Debt Slavery: 30 Facts About Debt In America That Will Blow Your Mind

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When most people think about America’s debt problem, they think of the debt of the federal government.  But that is only part of the story.  The sad truth is that debt slavery has become a way of life for tens of millions of American families.  Over the past several decades, most Americans have willingly allowed themselves to become enslaved to debt.  These days, most of us are busy either going into even more debt or paying off the debt that we have accumulated in the past.  When your finances are dominated by debt, it makes it really hard to ever get ahead.  Incredibly, 43 percent of all American families spend more than they earn each year.  Even while median household income continues to decline (now less than $50,000 a year), median household debt continues to go up.  According to the Federal Reserve, median household debt in America has risen to $75,600.  Many Americans spend decades caught in the trap of debt slavery.  Large numbers of them never even escape at all and die in debt.  It can be a lot of fun to spend lots of money and go into lots of debt, but it can be absolutely soul crushing to toil and labor for years paying off those debts while making others wealthy in the process.  Hopefully this article will inspire many people to try to escape the chains of debt slavery once and for all.


Because the truth is that the American people need a wake up call.  Consumer borrowing rose by another $19.3 billion in December.  Right now it is sitting at a grand total of $2.5 trillion according to the Federal Reserve.

Overall, consumer debt in America has increased by a whopping 1700% since 1971.

We always criticize the federal government for going into so much debt, but we rarely criticize ourselves for our own addiction to debt.

Debt slavery is destroying millions of lives all across this country, and it is imperative that we educate the American people about the dangers of all this debt.

The following are 30 facts about debt in America that will absolutely blow your mind….

Credit Card Debt

#1 Today, 46% of all Americans carry a credit card balance from month to month.

#2 Overall, Americans are carrying a grand total of $798 billion in credit card debt.

#3 If you were alive when Jesus was born and you spent a million dollars every single day since then, you still would not have spent $798 billion by now.

#4 Right now, there are more than 600 million active credit cards in the United States.

#5 For households that have credit card debt, the average amount of credit card debt is an astounding $15,799.

#6 If you can believe it, one out of every seven Americans has at least 10 credit cards.

#7 The average interest rate on a credit card that is carrying a balance is now up to 13.10 percent.

#8 According to the credit card calculator on the Federal Reserve website, if you have a $10,000 credit card balance and you are being charged a rate of 13.10 percent and you only make the minimum payment each time, it will take you 27 years to pay it off and you will end up paying back a total of $21,271.

#9 There is one credit card company out there, First Premier, that charges interest rates of up to 49.9 percent.  Amazingly, First Premier has 2.6 million customers.

Auto Loan Debt

#10 The length of auto loans in America just keeps getting longer and longer.  If you can believe it, 45 percent of all new car loans being made today are for more than 6 years.

#11 Approximately 70 percent of all car purchases in the United States involve an auto loan.

#12 A subprime auto loan bubble is steadily building.  Today, 45 percent of all auto loans are made to subprime borrowers.  At some point that is going to be a massive problem.

Mortgage Debt

#13 Total home mortgage debt in the United States is now about 5 times larger than it was just 20 years ago.

#14 Mortgage debt as a percentage of GDP has more than tripled since 1955.

#15 According to the Mortgage Bankers Association, approximately 8 million Americans are at least one month behind on their mortgage payments.

#16 Historically, the percentage of residential mortgages in foreclosure in the United States has tended to hover between 1 and 1.5 percent.  Today, it is up around 4.5 percent.

#17 According to Dylan Ratigan, 46 percent of all mortgaged properties in Florida are underwater, 50 percent of all mortgaged properties in Arizona are underwater and 63 percent of all mortgaged properties in Nevada are underwater.

#18 Overall, nearly 29 percent of all homes with a mortgage in the United States are underwater.

#19 If you can believe it, the mortgage lenders now have more equity in U.S. homes than the American people do.

Medical Debt

#20 Medical debt is a major problem for a growing number of Americans.  One study discovered that approximately 41 percent of all working age Americans either have medical bill problems or are currently paying off medical debt.

#21 Sadly, the number of Americans that are protected by health insurance continues to decline.  An all-time record 49.9 million Americans do not have any health insurance at all right now, and the percentage of Americans covered by employer-based health plans has fallen for 11 years in a row.

#22 But even if you do have health insurance, there is still a good chance that you could end up with huge medical debt problems.  According to a report published in The American Journal of Medicine, medical bills are a major factor in more than 60 percent of the personal bankruptcies in the United States.  Of those bankruptcies that were caused by medical bills, approximately 75 percent of them involved individuals that actually did have health insurance.

Student Loan Debt

#23 Total student loan debt in the United States is rapidly approaching 1 trillion dollars.

#24 If you went out right now and starting spending one dollar every single second, it would take you more than 31,000 years to spend one trillion dollars.

#25 In America today, approximately two-thirds of all college students graduate with student loan debt.

#26 The average student loan debt load is now approximately $25,000.

#27 After adjusting for inflation, U.S. college students are borrowing about twice as much money as they did a decade ago.

#28 One survey found that 23 percent of all college students actually use credit cards to pay for tuition or fees.

#29 The student loan default rate has nearly doubled since 2005.

#30 Student loans made to directly to parents have increased by 75 percent since the 2005-2006 academic year.

At this point, most Americans are up to their eyeballs in debt.  According to a recent study conducted by the BlackRock Investment Institute, the ratio of household debt to personal income in the United States is now 154 percent.

Our entire economy has become based on credit.

Do you need a car?

Just get an auto loan.

Do you need a house?

Just get a mortgage.

Do you need to fill up your house with stuff?

Just get a credit card.

Do you need an education?

Just get a student loan.

In fact, if you are anything like a typical American, you probably have a mortgage you can barely afford, you probably have at least one auto loan, you probably have several credit card balances and you probably have a student loan that you deeply regret.

So what should you do if you are drowning in debt?

First, make a firm decision that you are going to break the chains of debt slavery once and for all.

Secondly, come up with a plan to reduce your debt.  Paying off debt that carries a high rate of interest first (such as credit card debt) is usually a good idea.

The big financial institutions want to get us into as much debt as possible, because all of this debt makes them incredibly wealthy.

Don’t play their game.

Yes, that may mean that you may have to put off certain purchases until you can come up with the money, but in the long run you will be much better off.

So do any of you have any debt slavery stories to share?  Please feel free to leave a comment with your thoughts below….

  • BenjiK

    One of our neighbors just re-financed her 2002 mini-van for a third time. The re-financing of vehicles seems to be a growing trend as I see more ads for this in the local papers, radio, etc. Talk about a perpetual debt-cycle.

    Regarding vehicle and mortgage notes, as a 20-something, naive, first-time home buyer, we were talked into “consolidating” our debt when we refinanced our first home from a land-contact into a traditional mortgage. Our mortgage broker “advised” us that rolling all of our debt into our mortgage was a “wise investment”. After all, as she explained, how could we do better that 5.3% interest on total debt? Admittedly, like I stated, we were naive and got caught up in rosy picture Citi-Financial painted for us.

