Great post from Christian Weller on Credit Slips:
The argument that all forms of household debt, including credit cards, were caused by irresponsible borrowers has never jibed with the data. For instance, data from the Federal Reserve’s Survey of Consumer Finances show that families became less accepting of debt for conspicuous consumption over time. Also, irresponsibility cannot explain why the growth rate in debt abruptly changed after 2001. Interest rates after all fell much more slowly in the 2000s than in the 1990s. And finally, people would have to plaster the walls of their homes with plasma screen TVs, have a different iPod for every day of the year, and rent out storage units for all of their new designer wardrobes to explain the enormous additional debt that families have taken on.
When we first told my mother about our debt, she said “We’ve been wondering this whole time where all of your money was going.” It wasn’t going for big ticket items, that’s for sure. Our biggest ticket item was a bed ($1,600, which we paid 50% cash for) and the rest of items were school expenses, living expenses and car repairs. Our clothes, electronics, cars and lifestyle don’t add up the debt that we have. Now that we have it all in Microsoft Money, we see that our rent/utilities is the same as the amount we are paying toward commercial debt reduction (around $1,700).
What do you think about the post (click through above to read the whole thing)?