Wednesday, December 16, 2015

Christmas Shopping

From a recent post from The Burning Platform, a few numbers about the state of the economy to think about while you finish your Christmas shopping:

Total mortgage debt - $13.6 trillion ($9.9 trillion residential)

Total credit card debt - $924 billion

Total auto loan debt - $1.0 trillion

Total student loan debt - $1.3 trillion

Other consumer debt - $300 billion

  • The amount of credit card debt carried by the average household carrying this type of debt is $15,355.
  • The amount of auto loan debt carried by the average household carrying this type of debt is $26,530.
  • The amount of student loan debt carried by the average household carrying this type of debt is $47,712.
  • The average household is paying more than $6,600 in interest per year, which means that roughly 9% of the average household’s income is being spent on interest alone.
  • Credit card debt — one of the most expensive types of debt — costs consumers an average of $2,630 per year in interest, assuming an average APR of 18%.
  • If you have the average amount of credit card debt ($15,355) and a 15% interest rate and only pay the minimum on that debt each month, it will take you more than 31 years to repay your debt and will cost you more than $18,600 in interest payments alone.
  • The average amount of credit card debt peaked at $16,912 in 2008, fell by 14% to $14,539 by 2012 as Wall Street banks wrote off billions in bad debt, and has since risen by 6% as consumers have been lured back by the Wall Street propaganda machine.
  • Consumers vastly underestimate or under-report how much debt they have. In fact, as of 2013, actual lender-reported credit card debt was 155% greater than borrower-reported balances.

  • The article puts all the numbers into proper perspective but just reading the nembers is pretty scary. In addition, The Wall Street Journal had an op-ed in last Thursday's paper that throws a few more scary numbers out there:
    40% of American households live hand to mouth.  
    Half the households queried  did not believe they could come up with $2,000 within 30 days to cover an unexpected expense. That includes almost a quarter of households making between $100,000 and $150,000. 
    55% of Americans either break even each month or overspend.
    Wooo-doggies! Doesn't anyone live within their means anymore? Throw in the US debt and the numbers just become ridiculous. ($18,783,493,000,000 when I checked) If you click on the link you'll see how fast the debt is accumulating and if the interest rates ever go up, there's no way the government will be able to service all that debt.

    I don't know why I read this kind of stuff. I know it's all going to come crashing down one of these days. It's just a matter of time. And when it does, we're all going to be in big trouble. Just so I don't sound too pessimistic, let me close on a happy note: If you have no debt and you also have ten dollars in your pocket, that gives you a greater net worth than about 25 percent of all Americans.

    Happy shopping!


    Traveling Pirate said...

    Yeah for no debt for me! I don't always think people understand the freedom that comes from having no debt. You can even quit your job and move to Spain if you want!

    Shop Teacher Bob said...

    Being debt free seems to be a foreign concept to most people anymore. I understand the necessity of having debt for housing and reliable transportation but why would anyone willingly become an indentured servant so they can have non-essential things? They all want to have everything and have it right now, or they are willing to get by on what someone else will give them.

    Economic freedom is indeed a beautiful thing. Having the freedom to quit your job is great - even better if you can cap it off with a side jaunt to Italy with former colleagues. I know that's something you'll never regret.