    It was only a few days later that I realized we would be paying for 2 cars and a motorcycle for THE NEXT 30 YEARS. Luckily, we were able to break even on that house but more importantly, we learned a VERY valuable lesson in debt-management.

  • A Dodgy Bloke

    There is a consumer radio talk show in the city I live. Three of the biggest topics are bankruptcy, dumb auto buys and people having questions about how to get on disability. Most the economic increase over the last 30 years was easy credit and houses going up. That $15,799 figure of average credit card debt has been rolled over a few times. People would get home equity loans or seconds pay off the credit cards and run those baby’s back up again. The credit used on the plastic or the home equity loan added to the persons yearly income. Folks bought cars, went on vacations bought all the latest junk from china now the party’s over and the bills have to be paid.

  • Kimberly

    Awesome article michael! You rock ! I decided not to be a slave to the lender along time ago.

    • Michael

      I bet you never regretted not getting into their clutches, eh?




        Hold on there Hoss! There is nothing wrong with certain kinds of debt for very specific reasons. I highly doubt that there are many people who can pay cash for a Chevy Cobalt, much less the fleets of SUVs and trucks that are speeding around the roadways and guzzling major unleaded.

        I highly doubt that there are many people running around with at least ONE HUNDRED THOUSAND DOLLARS FOR A HOME IN A DECENT NEIGHBORHOOD.

        Credit use is necessary. Responsible credit use is paramount. But trying to sell the idea that all debt is bad debt is wrong and illogical. Some debt is necesary and good. As with anything in life, when taken beyond rational limits, debt, like anything else, becomes a bad thing.

        • Terry

          You are completely missing the reason why someone “needs credit”. Banks knew damn well when they eased lending standards that the side effect would be rapid increases in capital costs for goods such as houses and cars. They set the system up so that people are FORCED into using credit. So wake up dude!! Had lending standards not been eased so much to the point where you need a pulse to buy a house and a car, prices for those items would be affordable and yes, houses would be under $100K.

          You’re contention that nobody has $100K in their pocket to buy a house is correct, but the masses (like you) have taken the bait and believed our crony capitalist bankers that the only way to make those kinds of purchases is on credit.

          So please tell me what debt today is good? What credit is good? Housing is down substantially…. is housing credit still good? LMFAO! You’ve taken the bankster bait dude. Now you’re adding to the fire by trying to convince an underwater population that what they did was “responsible”. LOL.

          • Shel_TR

            Of course housing credit is “good”. It allows you to have a home in exchange for a promise to re-pay the debt over a long period.

            If debtors make irresponsible choices, there will be a cost that they must be prepared to bear.

            If creditors fuel a credit bubble, there will be a cost that they must be prepared to bear.

            But, just as Reed Richards (hmmmm) indicated, the idea that all debt is bad debt is short-sighted and self-defeating. You want to go back to horses and buggies? Be my guest. I’d prefer to live in the here-and-now. Admittedly, it demand a level of awareness from its citizens. As long as there are protections available in order to protect against subsistence, I’m totally fine with that.

        • Bryon Brooks

          My wife and I are going nuts (at least according to society). We don’t want to have any debt ever. We have paid for cars, no student loans, and $70k saved up for a house. We are staying with a friend not paying rent (just yard work and other things like that) and saving 4k a month. In 2 years we will have plenty to buy a house in cash. That will leave us at 25 and 24 years-old with no debt and no monthly payments!

          I understand that maybe 1 in 10,000 first-time homebuyers pay for it in cash, but when you translate your thinking to cars it becomes very dumb. Save up some money get a practical cheap car and save. It is impossible to save when you have a monthly payment for everything. Also, the excuse that a car loan is ok just because everyone else has one is DUMB.



        By the way, the masses are not slaves to debt. They are slaves to idiotic, mindless materialism.

        • tribeseeker

          Could you possibly get your head around the idea that the federal reserve notes called “dollars” ARE instruments of DEBT!? You use dollars, you are in debt: simple.

        • Shel_TR

          @Reed Richards: Well said.

          When the masses stop patronizing the Kardashians (and the like), they will emancipate themselves.

  • Deborah

    When I was in college and even in graduate school, I remember the people in the financial aid office were very happy to get you loans. They made it very easy for you to get as much money as you needed. I even got extra money one semester to buy a car. I bought everything with student loan money. Why did they not have counselors there to help you so that you made good decisions. My parents were not even contacted because I was over 18. College student loan offices prey on young ignorant kids. It is immoral….these same colleges charge upwards of $1000 per graduate credit today for a crappy education. Just so that they can pay the bigshots and the coaches. It is disgusting. It literally ruins lives especially if you graduate and can’t get a return on that investment. I have a teaching job now, but for how long? Then what? To top it off, if you can’t afford your student loan, too bad they will suck it out of your social security if they have to. I could go on and on with this immoral system…how could a reasonable society do this to their citizens? Come on USA? We should do better than this!

    • Shel_TR

      Help! Help! Save me from myself!!!

      You’ve not indicated any evidence of misreprentation or malfeasance. Nobody forced you to take the money.

      You were over 18 years old. You ought to have known that you’d have to pay-back money you’ve borrowed.

      You call it an “immoral system.” Forget it. It’s ridiculous that you’re even whining. You’ve simply exposed your own naivete and gullibility.

      The only immorality here is that you’re appealing to have society protect you from yourself. Take self-responsibility.

  • Kevin

    I’ll catch flack for this statement but here goes.

    Women may represent 50% of the population but they are responsible for 75% of excess debt. This thesis was obtained by over 50 years of personal observation and countless interviews with co-workers.

    • Uh huh

      I’ll agree with that whats ours is theirs and whats theirs is theirs they have to have it all…….

      • sdfssfd

        you’re just mad cuz you’re not getting laid

    • All I know from having been a close friend of a collector, men’s toys are bigger and more expensive than women’s toys overall. There are those women who want to spend their $ into oblivion, those who like to collect rare gemstones, and such………but the boys die with the most toys wins is not just a phrase.
      Women keep books better then most men I know……

      • Kevin


        Which gender “needed” the 400+K home most often? Don’t forget the furnishings.

        I guess we know different people but the Macy’s, Sax, Neman Marcus and the like have 85% of the floor space for women and even Sears dedicates about 70%.

        • Rog in Miami Gardens

          I think what Jarrett is getting at is that men might by less things, but the things they buy cost a lot more. For example, most women love buying things on sale, so they could probably purchase 15 dresses for under $3000, but a guy would get one wave-runner that’s twice that. So, it is really all relative.

  • DaytoDay

    Good article Michael.

    I don’t even know where to begin…

    So, I’ll start with the obvious, which you pointed out. We need a “payment plan” for EVERYTHING… Houses, cars, furniture, and even for education…

    What does this mean? Well, the way I look at it is, we don’t have enough money to pay for things… Allowing people to make payments, gives you a false sense of reality… Which is, you don’t actually have the money to buy a house, car, furniture, but you hope that you will in the future…

    So, this is extremely dubious… Because people have been conditioned through generations to believe that “this is the way it is”, which is to go into debt and not have any real (physical) dollars to pay for things.

