 years ago.
The New York Times tells the story of Diane McLeod and her debt hole.
McLeod began debt free, but a divorce caused her to spend and rack up $25,000 in credit card debt. She bought a home soon after with a $135,000 mortgage. Five years later illness and irresponsibility caused McLeod to owe $237,000 on her mortgage.
Now in foreclosure, it is hard for her to see light at the end of the tunnel.
No comments:
Post a Comment