The Price Of Debt
How much do most Americans owe?
The average American today has about thirteen credit cards and about $9,800 in outstanding balances. That is up dramatically over the last ten years or so and it's because credit has been so widely available. Our credit card companies are giving offers in the mail all the time; a lot of people take them up on it. Now the interest rates are very high on that credit card debt but just the availability of it is very tempting for a lot of people to get into debt that way. As far as the totals, there is currently about nine trillion dollars in mortgage debt outstanding, about two and a half to three trillion dollars in non-mortgage debt, that would credit cards, which is about nine hundred million, car loans, student loans, medical debt, all kinds of other debts combined are about two and a half to three trillion dollars. So consumers have a total of well over ten trillion dollars in debt in this country and it's hurting an awful lot of people's ability to keep up.
Will I always have debt?
Many American will always have debt. You're probably going to have a mortgage for many years. If you're paid off by retirement, which would be great. Many, many Americans have credit card debt. Student loans now can last 30 years or so. Car loans can last beyond when the car is still around. A lot of people still paying on car loans but they don't even have the car anymore because the car died and the loans did not die. So, Americans do have an awful lot of debt and for most people in America, they are not debt free. The ones that are in a much stronger position to kind of withstand the buffeting of the economy. If you have a lot of debt, at particularly high interest rates, like credit cards, it makes you very vulnerable to have this huge burden hang over you and strain your lifestyle.
Is is possible to live debt-free in the US these days?
It is possible to live debt-free in the United States these days but it is not easy. People are constantly trying to offer you credit cards, and home equity loans, and mortgages, and student loans, and all kinds of different loans. So, there is a kind of a borrowing culture out there that makes it very easy for people to get in over their heads. Particularly younger people who may not have that much income and they want everything now, usually go into debt to buy these things. It is important to have at least some credit cards. Some people say to me, "Well, I just want to work on cash only. I want to have zero credit cards." Well, it is kind of difficult to check-in to a hotel room with only cash. Or, even going on a flight--if they think you're going to go one way with cash, they're going to be very suspicious about you. You do need some credit cards for things like that but most people have way too many. The average American has about thirteen credit cards and $9,800 in outstanding balances. So, that's too much credit but you can't go in the other direction and have no credit either.