    I mean, if you cut off all credit cards and all forms of loans, there would be hell in the street by morning… Because suddenly, people wouldn’t be able to afford their lifestyle… And really they can’t afford anyway…

    This country is in a world of hurt (literally) and for some, staying out of debt only seems logical, and for others… Well, they just don’t know any better…

    Stay Strong and Keep Up the Good Work!

  • another Jay

    finally got all the debt paid off except the mortgage, and don’t see much hope in paying that off before it all collapses.

  • Gary2

    Tax the rich and spread the wealth…The bible told me so!

    -You cannot serve both God and money…

    -Love your neighbor as yourself…

    -Do not store up earthly treasures…

    -Give your cloak also…

    -For I was hungry and you gave me nothing to eat…

    -What you do to them you do to me…

    -It’s nearly impossible for a rich person to enter the kingdom…

    -If you want to be perfect… sell your possessions and give to the poor, and you
    will have treasure in heaven…

    -Do unto others…

    I am trying to save the soul of the rich folks (don’t want the Gog-Magog to get them) when I say to tax the rich and spread the wealth.

    Some of this was copied from a comment onpoint radio

    • ScoutMotto

      There’s nothing in those scriptures that says anything about giving up all our personal wealth to the government, Gary.

    • Scott

      You shall not covet your neighbor’s house. You shall not covet your neighbor’s wife, or his male or female servant, his ox or donkey, or anything that belongs to your neighbor

      • Guido

        It’s not coveting if you get a commissar to seize it for you. And it’s not coveting if you can convince a bunch of your smelly friends to just squat on it with you.

    • Rick

      Apparently you have not read “thou shalt not steal”

    • Sheree

      The Bible says that those that do not WORK do not EAT. VERY clear to me. True Chrtians tithe 10% to their Church- the Church is the body that is suppose to help their members NOT the GOVERNEMENT- READ THE BOOK OF ACTS esp widows & ophans. I am 68 yrs old have worked since I was 13 & still WORK. Never ever had a problem in my life finding a job & when there was a problem I created my own work- I did cleaning to fill in even through I was a semi-professional managing Shopping Centres & Buildings. James tels us to be content IN ALL CIRCUMSTANCES. People are adicted to materialism! They need deliverence! Thank God I was delivered!

  • Gary2

    There is a lot of debt because all the good jobs are gone and all that is left is the shit service wal slave jobs. People use the credit cards to survive.

    When I was unemployed we used it to eat. Now that I am underemployed I need to use it to pay a bill to keep the lights on. I do my best to pay off each month. Also for car repair as all I have are 10+ year old cars that need lots of maintenance/repairs.

    • Kevin


      Yep as manufacturing left complements of both party’s the middle class just withers away.

    • tribeseeker

      Dude, there is a lot of debt because its a DEBT BASED SYSTEM! Its baked into the cake. Its inevitable!

  • Gary2

    People should rack up a big credit card bill and default. This way they can do some of their own wealth redistribution.

    My co-worker ran up almost $70,000 on credit cards, filed chap 7 and walked away as the scum bag banks and rich got stiffed. She$46,000 dollars this time.

    She is planning already to do it yet again in a year when she can file again. Too bad we have such low paying jobs now. Probably will not get much of a credit limit. She is figuring $20,000.

    Thats what I call wealth redistribution.

    Screw the banks/investors.

    ha ha ha ha

    • What a hypocrite! You quote the Bible in a previous comment and now you’re encouraging people to rack up credit card debts with the intention of defaulting.

      It’s one thing to get into debt and not be able to pay them off. It’s quite another to intentionally defraud the credit card companies.

      That’s not wealth redistribution, that’s a crime.

      • Gary2

        The credit card companies defraud us all the time. Pay back is a bitch!

        • Guido

          In what way do they defraud you all the time? It is a voluntary association. You accepted their terms going in. You made that deal with the Devil and probably even knew how they operate. I, after having my own experience with them, no longer use them. Consequently, I never have to feel like I’m at their mercy. Payback is, indeed, a bitch-for you. Just keep in mind, while you’re out believing you’re getting yours back by stealing from them, you’re just increasing rates for everyone else. They’re not going to lose money on a few crooks like you when they can just screw everyone else one more percentage point.
          I wonder if dishonest card holders like you will drive up the rates the most for the folks at the bottom? Guilt by association, your selfish practices will probably make lower-end users seem more risky, so their rates might go up more than others. Or not. It’s just a thought. Nothing operates in a vacuum. While you’re out getting yours, keep in mind you might be getting someone else’s, too.

    • Adam

      Wow Gary. You truely are a horrible, evil little person. I used to think you were just a loser, now I’m really starting to feel sorry for you.

      • Gary2

        You can think what you want-my co-worker got 70,000 of toys the first time, 46,000 of toys the second time and will probably get 20,000 of toys this time. Yes I am talking about my co-worker and not myself.

        Ain’t capitalism great???

        (By toys I mean electronics/meals out trips etc)

        • Guido

          Your coworker is a low-down thief and part of the problem.

        • SovereignSoldier

          All you’ll bashing Gary are the exact reason why the Govt. does what it does. You are brainwashed 14th amendment citizens of the US CORPORATION and will tuck your tail between your legs like cowards when it comes to defending your constitutional rights oh wait you don’t have any constitutional rights…my bad. That’s why I pledge allegiance to the Republic for which it stands and not the USA CORPORATION. America destroyed itself when the Federal Reserve (Crown) took over and in 1933 the gold standard was implemented so now you have notes which are debt notes. But wait you can’t pay a debt with a debt. So if the credit card companies extend you credit then they must know this and must discharge the debt in accordance to the Uniform Commercial Code which is the Bible for trade and commerce. The Bankers are fraud. The Citizens are duped. The Govt. is corrupt. And Seriously???? Gary is the problem with you are the problem cowards that won’t stand up to a De Facto capitalist system!!!

    • Seriously????

      You are the problem with our society!! Self responsibility is a foreign concept. If you can’t afford it then don’t buy it. What you are promoting is stealing – plain and simple.

    • Guido

      Gary, I noticed you left out that one part about rendering to Caesar what belongs to Caesar…

      I got a different one. How about “2 wrongs don’t make a right.” It’s not in the bible, but it sure sounds good to me.

      • Gary2

        the give to Caesar justifies taxing the rich hard! Works for me, thanks

        • Guido

          I think it’s more than just pay taxes-I believe it means to obey Caesar and his rules. You fundamentally misread the bible if you believe Jesus’ words can be construed to support gov’t confiscation of wealth.

          It’s funny to see people who subscribe to the creed that religion is the opiate of the masses cloaking themselves with the same to push their agenda.

          Jesus wasn’t a highway robber. It would in no way serve his goals to have government force people to turn over their wealth at gunpoint, no matter how many people could theoretically be helped. In any case, what moral value to your soul is charity if you perform it involuntarily at gunpoint? That’s called theft, as I remember it. Sure, the commissars and Robin Hood and the gestapo all have other names for it, but in Western Law when you seize something by force, it’s stealing.

