Unfortunately, not surprisingly, household debt increased slightly to $ 5,581. However, this figure is deceptive because only 38.1% of households have such debt at all. So those who are owed are $ 16,048 debtors, and the interest they pay is typically between 15% and 20%. (The median annual income of households is $ 53,719, before tax.)
Adjusted for inflation
The country is expected to reach its peak in credit card debt in 2007 by the end of 2019. Those born between 1946 and 1985 have an average debt of $ 6,889, those born before 1946 have $ 3,780, those born between 1985 and 1995 have $ 3,542, and younger (that is, mostly students) debt $ 1,682. What is interesting (sad) is that those over seventy and students are already heavily in debt.
On a regional scale, the range ranges from $ 4,410 in Iowa to $ 7,752 in Alaska. Credit card debt is also typically higher in regions with higher unemployment.
If families were to spend 15% of their income on credit card repayments, they could pay off their debt in 15 months on average. However, let’s not forget that only 38% of people have debt, so the average is again fraudulent. It would take almost two and a half times for those who owe it.
Debt indebtedness is also a huge problem in the United States
Especially the so-called X (next) generation, born between 1965 and 1980. It is mainly those who have faced in the nineties that the real value of their income has been steadily declining while their cost of living has risen sharply.
They got the password: if you don’t have the money, solve it with credit. There is no need to be scared of the challenges, to get enough credit for it. Whether it is buying a home, education, buying a car, or even everyday shopping. Credit seemed to circumvent the decline in living standards due to falling real wages. (Unfortunately, this has not happened since.)
The concept of financial awareness has changed
No longer did savings come to the fore as the pledge of the future, it meant financial responsibility if someone could earn more than their monthly expenses. He was already a financially responsible man by the new worldview.
This attitude has resulted in unprecedented indebtedness and, while in 1970, 51% of the then-single-income household income went to fixed expenses, today it is 82%. This means that four-fifths of the monthly (weekly) income is already spent, including on loan repayments. Thus, people had no room for change.
People have also become vulnerable in the labor market, employers know exactly that it is unnecessary to raise wages, and workers cannot afford the luxury of not finding work for just a month, but looking for work. This is also one of the reasons that real wages have fallen for twenty years, and only in the last two or three years has the purchasing power of the US average salary started to rise again.
Young people who are heavily indebted to student loans (or even credit card debt) are also forced to go to work immediately, regardless of their available income.
Low interest rates on debt have further worsened the indebtedness of the population
who have not realized that the inflation rate is low, so they cannot enjoy what has helped debtors for decades: the real value of debt has declined year by year, . They only see that interest is currently being paid less, so they are borrowing more.
The problem is getting more serious. There are those who would already prevent people from over-indebtedness in the state, for example, to maximize the amount of student loans that can be taken by one person, or to punish banks by giving more loans to people who are over-indebted. Of course, this is easier to solve on paper than it is in reality, and it would be very difficult for those concerned to explain that they would not allow themselves to continue to be indebted.