Sunday, December 26, 2021

American Households $15 Trillion In Debt

Americans are beginning 2022 with $15 Trillion in debt.  That sound a little scary; but about $10 trillion of this debt is in low interest rate mortgages, which this blogger sees as good debt.  No one who can qualify for a mortgage should be paying rent unless they are living in an area for a short amount of time and will be moving within a few years.  Renting from somebody else makes the landlord rich, which is great for landlords; but not so good for most Americans.   It is better to own a home and build up equity in that home so that by the time retirement comes, people have options to downsize and or move to a lower cost of living area.  For most people, it may make sense to pay off a home before retirement; but that depends on lots of considerations. 

However, not all of this debt is good debt.  About $1.7 Trillion is student loans.  Many are already in default related to these loans.  What is worse, there are many people who took out student loans and never did graduate from a college or university.  So, they have this debt with no college degree to show for it.  And, there are others who got worthless degrees that do not result in high paying jobs.  So they have this debt without the ability to pay it off.  Of course, the most radical Socialist Fascists (AKA Democrats) are pushing feckless Joe Biden to cancel these loans and to end the debt.   Not sure Biden has the authority to wipe out $1.7 Trillion in student loan debt.  Doing so would be incredibly unfair to those that paid off their student debt and or parents who sacrificed to send their kids to college so they would have no debt.  And, most important is that the radical Socialist Fascists want the 60% of Americans that have no college degrees to pay for the 40% of Americans that have college degrees presumably that should allow them to earn more money than many without degrees.  This is really unfair. 

The rest of this $15 Trillion in personal debt is either car loans, or worst of all high interest credit card debt.   People charging a Starbucks coffee on a credit card need to cut up their cards.  Credit cards should only be used for emergency expenses like medical care; not daily living expenses if they cannot be paid off monthly.  High interest rate credit cards are a debt trap that should be avoided at all cost.  Forget about buying the $500 Nike Tennis shoes or the $1,000 I-Phones on credit.  Cut up the cards and pay off this credit card debt to end the interest rate misery.  

So there is good debt and very bad debt.  People who have discipline can manage debt.  For others, debt can turn into a nightmare.  It is like being addicted to drugs.  Many die from being addicted to drugs.  Credit can be just as bad.  

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