          • Guido

            Let me amend that. I’m wrong. When you take something that doesn’t belong to you, that’s stealing. Force isn’t part of what you’re advocating. That’s just thievery and the fraud you were complaining about.

  • Jim

    How we spend our money as individuals and as a country reflects our values. The first step to getting out of debt is to look at where we are spiritually and morally.

    For where your treasure is, there your heart will be also. Matthew 6:21 (NIV)

  • mark

    I was in debt for over $600,000 on rental mortgage loans in 1990. Some of the loans were seconds mortgages. It was hard to get loans for rental property in 1981 when I bought mt first duplex. I chose to work my way out of debt. I made some rules for myself to follow. The first rule was as I paid off a second mortgage on a property, I had to continue to use the same amount of the payment on the second to be paid towards the first mortgage. This amount was paid towards the principal amount on the loan. I did not allow myself to have fun with the extra cash flow when the second was paid for. The next rule was if I refinanced a property with a new loan, the term of the loan had to go from 30 years to a 15 year loan. Also any loan had to be a fixed rate of interest.. If I did refinance a property the cash pulled out uf the property had to go into the purchase of another property and the new property had to be financed with a 15 year fixed rate loan. Since I kept paying down the principal balance owed with the money that I had been paying on the seconds, the principal balance on other properties went down quicker than the 15 year term. In the end I was able to pay off all of the mortgages and be debt free with a good income from rental property. I will add that I did all of the cleaning and repairs myself and did my own management for many years. Today we pay for property management and others to do the repairs on the properties. This took thirty years to make this happen and a lot of hard work. This is an example that you can gain real wealth with a lot of hard work over time. I have always said that slow and steady will win the race. I had some landlord buddies that wanted to live beyond their means and the would always crash and burn each time. People today think they have to have it all when they have not yet earned it and go into debt. All that will get you is some short term fun and then you become a debt serf.

  • B.Greenwood

    Prov. 22:7 “The rich ruleth over the poor, and the borrower is servant to the lender.”
    Why can not people understand this?

    • Great verse and wisdom. Proverbs 1:7 says “The fear of the Lord is the beginning of knowledge, but FOOLS despise wisdom and instruction.”

  • Pauly

    Spend every penny you don’t have to borrow on insulation projects, and home improvements.

  • Bob-o

    Me-debt free as of 2 years ago, aside from a cell phone which I plan to downgrade after the contract expires. It’s a feeling that is hard to explain, having next to no bills. I’ve somewhat adopted a minimalist lifestyle. I highly recommend it. It’s allowed me to save 50% or more of my income. Most places will offer a cash discount on purchases as well. Huge fan of your work. I hope people will start opening their eyes.

    • Michael


      Thanks for being a fan. :) It is humbling to know that there are so many people out there that appreciate all the long hours I put into this.


    • Congratulations Bob-o, that is great! It’s amazing how much more cashflow you have when you aren’t paying interest charges to mortgages, autos, credit cards and school loans.

      Of course, paying with cash will probably get you labeled as a ‘terrorist’ these days :-P

      • Xander cross

        I don’t see nothing wrong with using cash.

  • OldPhart

    I was more comatose than concious over the last thirty years. However, I was always someone who had little fondness for credit and paying interest. I’m 52 and got my actual first credit card about seven years ago. Up until the debit card system I paid cash direct or bought a twenty-five cent money order.

    In my twenties my caution was reinforced when others convinced me to use travelers checks on a trip. Trying to get those suckers accepted without making a $20 purchase was virtually impossible. It ruined the trip and cured me of the use.

    I bought my first actual new car at the age of 35, at a fixed rate, at a payment I could afford. I bought a house with $0 down, for $75k in 1998 at 7.5% fixed 30 year. At the close I wound up getting $1,500 in cash somehow. Since then I’ve never pulled equity, couldn’t even conceive of it, never refinanced, never did much at all. My payment with principal, interest and insurance runs less than $750 a month. I have no second, and have been paying $800 to $1000 per month to bring down the cost of interest as fast as possible.

    We’ve never bought big boy toys. Didn’t buy our first computer until the prices had dropped into the hundreds of dollars instead of thousands. And didn’t buy the kids video games until those prices had dropped quite a bit, too. When we did buy we paid cash or used the debit card cash equivalent.

    My 2005 car was paid off early by paying more than required. The 1948 truck was a gift from my dad (since it’s what I learned to drive in), my youngest son was given a truck by his grandparents as they retired to cruise the world. My oldest son has had the luck of Midas due to skill, hard work, dedication, and taking advantage of legitimate opportunities his character opened up.

    I purposefully took a job near home, foregoing about $50k annually, so I could do things I wanted with those I want to be with. I live like I make less than $40k per year though I make about half as much more because that’s how we’ve been living since I was 18.

    We are, and will always be, considered the white trash in the neighborhood because we have little concern for image. My front yard is desert sand, literally, because I don’t want to pay to water grass.

    Last time I peeked out the backdoor the backyard was a mess of tumbleweeds, dried up sticks and random shit blown in.

    We use a wood fireplace for heat because I can get through the winter with three and half cords of wood that costs $500 if I buy all at once. Otherwise I’d be shelling out $12k to replace the internal AC/heater. In the summer we use fans and open windows to cool off. Granted, it gets miserable around 120 degrees…but it’s a dry heat.

    As my mother in law was dying I checked into a HELOC for emergency use. They wouldn’t even consider it for the relatively tiny amount I was asking for. During the years that banks were throwing credit at people in the form of home refi’s I’d occassionally waste somebody’s time getting into the details of the loans they proposed. Around 2005 my $75k home had a ‘value’ exceeding $360k. I just wanted to transfer my outstanding principal and pay a lower interest rate. They wanted me to draw a minimum of $20k out and I’d get 6% interest. No deal.

    Now my house has a ‘value’ of about $100k, realistically sell for $75k, and I owe around $43k (citimortage played around quite a bit with my extra payments until I started paying attention).

    The point is we weren’t extravagant, we didn’t borrow excessively, we bought a home to live in not as an investment, and we plodded along unglamourously until we are one of the few families here surrounded by a sea of foreclosures.


    We had no strategy. We couldn’t figure out how people half our age were able to afford a house, cars, toys, big screen TV’s, etc. Made us feel bad about ourselves for the longest time and even had marital strife over it. In short, we were comatose for twenty five years or so. And what we did see confused the shit out of us. It just didn’t seem right somehow.

    The bail out early in 2008 (forget who it was) shook me to groggy conciousness. The bail out at the end of 2008 was a bucket of ice water on my back. I woke up and was pretty pissed about being woken up that way. Since then I’ve been trying to learn all the stuff I tried to avoid.

    I’ve been to countless websites every night, initially jumping inand arguing only to get my ass handed to me, neatly, for being a dumb-ass. Then I started listening and learning and paying attention.

    Of all the sites I’ve been to, countless times, since November 2008 the quality of commenters, contributors, and the moderator, Tyler, at Zero Hedge blew me away with the depth of obvious depth of knowledge and the level of arguments made. I lurk there throughout the day and most of the night.

