[TiredX2]

MSN today had an article about the average debt, by state in the US.

http://moneycentral.msn.com/content/...ng/P120358.asp

You can check your state here:
http://moneycentral.msn.com/content/...asp?special=IA

What I don't understand is why our *independent* media encourages behavior that is, in reality, NOT good for the consumer but good for the creditor.

Quote:

Don't be too quick to condemn the heavily indebted, however. Carrying around a hefty debt load does not necessarily equate to a bad credit score. Haggag notes that consumers who have higher-than-average debt also have better-than-average credit scores. These consumers often have more access to credit, increasing their opportunities to incur more debt. For example, Experian found that consumers in Massachusetts have the fourth-highest overall average debt load at $14,601, but they also have the fifth-highest average credit score at 702, just a few points behind top-ranking South Dakota. "Just because someone has a large amount of debt doesn't mean they will have a low credit score," she says. "Managing debt is crucial to earning and maintaining a good credit score."

But is it a good financial decision to be paying through the nose to inch up your credit score? And, I would need to see some stats that it actually *helps* your credit score to pay off over time than all at once. I certainly don't see it on *my* credit score.

Why is consumerism/debt continuing to be pushed as the all-American religion and why do people actually *believe* it?

 

[TiredX2]

Additionally---- Can no one do a simple statistical analysis at this point?

Why, oh why, on a story of average debt would you not compare it to average income/average net worth?!?!?!

 

[Jumblepuff]

Gathering my thoughts on this, I would also like to see average debt in regards to average income, but here goes...

First, it seems like it would make sense that creditors would give a higher credit score to and continue to extend credit to people from whom they are making the most money. Those who have large balances, but are able to make their minumum monthly payments on time. It irks me that they continue to extend credit to people who are already in over their heads. For heaven's sake I have a credit card that has a balance of a few hundred dollars on it at any given time and they just keep upping the limit. It is now at about half of what I make in a year. I would be paying that off for years and years...which is exactly what they want.

Also since public assistance in this country is basically non-existant, I think a lot of people end up having to use a credit card or loan just to pay the bills. Especially if one has no health insurance and goddess forbid needs basic medical care. Either you pay up front or you go without...whip out the Visa so you're kids can get a cavity filled. Tied into this is also the stigma of collecting public assistance even if you qualify...better to be 'doing for yourself' by borrowing money from some far away credit company, even if it means drowning in debt. You are a lot less likely to get a hassle for using a credit card at the grocery store than a food stamp card.

So basically the credit industry is an evil empire that feeds on the capitalist notion that if you are worthy you will make due even if it means you continue to dig your self deeper and deeper into debt.

 

[TiredX2]

Quote:

Originally Posted by Jumblepuff First, it seems like it would make sense that creditors would give a higher credit score to and continue to extend credit to people from whom they are making the most money.

But see, I don't think this is true. DP & I have NEVER had a car loan, paid our student loans off before they accrued any interest, are convenience credit card users and considering our ages, our credit scores *literally* cannot be higher. So much modern advice centers around using revolving (heavy interest) credit as a way to increase/improve your score but ignores the FREE way---

Quote:

Tied into this is also the stigma of collecting public assistance even if you qualify...better to be 'doing for yourself' by borrowing money from some far away credit company, even if it means drowning in debt. You are a lot less likely to get a hassle for using a credit card at the grocery store than a food stamp card. So basically the credit industry is an evil empire that feeds on the capitalist notion that if you are worthy you will make due even if it means you continue to dig your self deeper and deeper into debt.

Oh, I understand why the credit card companies push their "product." Even many stores at this point make more from interest on their loans than they make from the actual product (GM & Sears are two prominent examples--- I'm sure about Sears, I *think* I saw that about GM the other day). But, why do financial advisors even support this? They have convinced soooo many people that it is actually a good move (just like so many people think the mortgage interest deduction is *great* NO MATTER WHAT) when there are other options.

