U.S. household debt tops $14 TRILLION and reaches new record

This thread is about HOUSEHOLD debt.

 

Not possible unless those houses are mortgaged. Rule of thumb in an uncertain market, always pay cash.

 

I'm not the arbiter .. economics are! CLEARLY, if you're rich enough to not need a well paid full time job to repay your student loans, and afford decent housing, and raise a family - then it doesn't matter what you study. Go nuts. Study 17thC French Poetry, or History, or Ethno-musicology. Heck, I would!

In reality, the other 90% of us need to ensure we're able to not only repay that loan quickly, but also support ourselves in a climate of very expensive housing etc. That means we absolutely cannot afford to risk borrowing money on courses that have no job certainty at the end of them, or which pay badly. Doing so would be a very reckless gamble.

 

Exactly.

 

Yes, of course. All courses which lead directly to secure full time work in high demand and growing fields, should be govt funded.

Best way to achieve that without adding further burden to the taxpayer, is to increase fees for non-vocational courses - ie, Arts/Humanities. The rich/wreckless 'hobbyists' can fund the working and middle class kids who need to learn a trade to survive our changing economy.

 

Crank...whichever way you want to spin it, whoever has the most debt, students, nurses, Mumd and Dads...whatever, this Thread highlights the real issue in the USA. It is reflected nationally, only much worse there. 'You' are living on borrowed money and one day, that is gonna bite 'your' arse. And Donald boasts about how fantastic things are there. Sure.........great stuff, but all on the credit cards.

One poster here said he had three credit cards. That in itself tells the tale.

I have...not one credit card. I have a debit card. When I use it, I am spending MY money, not borrowed money.

I don't want you to answer this, but the rhetorical question would be.....are you operating on borrowed money to support your life style?

 

http://www.politicalforum.com/index...rve-report-says.568023/page-3#post-1071430579

Nobody seems to wonder why I have links to 2005, and very rarely do they respond, see above link. Simple fact is that the FED in essence, around the time of Obama's "credit crunch," testified before Congress, televised on C-Span, that banks rely upon irresponsible debt to subsidize small business loans.

Fair Debt Collection Practices Act
https://www.ftc.gov/enforcement/rul...dings/fair-debt-collection-practices-act-text

“The term ‘consumer’ means any natural person obligated or allegedly obligated to pay any debt.”
“(d) ‘Consumer’ defined
For the purpose of this section, the term ‘consumer’ includes the consumer's spouse, parent (if the consumer is a minor), guardian, executor, or administrator.”

So when the 2004 hurricanes hit and I kept getting calls that hung up, and many refused to talk to me, I found out that I was only a consumer for purposes of debt collection, I later found out the EX had two Capital One Cards, two Discover Cards, and two Chase cards; didn't mention all the other cards, nice long list, equaling the total equity in the house. Google "Big Love Nicki Grant crushing credit card debt."

As a former slave I demand immediate and full reparations from DEMOCRATS, such as U.S. Reps. Carolyn Maloney, D-NY, and Louise Slaughter, D-NY, see link at top.

 

A lot of people don't realize that if you pay off your credit cards each month, you don't accumulate ANY debt. I knew a guy who mortgaged a house and paid for the down payment using a Mastercard.

On the flip side of staggering credit card debt is the amount of new millionaires.

"The 7% rise in millionaire households in 2018 is the strongest rate of growth in that market since the financial downturn 10 years ago," says David M. Thompson, managing director at Phoenix Marketing International, which tracks the affluent market. "The growth in capital markets in 2018 clearly lifted many more households into the millionaire ranks."

Total households in the U.S. with at least $1 million in investable assets have increased by 534,000 in the past 12 months, Thompson notes. In the past decade since the financial crisis, the number of millionaire households has grown by more than 2 million.

As a result, 6.21%, or 7,698,765 U.S. households out of 123,942,960 total households, can now claim millionaire status. That's up from only 5.8% a year ago. To reach that lofty level, you must have investable assets of $1 million or more, excluding the value of real estate, employer-sponsored retirement plans and business partnerships.

https://www.kiplinger.com/slideshow...-america-2019-all-50-states-ranked/index.html

 

I didn't do any math...everything in italics were quotes from legitimate sources.

People or kids who borrow money without knowing how they can pay it back are being reckless, and if they get into trouble, they only have themselves to blame.