    At the moment I have three loans to be paid off. The mortgage and two student loans. One of which will be paid off next Friday, the other has about $1,200 left and I’ll start applying the paid off loans payment to it in addition. So that should be done around June. Then those payments will be added to the mortgage.

    According to the original amortization schedule, my mortgage balance puts it into somewhere in 2017. My next goal is to start pushing actual monthly payments ahead rather than just pay down principle. If I make two or three additional full payments per year, that gives me an increasing buffer in case something happens. Citimortage doesn’t care what the principal balance is (well, they do because they want to steal my equity), they only care that monthly payments are accounted for.

    I am a financial dumbass.

    All the products, structures, abbreviations, returns, ratios…are all the equivalent of my five years of spanish back in the Stone Age. Familiar, misty, often garbled and long forgotten.

    • Guido

      I agree with you, sir. Tyler at 0H is doing an amazing job. I have been impressed since day 1.

  • OldPhart

    Oh, the other, best way, to legitimately and morally screw creditors is to pay off early.

    The easiest is to work to pay off the lowest balance first. Maintain the basic payments as you do this.

    Then apply that payment to the next lowest.
    Then combine those two payments to the third lowest.

    Continue up the ladder.

    Believe me, every time you pay off a creditor you have a huge relief — and an increasing determination to get rid of the next one.

    • tribeseeker

      Believe me, the bigger relief is to default on those credit cards, make sure you judegment proof, and move to a state with a short statute of limitation.

  • I’m 52. Seven kids, oldest 33, youngest 17. Never had a credit card in my life. Zero credit rating. Thats something I’m proud to brag about. Always worked 2-3 jobs, paid cash or did without. Paying cash as we did all these yrs., one really appreciates the value of this purchase. Saved alot of money also. Great example is this one. My Z-turn mower was $5799. The dealer took $5,000 cash, didn;t charge sales tax, included all warranties. If I had to finance this machine the payback would have been $10,000. I don’t make alot of money, don’t need to. All my friends work for the creditors, make much more money, yet I play golf 3-4x a week, and have more disposable income. Don’t know why in particular I never had a credit card over the yrs. extremely glad though. By the way, a home can be purchased w/o “credit”. Just need to SAVE a large down payment. CASH IS KING

    • DaytoDay


      You have good money management skills.

      Like my dad use to say, “It’s now about, how much you got, but what you do with what you got”

    • M. Rocknest

      Jeff, you are right about not needing a credit rating to buy a house. Many years ago I had zero debt, 2 good jobs and a 25% downpayment to offer but I was a no show at the credit rating agency because I didn’t have a credit card or previous loans — paid cash for everything (car included). I had no problem whatsoever when I applied for a mortgage on my first home (a new condominum complex) — probably crinkled a few brows at the time though. Previous to that I had done 3 years of university but going into the 4th year I knew that despite working part time I wouldn’t have enough cash to make it through. My decision was to stop the education because it was not worth it to me to go into debt simply to complete a degree. Truthfully I wasn’t at university to change my profession (already had a useful technical degree). I was there just because I wanted to learn some new things and experience life in academia. My next home (after marrying) we built ourselves and we are doing likewise with our current home — bit by bit, as we feel we can afford the materials. (One third is completed and is a very small but comfortable space to live in.) BTW, I only carried that first mortgage for 4 years before I sold the condo for a modest profit. It was my first loan and my last loan (touch wood). And I still don’t use a credit card which makes me an old “phart” too I guess.

  • Jeremy

    Brilliant article, that why I don’t go to college because of debt slavey. I’m free debt and no any loans or credit cards but I bought gift cards (25,50, and 100 dollars) for buy some games and stuff from internet. I know about how debt can be worse for you to getting in debt.

  • William

    NEVER place a charge on your credit card that you can not pay off when the next bill comes. There is one, and only one exception to that……young people establishing themselves in life should never place a charge on their credit card that they can not pay off in three months, with NO additional charges until the balance is ZERO. Get OVER the “got to have it NOW!” idea. Cash talks, and BS walks…… People driving a financed $30,000 + vehicle who can not rub together $30,000 in CASH are BRAIN DEAD.

  • GreenGrass

    Wonderful article on what is really happening in America and yet, I don’t see these kind of news reports on CNN/FOX. Thanks for this informative article.

  • Bradley R. Anbro

    In December 2010, my wife & I paid off our house
    (in full). We have no mortgage or other debt of
    any kind. Our ONE credit card gets paid in full
    each month, as soon as I receive the statement.
    I do not play the “due-date” game with it or with
    statements for any of our utilities.

    • That is excellent Bradley!

      I heard some excellent advise the other day for people in your situation. The only way that the anyone could take possession of your house is if you can’t pay the property taxes.

      If the US defaults on its debts and/or Bernanke devalues the currency, the US Dollar will lose its value.

      So make sure that you have enough silver/gold stored up to pay your property taxes for many years to come.

  • thegravedog

    Gold is the money of kings; silver is the money of gentlemen; barter is the money of peasants; but debt is the money of slaves.”
    – Norm Franz

    I am almost a peasent. Cant wait till I get there.

  • angry moose

    Regarding item number 8. I think the Federal Reserve calculator is full of fecal matter. I tried 3 other on line loan amortization calculators and they all gave the same answer – a 27 year loan of $10,000 at 13.1% interest will cost a total of $36,450 by the time it is paid off, not $21,271. I wonder if they calculate the interest on the Federal debt the same way.

  • Most people are going into debt because they have no choice. The jobs simply aren’t paying enough for even the basics, medicine, gas to get to work, clothes to keep the job to start with, rent, housing and food. There are those of course who are shopping their way to debt, but then there the majority where the debt has become part of the struggle just to keep food on the table and a running car with expensive repairs to get to a job, where they pay the same wages or even lower since 1990. It has even come to my attention helping a family member job search that even many hourly wages are equal to what they were 10 plus years ago.

    The poster who wrote “We do not have enough money to pay for things” is absolutely correct and I wouldn’t doubt the wages were kept suppressed for more profit. Think about this, why is DEBT considered a necessity now to even get an education or own a house? Why did that becme NORMALIZED? Think those things may cost a bit too much compared to what people make? I sure do.

    • DaytoDay

      The Squawker,

      Yes, you hit the nail on the head perfectly.

      “People are being forced into debt”… Exactly, so how can the economy be improving? How are we a “wealthy” society? How are we supposed to survive making $800/month when rent costs $1000/month?

      See, there are alot of people who spout “Well we’re not 3rd world poor” and “We make 10 times what they make in China” etc…

      What they don’t understand is, America is an expensive country to live in… And I don’t care how you cut it… If you don’t make enough to pay your mortgage or rent, then you will be sleeping in your car and showering at the YMCA…

      And if it’s getting to the point to where, people are using credit cards to pay for groceries… God help us in another 2-5 years…

      • tribeseeker

        (er… don’t you mean in another 2-5 MONTHS?!!)

