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posted by martyb on Thursday May 18 2017, @09:28PM   Printer-friendly
from the I-owe,-I-owe,-it's-off-to-work-I-go dept.

Another day, another record broken.

The debt held by US households has surpassed its pre-2008 record, several financial outlets note. A peculiar spotlight in the associated numbers falls on student loans, where delinquencies are multiple times higher than for other debt types: 10 percent is the norm.

That's some pretty troubling news for the economy [and wider society], notes Rana Foroohar at sister outlet the Financial Times. First off, there's the association between the rise in student debt, and a decrease in home ownership for young people. This connection is exacerbated by them millennials increasingly turning towards income-based repayment programmes, which spread out the debt over more years.

Secondly, the level of student debt delinquencies ain't changing: the 10 percent figure is a near-constant over the past 4-5 years. People who've ever had a delinquency -- even if they recover -- have a much lower rate of home ownership at age 30 as compared to their non-defaulted compatriots. Not having a home means not filling it with stuff, and filling with stuff is kinda what the economy is based on.

Then, thirdly, it's not only students that are hit by student debt: increasingly, their parents are taking on debt too, to help out. Fuel for that debt sandwich is something peculiar: the rate of inflation in college admission costs is three times higher than the consumer price index. Must be that college professors wages have increased a lot, then.

Given that boomers and their millennial offspring are the two largest voting blocks in the US, a snappy future president-elect might consider raising the issue a bit.


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  • (Score: 4, Insightful) by Lagg on Thursday May 18 2017, @10:34PM (5 children)

    by Lagg (105) on Thursday May 18 2017, @10:34PM (#511868) Homepage Journal

    Debt terrifies me, and people who don't take it seriously frustrate me. So it confuses me greatly that people treat credit cards as a separate account rather than (forgive my terms) a delayed debit to your real account in the first place.

    Also my eyes roll back into my head when I read people trying to explain how to do coupon savings and take advantage of gift card incentive and all that shit, because I never need to prepare a budget that they would assist with in the first place. I just don't do the things you're talking about.

    I'm not judging you negatively of course, this is purely because I'm a lifeless loser. But saying it like you did is pretty much a solid example of why people just prefer to pretend their debt doesn't exist. When people who are familiar explain the concepts, they include a lot of assumed knowledge and usecases. Because your usecase is one that has been optimized by needing to do trip budgets. It's going to make people go "fuck it this is too complicated". I think that's also one component of the overall issue with the economy. Banks and credit sellers outright lie and mislead people into thinking they're getting benefits they're not. Purely because of ignorance brought on by unfamiliarity.

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  • (Score: 4, Interesting) by AthanasiusKircher on Friday May 19 2017, @02:42AM (2 children)

    by AthanasiusKircher (5291) on Friday May 19 2017, @02:42AM (#511960) Journal

    There's no reason to make credit cards sound as difficult as the parent does here. Yes, those who have specialized needs or who are willing to "play the games" with credit cards can maximize savings for themselves -- more power to them. But you're right that a lot of people who likely try to do that also end up messing up at some point -- and that can negate a lot of the benefits if they suddenly end up paying interest where they weren't expecting.

    Anyhow, it's also possible to be a lot simpler with credit cards. Rather than something complex with ever-shifting terms, find one that gives the rewards you want consistently and just use it almost exclusively. For maximum flexibility, just get a cash-back card. It's easy to find cards now (if you have good credit) that will give at least 1.5% back on ALL purchases, no limit, no annual fee. Done. No worrying about changing terms or complicated schemes to redeem "points."

    Most credit cards also offer an option for automatic payment of all balance due each month, so you never carry a balance. I check my statement each month, but I also receive an email warning when my payment is coming due, as well as a confirmation message that my payment has automatically been made for the entire balance. It takes no thought -- and I earn 1.5% "interest" just for allowing a credit card company to carry my "debt" on their books for a few weeks each month. That's better interest than most bank accounts have been offering for years.