Forever kids have been achieving college educations so they are obviously attainable to anyone who puts forth the effort. Depending on individual circumstances, each kid will have a different path. Sure some kids are born with a silver spoon but so what...good for them. Meanwhile in reality-world, all kids who strongly desire further education can achieve it...

 

The level of household debt service as a percentage of disposable personal income is at all-time lows going back to 1980.​

https://www.cnbc.com/2020/02/11/hou...-in-12-years-federal-reserve-report-says.html

 

No teenager taking out a loan for college knows how they can pay it back - unless their parents will do that for them. Taking out a college loan is no indication that they will even graduate. They could be one of the relatively high percent who don't even complete their first year - for any one of many reasons.

I've never complained about those with silver spoons. Not once.

What I do note is that higher education is rapidly becoming more important.

And, tuition is one of the gates that makes it hard for those without significant parental financial support.

From a national perspective, that's bad news for all of us.

 

Yet I will answer it - we have zero debt. Haven't had any since last mortgage was paid off - many years ago. We've never taken a personal loan, car finance, or dipped into home equity. We use debit cards.

 

1) Yes, they do know how they'll pay it back - if they're studying a trade in a high demand field. Nursing, teaching, medicine, engineering, etc. Any kid who isn't pretty darned certain that their course will enable them to repay the costs associated, has made a huge mistake. As for those hopeless kids who don't graduate, why would you even factor them in? That's like including crazy people, or heroin addicts.

2) Not necessarily. Skilled trades which require a license are becoming more important. That includes the traditional trades like electrician, plumber, carpenter, machinist, dental technician, etc etc.

3) Not at all. Any kid, from any family - even the poorest - can safely take out all the student loans they need as long as they choose a course which guarantees them a well paid full time job in a high demand field.

4) Not really. As long as our own kids have a solid work ethic, aren't taking student loans for non-vocational courses, they'll be just fine. Not sure why random Sociology grads with $100k debt and a part-time minimum wage job should be of concern to us. Let their own families worry about them.

 

Household debt increased by $601 Billion during 2019 the majority of it was in mortgages due to refinancing to the tune of $433 BILLION which are both record highs since 2007.Not exactly the kind of totals we should see climbing at a time when our tearless leader says we have record prosperity???Obviously the wealth IS NOT BEING SPREAD.

 

Good points.

The thing we need to consider here is whether or not that $14 trillion in debt is manageable.

To use myself as an ordinary example, looking at the graph in #23 we see debt dipped in 2013 and then started to rise after that point. Coincidentally enough, 2013 happens to be when I started carrying more debt. We bought a home that year and a couple years after that we bought a car and two years ago I bought a truck. The first car is already paid off, and the payments on our house and my truck aren't a problem. We're actually thinking of buying another car this year and we can afford it.

I'm also like you in how I use my credit cards. I really don't need them but using them enables me to keep my credit rating high (mine is well over 800) and of course they're good for making online purchases.

$14 trillion looks like a scary number but I need a lot more information before I get concerned about it.

 

And THERE'S your problem (my bold).

Nothing whatsoever to do with leaders, or the economy, or the 'spread of wealth'. Just plain old bad choices - made by people with no concern for their future, or regard for changing economic climates, or the ability to delay gratification.

 

That would scare the living daylights out of me

 

Live and learn, brother.

My wife and I were just the opposite. We waited out the housing bubble and bought after the Crash. We wound up getting a nice little house on a lot of land for dirt cheap. Mortgage rates were right near rock bottom and we locked in a fixed rate.

I'm curious what makes you think real estate is going to drop like you think it will in a couple years. The market in our area is not over-heating or over-valued and I don't see another crash coming in a couple years. Of course, the market in your area could be completely different.

 

It's all good. I've got the money to pay off the truck right now and we'll be paying off our mortgage years ahead of schedule. I also keep a sizable disaster fund in the bank in case anything unforeseen happens because something unforeseen always happens.

I've always been responsible with money. I put myself through college - went to school during the day, worked at night and then went home and burnt the midnight oil to get my homework done. I even spent a summer in Nushegak, Alaska working at a fishery to pay for my senior year's tuition. Sometimes I look back and wonder how the hell I did it, but youthful stamina, personal responsibility and sheer determination is how I did it.