      • Thanks DaytoDay. This is a very expensive country to live in, and if the jobs do not pay enough for people to pay basics…good question: “How are we to survive making 800 a month when rent costs 1,000?” I would like to ask many that one. I think life in some third world countries, barring the more austere less technological lifestyles may actually be BETTER in that they have social networks–others to help, many of our poor end up isolated and alone, they can hunt, fish, trap, grow more of their own food-impossible in modern American life–especially apartment life and many do not have those skills now to begin with. I have been in the boat using credit cards for groceries, and well, that was not by choice. You think “I want to eat today”. This country has been deceived into thinking life is automatically easier here, it is not, they have done studies where people overseas are even happier. There is more to life then just working and struggling to survive in other places.

  • josh

    “In fact, if you are anything like a typical American, you probably have a mortgage you can barely afford, you probably have at least one auto loan, you probably have several credit card balances and you probably have a student loan that you deeply regret.”

    this describes 90% of the people i know perfectly.

  • justadad

    “My other piece of advice, Copperfield,” said Mr. Micawber,” you know. Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery. The blossom is blighted, the leaf is withered, the god of day goes down upon the dreary scene, and, in short, you are for ever floored. As I am!”
    from David Copperfield – Charles Dickens

  • Xander cross

    You forgot about debt to the IRS and to the state.

  • More of my comments here:

    People are being set up. To those who can live debt free I commend you, but there people ending up with no employment or such low paid employment, you can cut back to the most meager apt, and other expenses and still not make it.

  • TheTruthHurts

    Who cares? Where is my ipad.

  • tim

    You forgot to mention that potential employers look at credit ratings as a part of the employment screening process. Anyone who has had financial difficulty will have their applications shuffled off onto the side of the desk closest to the paper shredder. This GREATLY impacts the chances those already in debt have to get out of debt. The practice promotes unemployment. It promotes throwing out those people trying to turn their lives around by getting an education (more debt) by not allowing them access to a job capable of letting them get themselves out of debt, REGARDLESS if the individual is qualified or not.

    • Class warfare by fiat, ensuring the already rich and comfortable are the ones who get the jobs. I believe credit checks for employment should be illegal.

  • Bob

    I am reading rumors that the dollar is to be devalued. For example:
    “The U.S. Dollar is about to be Devalued & Sold-Off, TWO Ways!

    1. Central Banks of: Switzerland, Europe, Canada, England and Japan have joined forces to Flood the currency market, with Cheap U.S. Dollars! The Obama Administration Agrees!
    2. The PetroDollar is Officially Eliminated by Key Countries. The PetroDollar is the Key & Sole reason, The U.S. Dollar is Still Alive! ”

    This was from a site that sells gold. But, if true, this would be a way for the government to reduce it’s debt.

    • Great points Bob!

      Fed Chairman Ben Bernanke has lowered interest rates to zero, expanded our country’s debt obligations, created more money out of thin air, monetized our own debt via Quantitative Easing, and he has said that his next step is to devalue the Dollar by 40%.

      And since the US Dollar is the world’s reserve currency, there won’t be any safe currency to run to, except real money, gold and silver.

      • Hefsmaster

        This is the second time i heard that 40% devaluation. Very obscure piece coming out the in the last 2 weeks. It’s all about Facebook saving WallStreet and rosy employment numbers.

        Watch for bank runs and declared bank holidays.

  • Kudos American Dream: Outstanding journalism.

    Should Chairman Obama get a second term there will be a Muslim star crescent within a hammer and sickle flag flying over the white house.

    It is impossible to underestimate the US public’s ability to bury their heads in the sand, denying and repressing real threats to their lifestyle, albeit very existence.

    We blithely turn on Monday Night Football or Dancing With The Stars mind-numbed hoping bad things will happen to somebody else.

    An estimated 40% of US citizens still support Chairman Obama. The ones hoping for change to get all the free stuff.

    Communist Revolution Coming To Your Neighborhood.

    Stay the course American Dream. Save citizens – collect the whole set.


    “May you live in interesting times” Ancient Chinese curse.

  • Mark …

    For Canadians …

    The Wolf at the Door: What to Do When Collection Agencies Come Calling

  • Mark …

    I have one credit card. My bank website allows me to pay off the balance Automatically once per week.

    The credit card gets automatically blocked if ever it would reach 10% of my savings account.

    Great system.

  • Joe

    We (my family of 4) still have an old style 32″ TV in our livingroom. Still works fine and the picture is still nice so why do out and buy a $500+ flatscreen? We CAN afford it easily but choose NOT to keep up with the Jones, have NO debt but our mortgage (oh we can buy a new larger house if we wanted to) but choose to stay out of debt, live within our means and can sleep peaceful at night.

    This is just one example but could use the same for fancy vacatiions, cars, toys, etc. Its a mindset that either you have or you dont. Not sure how to teach that to anyone.

    Above all, believe in our Lord Jesus, thats the richest you will ever be!

  • Golden child

    Im 20 and im debt free.I work to pay my school. my car(05 lexus is 300)is paid off. I have my own apartment. No credit cards i only pay cash and save for tuff times. I feel good but its hard not to get into the “keep up with the jones” Ive just been thankful to have the mindset to not give in to what I see around me since im young.I just dont dont want to repeat the cycle as my parents did. Thank you Micheal youve been a big help.

  • Richard

    The author and commenters miss the real debt… we are enslaved as a result of the four bankruptcies the United States has undergone. We are paying and essentially ‘owned’ by the holders of the debt…. You income tax payments go to them via the International Monetary Fund… Do your due diligence and research. And it is the truth. You own nothing (see 82 congressional docs). You don’t own your home. You don’t own your car etc. Stupid American proles.

    • tribeseeker

      Thanks for that truth, Richard!



    • It’s not just America. The elite bankers who own and control the Federal Reserve, are also behind the central banks of almost every country in the world.

      And they control the The European Union, the International Monetary Fund, the World Bank, the Bank of International Settlements, Goldman Sachs, JP Morgan, Citibank, etc.

      • It’s so true ‘The Truthful One’

        Yep, one just need to do his/her own due diligence and research…

        To kick off, read through this book:
        Web Of Debt – Ellen Brown

        Then one many carry on with either book below:

        * None Dare Call It Conspiracy (1971)-Gary Allen

        * Crossing the Rubicon (2004)-Michael C. Ruppert

        If you read it, you will never see the nightly news in the same light again!

  • aron b

    this country, as well as the rest of the world fails our children in two very important matters. 1)responsible procreation (having children is a divine privilege, not a divine right, for the life we are bringing into this world does not belong to us…. we are merely it’s custodians for a short while) and 2) the value of money. the universe itself is driven by entropy… the attraction and cancellation between dark matter, and light. we spend our entire life resisting corruption, but in the end, the universe wins. spending more than we earn, without conserving a cent is like jumping into a black hole.
    the purchase of anything, that almost immediately depreciates is foolish. once in a while, a trip, a distraction is good for the soul, but not perpetually.
    buy what is necessary,.. buy it well (don’t buy crap), and if you really must indulge in satisfying that spending urge…. buy money!! if gold is out of reach… start buying silver coins. not nickel, not copper-nickel… silver.
    buy money!!!