 

[captain optimism]

But do you know why people in Massachusetts carry so much debt? I saw that figure in your quote and I immediately thought "Well of course we have a lot of debt, our housing costs are way higher than what anyone can afford." So we have a lot of people who make a decent living and are employed and stuff like that, who carry debt that's crazy. I'm not sure if mortgages are included in those figures, but even if they aren't, it's housing costs that are driving debt on other items.

 

[TiredX2]

Quote:

Originally Posted by captain optimism But do you know why people in Massachusetts carry so much debt? I saw that figure in your quote and I immediately thought "Well of course we have a lot of debt, our housing costs are way higher than what anyone can afford." So we have a lot of people who make a decent living and are employed and stuff like that, who carry debt that's crazy. I'm not sure if mortgages are included in those figures, but even if they aren't, it's housing costs that are driving debt on other items.

They do not include mortgages. It is revolving (cc) and installment (car loans...) debt only.

But your point is one I touched on... higher housing costs tend to be in areas w/higher costs of living which tend to be in areas with higher average income. If you make $100K yearly and owe $20K, I think you're a LOT better off than someone who earns $12K yearly and owes $15K even though the first person actually owes *more.* With how drastically income, cost of living, housing, etc... varies accross the US comparing only one aspect of financial worth is rather meaningless (for example, that person in MA might owe $20K in debt but have two cars each worth $20K, $400K in housing value above their mortgage and the person with $12K of debt may have $30K of home equity and one older car).

 

[captain optimism]

Quote:

Originally Posted by TiredX2 They do not include mortgages. It is revolving (cc) and installment (car loans...) debt only. But your point is one I touched on... higher housing costs tend to be in areas w/higher costs of living which tend to be in areas with higher average income. If you make $100K yearly and owe $20K, I think you're a LOT better off than someone who earns $12K yearly and owes $15K even though the first person actually owes *more.* With how drastically income, cost of living, housing, etc... varies accross the US comparing only one aspect of financial worth is rather meaningless (for example, that person in MA might owe $20K in debt but have two cars each worth $20K, $400K in housing value above their mortgage and the person with $12K of debt may have $30K of home equity and one older car).

This sounds good, but actually what you would have is a person in Massachusetts who is a homeowner and the house is worth $500K right now, but they can't afford two cars, they have one older car, they regularly put their groceries on their credit card, etc. etc. (This person is not me, I don't own my home, instead I just have an old clunker car and a high rent check every month. :LOL)

 

[A&A]

It's really scary (economically) that we are talking about "average debt" instead of "average savings" across America!!!!!!

 

[mommytolittlelilly]

I think it's all about trying to convince people that they are living "the American Dream," even though in reality they can't afford all of the junk they are consuming. If people could not extend their credit waaaay out there to pay for their SUVs, cell phones, cable TV, all the new shoes and clothes, eating out at restaurants, well then maybe those people might start to question what their lives are really about and also the political/economic system we're a part of.

I just bought a house a few months ago and was AMAZED at how little the seller was taking away from the deal despite the fact that they had the house for 13 years! I can't believe how much people are living on the edge of total financial ruin!

 

[TiredX2]

Quote:

Originally Posted by mommytolittlelilly I think it's all about trying to convince people that they are living "the American Dream," even though in reality they can't afford all of the junk they are consuming. If people could not extend their credit waaaay out there to pay for their SUVs, cell phones, cable TV, all the new shoes and clothes, eating out at restaurants, well then maybe those people might start to question what their lives are really about and also the political/economic system we're a part of. I just bought a house a few months ago and was AMAZED at how little the seller was taking away from the deal despite the fact that they had the house for 13 years! I can't believe how much people are living on the edge of total financial ruin!

I guess it is just disappointing how the media is so biased towards their own corporate intrests.

 

[applejuice]

ITA with the OP, TiredX2.

Carrying a mortgage or trust deed is an invention of the last sixty years, in actuality.

I did have two friends who saved,saved saved and were able to buy their first homes outright.

Credit cards are also something new since WWII...there is even a collectors' mania going for the 1948 credit cards so there is even a value in them now...my Father had his own Sears card, the same account since 1954.