Paying off the house and the cars and the bills is a cake walk compared to that...

 

1. They don't know if they will graduate. Plus, the promises of jobs after graduation sound like fake news to someone who has no relatives who have found success in that direction. A kid told my daughter that there was NO way he was going to borrow that kind of money - because, he knows people who did, and they are dead because of it.

2. Agreed. We need better development of trade schools - not only for those coming out of high school, but also for people looking to switch professions - such as for those being displaced by automation or outsourcing to other countries.

3. Unfortunately, this one is just not true. Getting an engineering degree (for example) is far from easy. More than half wash out before they achieve that degree they wanted.

In act, 41% of those who start out in math, science, technology, engineering programs at 4 year schools do not graduate even after 6 years.

4. The only part of this I would object to is that the parents of the kids I'm talking about do not have the ability to cover school debt incurred by their kids. So, suggesting they will be OK is just plain false. They can end up with no degree and strapped to large debt.

 

We were 15 years in to a 30 year mortgage and the wife was seeing all these people buying these expensive homes because everything was just going to keep going up and even taking second mortgages on their primary residents to buy homes and flip them. We looked and I told this was a bubble and if we did take our equity and buy something at these prices we would suffer when it popped. We didn't just rode right through it with no effect and was glad when property vales fell back down to reasonable levels and my taxes and insurance went down with it. Refinanced when the rates dropped and mortgage free now.

 

And if we are seeing more millionaires then that means we are seeing more people moving up at all income levels. And yes it's a shame a good portion of the population is not budgetary and economically savvy. And it doesn't take a lot.

 

1) Of course they know. What sort of lunatic signs up for that debt and then doesn't take it seriously? Those are the sort who will **** up everything in life, and so are not relevant to a discussion of the economics for the majority (who aren't lunatics).

2) On the contrary, we need more parents taking their kids' future seriously by considering all options very carefully.

3) Who in heck said any of it was 'easy'? And why would you expect it to be? Survival is hard, always.

4) The parents don't NEED to cover the debt, when their kids take sensible courses in high demand fields. That's the point. The poorest family in America can do it. And why would they end up with no degree unless they were completely irresponsible about it - and why would a family that poor ever be irresponsible about it? They can't AFFORD that kind of irresponsibility.

 

Well, this flies in the face of the reality I've been describing.

Graduation is nowhere NEAR guaranteed. Stats make that crystal clear. The idea that those who don't graduate are limited to those who don't apply themselves is just plain false. The degrees you mention are difficult And, students from low income families face various issues with fewer options.

"Considering all options carefully" is a great idea. But, the point is the options are not great. Plus, those parents who have low income, working multiple jobs, etc., are often far from having any real idea concerning what these options might be. And, "considering options" does NOT mean there are effective options.

These problems absolutely DO reduce the number of qualified high school students who decide to take on the required debt. Suggesting debt the size of a house isn't an impediment to those with no family financial support is ridiculous.

 

1) And yet is exactly that, reality. The reality is that if your family is poor, you have no business taking student loans out on courses which will not equip you to repay them. A child can understand that simple math.

2) Failure to graduate is like choosing a non-paying course. Clearly, if your family is poor you have no business dropping out. A child can understand that simple math. And yes, STEM courses are 'hard' .. who said escaping poverty would be easy? You either want it, or you don't. People who don't want it, show their lack of interest by doing things like choosing non-paying courses and/or dropping out. Which makes those choices none of our business. As for poor kids facing various issues .. none prevent them achieving a medical or engineering degree except lazy, selfish parents. And if their parents are so lazy and selfish that they create impediments to their child's educational goals, they (the parents) have chosen poverty for their child's future. Again, none of our business.

3) There are a world of options, actually - with more coming all the time due to changes in technology and growing populations. And sorry, but parents with low incomes and multiple jobs are often EXACTLY the parents whose kids are now doing so well in America. I'm talking about Third World migrants. Parents who spend years carefully considering all the options, and carefully planning the best pathway through education to secure financial security for their children.

4) Good. There SHOULD be less kids going to college. Unless you're parents are very very wealthy, or you're prepared to work hard for a STEM degree because you're parents are not rich - you have no business in tertiary institutions. Become a plumber. You'll be considerably richer than any Arts grad, and have no debt.