    • tribeseeker

      Beautifully logical!

  • Anonymous from EasternEurope

    I had never been in debt ever in my life and i can not afford a new car but 10+years old cars run well and are quite popular here. People are not used to spend more than they earn except when they need a place to live

  • Robert

    We haven’t even begun to pay off the debt incurred by JFK in the early 60s! Do we really think we even have a PRAYER to get this paid off? NO WAY! I heard the other day that Obama has incurred more debt during his administration than all 43 presidents before him combined! Nice gift to our great-great grandchildren, huh?

  • ScoutMotto

    I paid off the house in early 2010. The day I made the last payment felt like I was crossing the Jordan, entering the promised land. No more money to a bank on that one.

    Credit card is paid off every month too.

    • sdfssfsdf

      that’s nice, but you do realize if you failed to pay taxes, the gov’t can come and take away your assets, including your house? they really do own everything

  • Lea

    Honestly, I’m sure there are people out there who buy more than they need or can afford (why do the people who earn the least have the most expensive cell phones?), but I’ve met plenty of folks who use credit just to get by because wages aren’t enough to keep them afloat.

    The issue is price inflation, stagnant wages and underemployment/unemployment as much as it is over-spending. All of this with a two-income household.

    Let’s face it: there’s no middle-class. Those who typically call themselves such are unable to hold to a test of the “traditional” middle-class lifestyle and would now be considered working-class. My husband and I both earn “decent” incomes together but we can’t survive on ONE income. The boomers were the last kids to enjoy mom at home, a nice house, a car paid for in cash and a yearly trip to the country. Now we struggle to buy a house that adjusted for inflation and income costs MANY TIMES what houses cost then, will pay for it longer, can’t find a job to buy the house without multiple degrees that are very costly, and then have a tough time keeping all of the bills paid if a major event occurs (job loss, medical emergency, etc).

    I feel like there are so many who go on and on about overspending and financial responsibility, but the fact of the matter is that we’re all just trying to live the American dream of the middle class….and that isn’t possible without going into debt and in most cases sacrificing your health.

    I work night shift as a nurse. My husband and I rotate off work hours to avoid extra childcare (also expensive) and I would LOVE to be able to stay home while my husband works in a job that was once thought of as middle class work and is now A WORKING CLASS LIFE.

    I wish I’d hear this as part of the discussion. My husband and I have more education and work far more than our parents did. We have made larger purchases later in life (neither of us have ever had a car loan) and have far fewer material goods than our own families did in similar life stages. I can’t speak for anyone who thinks they are owed a living. I just expect to make a life out of my hard work. And this struggle Is Not Worth It. I’ll drop dead trying.

    But then that’s society’s plan now, is it not?

    And s#$@, I don’t have any of those damn toys or the nice furniture. But I don’t have tons of credit card debt either. But I see the temptation. People spend because they get NOTHING in exchange for their time and work and they want reward of some kind that is not coming in the form of pay or free time. It’s human. Stop blaming the little guys.

    • Johny

      Absolutely true, a professional job is not enough to buy even a small property in a large Canadian city and I guess same is for US as well.

      • Queen Mennon

        the grip they have on housing is criminal. people have the right to have a roof over their heads that they can afford. housing is not a commodity.

    • MaMaBear

      Umm…are you aware cell phones are provided to the poor?

      • Queen Mennon

        corporate welfare.

    • Vince

      I understand the frustration, but ultimately no one makes anyone do what they do for a living. If what you do doesn’t provide the financial wherewithal that you want switch job/profession/career/business. Education and degrees have nothing to do with it and neither does just working hard. You can be the greatest skilled runner on the planet but someone on a motorcycle is going to crush you because their vehicle is better. I was taught to look at someone who has been doing what you want to do 20 years longer and if they don’t have the life you want don’t do it. The lie in America is we are teaching kids to “love” what they do, but when art majors only make 15k a year you are setting them up for failure. Do what works, and spend your free time doing what you love and making a difference.


    Yes too high for the people and families – but there is an optimum to everything. Japan went too far as people squirreled away too much savings because they got too fearful -part of the reason why they had an economic downturn. There was a report that savings rate has gone up some.

    USA debt is another story – too high and reason for much of the personal deb6.
    Divide 7 trillion by say 100 million families. 7 trillion is 7 million million. So each family owes about 70 thousand. Wish we could stuff it all in the liberal democrats where the sun don’t shine.

  • Canuck

    It’s not just Americans. Canadians are quickly catching up. I woke up in 2005 thanks to a precious metals blog, but friends of mine… they bought a house in 1996 for $49k, today they owe over $200k on that same house and for 30 years as of last December. They’re the rule too, not the exception. So they’ll be paying for that house into their 80s. Very very sad.

    Thank you for the article.

  • david john

    Embrace your poverty! Starve the Gov of all income and sales taxes. Starve the banks of interest charges and all fees. Drive an old car and learn to fix it. Get a bike and practise pedalling it. Live in a small house that you can actually afford. Turn off your cable and starve the media companies. Reject the American dream because it is actually a nightmare of slavery and misery.

    • Smoke Under Sky

      Aint it the truth.

    • Lil Dude From Across Da SkreeT


  • Tatiana Covington

    Oh well, sometimes I’ve just dumped my debts and skipped out, making the lenders eat them.

  • Steve J

    I have a friend who in the early 70’s
    when we were both fresh out of college told me to do as he was doing and use credit cards for downpayments on duplexes in marginal areas . He said by one a month. He did and is now vastly wealthy with apartment buildings all over the country with cash flow galore. I did the same but on a far smaller scale. However, it now pays a comfortable retirement. Lesson: when you’re young leverage yourself and take risk. When your older, get rid of the debt and concentrate on cash flow. Credit can be miraculous if used in an intelligent way!

    • MaMaBear

      I an unaware of any lending institution that allows one to borrow money, or use credit cards, for a down payment. My mother was a real estate agent during my teen years and I helped her in the summer with office work. The banking /mortgage industry has vastly different rules now than it did 30-40 years ago. When I was young , credit card interest could be written off as a tax deduction. Not any more. Your 70 year old friend would find the world today a very different place.

  • Uncle B

    Fed’s will use Q 3, 4, 5, 6 “Easings” to pay for war with Iran – on the backs of the American people – but why? Simple – whole damned lot of them, Some Uber-Rich Americans, Israelis, Saudis, all major share-holders in the MIC (Military Industrial Complex) and by promoting and even causing war, cause these stocks to go up in value, pay ridiculous dividends to them – They cause war to churm money so they can collect or “skim’ dividend checks for themselves – from your pockets!
    This “Entrappment of America” has gone far beyond the Proverbs 22:7 stages – in fact: The Great Corporate American Propaganda Whore has mesmerized, distorted, bastardized, perverted, the very fabric of American society to its own ends, making “noble cannon fodder” of its children, “freeing” them of farm-land, and sending them out as: mercenaries on behalf of the Saudis in Iraq, mercenaries on be half of Israel in Iran, and failed mercenaries to Oil corportions out of Texas in Vietnam, and the South China Seas Oil there.
    All of these wars committed on the gurentee that the American armpits would continue to produce at higher levels than any others in the world – snag! China and the vast Pan Eurasian production base swept in even buying our the machines of production form the greedy Uber-Rich, and leaving them with a “broken” money generator – what to do? Why! sell out the faithful workers to China for even more profits of course. Americans now face a drastic change inlifestyle debts they cannot hope to pay and a Corpocracy for governance. All this happened very quickly, in decades, and change will continue for decades. The old ‘America” dead on the rocks now, this interum America not livable, and the future looks very bleak in America for decades to come.


