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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.
(Score: 4, Interesting) by AthanasiusKircher on Friday May 19 2017, @02:42AM (2 children)
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)
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
Or "huh, why am I in prison?" (for having similar buying habits as Muhammad).