Consumer Debt Issues.

Discussion in 'Politics, Religion, Social Issues' started by Taft, Jan 6, 2004.

  1. Taft macrumors 65816

    Taft

    Joined:
    Jan 31, 2002
    Location:
    Chicago
    #1
    Read the article that got me thinking about this: http://www.chicagotribune.com/busin...ica,1,4614373.story?coll=chi-homepagenews-utl

    Consumer debt has more than doubled in the last ten years. Thats a pretty impressive figure. But what does it mean? What effects (if any) do you think this could have on our economy and the welfare of the middle class?

    It will likely affect buying power. If consumers are maxing out their credit, or are unable to pay bills, their ability to buy new products comes into jeapordy. This could effect the economy, which might hurt consumers even further.

    The article also alludes to the dangers of bankruptcy. How many people out there are in debt so badly that they would be out on the streets if they were layed off? In a depression type scenario, where there are massive amounts of layoffs, what would the landscape of our country look like? The 1930s?

    Finally, how can the situation be improved? A mortgage on a home is one thing, but the average American household carries more than 8,000 dollars in credit card debt. This type of debt can be very dangerous and damaging to a household. Can Americans be educating in wise speding habits and living within their means?

    I think this is a very serious issue as it affects so many households in this country. Anybody have any war stories? Or how about potential solutions to the problem?

    Taft
     
  2. Desertrat macrumors newbie

    Joined:
    Jul 4, 2003
    Location:
    Terlingua, Texas
    #2
    How many households? 90 to 100 million? At $8,000 per each? And then there's mortgage debt, with a record number of folks 30 days or more behind...And gummint debt plus unfunded liabilities in retirement obligations.

    Gold and silver aren't up in value; only as measured in dollars: The dollar is down--and falling.

    Oil jumped to over $33/bbl, natural gas to $6.83. Gasoline is going up, once again. I'd not be surprised at further increases in the price of oil, given the increasing demand by China.

    The only thing an individual can do, assuming you're starting right now, is to get as much out of debt as possible. If you can take a profit on any stocks, get out of mainstream stuff and into commodities (and futures, if you're savvy), certain currencies, and gold stocks. Certain mutual funds which invest in Asia are good bets. The Contrarians, for the relative short term of a year or two, seem to me to have the correct view...

    If you have talents and abilities that allow it, I'd even go so far as to suggest selling your house (if you can make a nice profit) and moving to a lower-cost part of the country. (Having had four different careers and in different cities, change has never bothered me...)

    Short run, I'm a pessimist about the economy...And I ain't so sure about that it's gonna be all that short.

    'Rat
     
  3. mactastic macrumors 68040

    mactastic

    Joined:
    Apr 24, 2003
    Location:
    Colly-fornia
    #3
    No way, housing has been paying at about 20% annually around here for some time now!
     
  4. yamabushi macrumors 65816

    yamabushi

    Joined:
    Oct 6, 2003
    #4
    Too little personal debt can also be damaging to an economy. This can result in lower consumer spending and large savings and investment but poor returns due to slow growth. This has been an ongoing problem in Japan.
     
  5. Desertrat macrumors newbie

    Joined:
    Jul 4, 2003
    Location:
    Terlingua, Texas
    #5
    I don't have a clue as to what "too little" debt is. However, IMO, debt is a tool which can be used either wisely or foolishly. Used wisely, it can help to create future wealth. Used foolishly--as seems so common, today--it's "ruinacious". Debt can be a powerful tool in times of inflation, since the debt payments are made with ever-cheaper dollars.

    It is commonly stated in the media that a large percentage of U.S. households live from paycheck to paycheck, and a large part of those paychecks are encumbered by debt.

    I sometimes feel fortunate that I grew up prior to the age of TV advertising; that has kept me from "being all eatup by the I-wants". I worked pretty hard to teach my kid to avoid the concept of instant gratification, and he seems to be doing pretty well. Too many of my friends, however, have kept themselves poor from the concept of "When you die, whoever has the most toys, wins." Hey, when you die, you're dead.

    'Rat
     
  6. Taft thread starter macrumors 65816

    Taft

    Joined:
    Jan 31, 2002
    Location:
    Chicago
    #6
    I think that hits the nail on the head. America has let themselves be brainwashed by companies who tell them they must have the latest and greatest toy/fashion/kitchen appliance. Keeping up with the Jones' (aka. buying to feel good) has become a national passtime.

    And believe me when I say that I'm not exempt from that mentality. While I don't have debt problems, I have succumbed to the lure of a new and unneccessary product all too often.

    The instant gratification issue is also very important. I think a lot of consumers don't stop to think why they want a particular product. Is it going to make their life easier? Is it going to make them happier? Do they need it? Why do they want it? Unless you reflect on those types of questions, it is impossible to see that we really don't need a lot of the crap we buy and a lot of our purchases don't make our lives any better in the long run.

    Taft
     
  7. zimv20 macrumors 601

    zimv20

    Joined:
    Jul 18, 2002
    Location:
    toronto
    #7
    yes, *very* well put.

    imo, the dangers you point out are at the *very base* of what's wrong w/ the US. we've got a culture of wanting the wrong things and expecting to have them, and fulfilling that greed comes at the expense of working for what's right for society.

    (a leap, but it makes sense in my own head)
     
  8. Desertrat macrumors newbie

    Joined:
    Jul 4, 2003
    Location:
    Terlingua, Texas
    #8
    Well, so far as "we've got a culture of wanting the wrong things and expecting to have them, and fulfilling that greed comes at the expense of working for what's right for society.":

    I dunno that it's so much the wrong things as it is unnecessary things in order to put on a front or keep up with the Joneses. SUVs are a case in point, as are the too-many city folks who buy a full-size pickemup. Nothing wrong with SUVs or PUs per se, when the use fulfills a real need. And, to me, a 3-2-2 house for one-couple occupancy is at least the beginning of overkill.

    I've never given a hoot about deliberately working for what's right for "society", but I'd like to believe I've given more benefit than cost. My employment in government, I think, was beneficial in ensuring the quality of construction projects, and the planning efforts in which I was involved at the very least provided new information. In my private sector activities, I know my last twenty years have been beneficial to my community.

    Regardless, you can't spend your way into prosperity...

    :), 'Rat
     

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