    You may be horrified by such a perspective, but if I don't participate, I lose out on the discount. If there's a large purchase where I might actually be able to "wheel-and-deal" to get a cash discount, I'll pay cash. If it's a small business that prefers cash, I'll pay cash. Otherwise, I'll take the 1.5% discount. Heck, go beyond groceries and gas and utilities -- some insurance companies will accept credit cards for your premiums. Some apartment complexes will accept credit cards for your rent. If they'll offer it without a fee, I'll take the discount.

    The only main concern is privacy, and I get that concern. But to me, it's worth it even just to have a simple easy record of my financial transactions that I can view, download, autosort into categories, etc.

    • (Score: 0) by Anonymous Coward on Friday May 19 2017, @01:02PM (1 child)

      by Anonymous Coward on Friday May 19 2017, @01:02PM (#512145)

      The only main concern is privacy, and I get that concern. But to me, it's worth it even just to have a simple easy record of my financial transactions that I can view, download, autosort into categories, etc.

      The convenience far outweighs those concerns for me as it's not like someone really can use my credit card statement to shame me for some embarrassing purchase (without the receipts it'd be hard to tell what I bought most of the time anyway) but the automatic tracking in my budget software means that by now if I pay cash there is a good chance that I'll forget about that transaction as it needs to be entered in manually so at the end of the month I'm wondering "huh, why am I $18.79 short?"

      • (Score: 2) by kaszz on Friday May 19 2017, @02:28PM

        by kaszz (4211) on Friday May 19 2017, @02:28PM (#512188) Journal

        Or "huh, why am I in prison?" (for having similar buying habits as Muhammad).

  • (Score: 2) by DannyB on Friday May 19 2017, @01:31PM

    by DannyB (5839) Subscriber Badge on Friday May 19 2017, @01:31PM (#512155) Journal

    There's really nothing complicated about it.

    I have two cards. Whenever I (we actually) get fuel or groceries, we grab a certain card to pay it. Utilities (mobile phone, electricity, gas, water, etc) are on auto-pay on the other card.

    People spend enormous amounts of time "couponing". We don't. We consider our time more valuable than that. It's a simple reflex to use a certain card for fuel or any store that happens to sell food items that would qualify as grocery.

    Then there is the minor hoops to jump through to claim your rewards. On one card its easy to use airline points when you book tickets. On the other one, you have to visit a kiosk at Disney World to get your Disney dollars. For us this usually works out to somewhere between about $250 - $350 depending on what we spent that year on the cars, and whether it was the "short" gap between vacations or the "long" gap.

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    People today are educated enough to repeat what they are taught but not to question what they are taught.
  • (Score: 0) by Anonymous Coward on Friday May 19 2017, @06:46PM

    by Anonymous Coward on Friday May 19 2017, @06:46PM (#512298)

    Debt terrifies me, and people who don't take it seriously frustrate me. So it confuses me greatly that people treat credit cards as a separate account rather than (forgive my terms) a delayed debit to your real account in the first place.

    I used to think like this, and to a large extent I still do. However, I think that is to my, and your, detriment.

    The way to think about it is that debt is a vehicle to transfer money from your future self to your past self. For example, would you rather have $100 when you are 20 years old (in college with effectively no income), or would you rather have $200 when you are 50 years old (and earning an income of $100k a year)?

    Like any other money transfer, this can be a good idea or this can be a bad idea: Giving somebody $200k to get a house is probably a good idea, whereas giving somebody $200k because they claim to be a Nigerian Prince is probably a bad idea. Borrowing $500 to buy a nice suit for your first job interview is probably a good idea, whereas borrowing $500 to buy that "plane ticket to Florida for Spring Break because, like, EVERYBODY is going to be there" is probably a bad idea.

    Debt itself isn't bad: it's a powerful tool, and it's really easy to shoot yourself in the foot, but so is root access on your computer.