    “The way Federal Reserve system works, whenever more money is created more debt is created as well.”

    as in the article: “10 Things That Every American Should Know About The Federal Reserve”

    It’s so amazing to watch out that the financial institutions today are very aggressive in luring people into debt by various sugar-coated loan offers! It’s a very dreadful situation as well as disgusting for those mindless esp. young generation will fall into debt slavery!!!

    And here’s a quote from Aldous Huxley about debt:
    “Armaments, universal debt, and planned obsolescence – those are the three pillars of Western prosperity. If war, waste, and moneylenders were abolished, you’d collapse. And while you people are over-consuming the rest of the world sinks more and more deeply into chronic disaster.”

  • My Grandfather used to tell me…..”It’s good to have money….If you can afford it”.

  • Lucia

    Clearly household debt is a problem, but I wonder where these statistics are coming from. For example, if I have a credit card that I charge things on every day, but pay off in full every month, how can you tell if I’m carrying a balance on it or not? It will always show a balance if I incur charges between the statement closing date and the payment due date. (This is in fact how we use our credit card. We put just about everything on it rather than pay cash because it’s a rewards card. We never carry a balance from month to month.)

  • Richard

    You are a smart person who is using their credit card correctly. But most of the Americans don’t follow that pattern, but carry a balance from 1 month to another. Thats where we all get into problems that the statistics that you are seeing.
    I myself finally realized that the credit companies are getting rich off of us wage earners. I finally at the age of 70 cut up all my cards up and went to a credit Co to pay them off and charge me to take out of my bank account on a monthly. Until they are all paid off, I had 6 cards worth $25,000 or more of debt I owed. Now I only have two cards left with approximatly $4,000 left to pay. Which I will still be paying a reduced interest rate this debt Co got my interest down to. which originally had 28%. Now I pay 6 or 8% that this company got them all down to. We all need to teach our children the cost of doing business with banks or loan Co’s
    We must not let them get a hold on our wallets. It took a life time for me to get out of their hold. I will never allow them to do that again, in my life time.
    Please share this with your children and family.

  • Amala

    I entered graduate school for film at the prestigious Columbia University School of the Arts. I was seduced by the Ivy League even though as someone in my late 30’s, parents already passed away, no other means of support, I knew I would have to take out a lot of loans. But I was told that this would be the cheapest loan I would ever get and, ‘go into denial.’ The MFA Film program at the time (mid-1990’s) let students languish or hang out for as long as we wanted just about. I did 7 years! What fun. But I took out the maximum in loans every year to pay for it and still had to work 30 hrs a week. It made it tough then and it’s even tougher now. I’m in my mid-50’s and know that I will pay until I’m nearly ready to retire. I did everything ‘right,’ after learning what compound interest means. I was that stupid! So I consolidated my loans when the interest rate was around 6% (it’s been higher and now it’s lower) and got them away from evil Sallie Mae. Then I went on income contingent repayment plan just as the Public Service Repayment program started. I fortunately work in the public sector at a city college here in NYC so I have a modest but steady income 1/3 of which goes towards student loans monthly. If I stay in public service for 120 consecutive payments, my debt is forgiven but any remaining debt is taxable. Now you know that you have to pay off your interest first so if you don’t pay enough per month, like me, you only pay off interest. This means I could still have the same mountain at the end of 120 payments (10 years) which is up in 5 years and 9 months for me. I could still have about $160K in debt. Taxes on that would be about $48,000. How do I pay that when I’m already in my early 60s? It is indentured servitude for sure. I would sue Columbia but I signed the paper work. I made a contract. They didn’t promise me a job – they only promised me an education which I can say I did get. But it’s overwhelming. And I know I’m one of millions in the same boat. How can we change this?

    For one, I think that charging compound interest is unethical. There ought to be a different way of making loans. And only allowing people to pay off interest first unless they pay a huge amount monthly is unfair too. It’s crushing. Totally crushing.

    Anyway, I remain undefeated and will look here to see if there are ideas or initiatives I can join to help resolve this quagmire.

  • moonmac

    Don’t take out student loan debt unless you plan on paying it back within 5 years. It it nothing but Peonage to the ruling elite…

  • matt

    The last two cars I got were trade-ins plus new notes. One was 0.9%, and the other was 1.9%. Debt has excellent value and is a key driver of the economy. Over-leveraging yourself or making stupid deals, is, well, stupid. Not putting your own skin in the game is dumb. And borrowing to get yourself out of a hole is the dumbest thing you can do!

    Me: Buy new functional/entry-level car (Corolla, Jetta, Focus, that sort of thing), rate well below market, no long-term notes (no 60/72 month car notes) take care of it, trade it in at the peak of the value curve, rinse and repeat. My car is now 1 year old, 2/3 paid off, and has three years of piddly little payments that I could clear flipping burgers at McD’s.

    Sister: Buy USED high-line luxury car (Benz, Lexus, BMW), put no cash into the deal, pay a used car market interest rate on the note, treat it like crap, drive it all the time and just for fun too, get sick of it when still owing money, trade it in for something even more expensive and used, then treat that like crap, then wonder how you got 20 grand upside down on a stupid car.

    Buying a modest but still desirable house (that you can actually afford) in a down real estate market that’s bottomed out with 4.25% APR, 15-year fixed and 20% down isn’t really a bad call.

    Using a charge card (that’s no interest rate if you pay the balance off each month– not to be confused with a credit card) can be a good call (again, if you don’t spend what you don’t have and pay it every month). I use a charge card for EVERYTHING. I just paid for my vacation with points I earned on the card.

    We got some furniture a couple years ago. The store offered 24 months, zero interest, no minimum payments. If you read the terms, can understand and follow them, and can pay off 100% of the balance before the end of 24 months, then you’d be a fool not to take a deal like that. Take the furniture money (since you saved the money up front to buy it, RIGHT?!?), put it in an interest bearing account, and withdraw the balance at month 23, pay the account off and keep the interest you earned.

    So yeah. DEBT isn’t bad. STUPIDITY is. And YES! I support regulations that prevent usury and I support responsible lending. Lending money to someone who is unlikely to repay it for something they can’t afford probably isn’t a great idea. There used to be a market mechanism for that, for you youngins out there…. it was called LAYAWAY. AKA you saw something you wanted, the store put it in the back, you made payments to the store, and when you paid for the item you could bring it home.


  • dave123

    When I was young and very poor and just immigrated to the US, I had no choice but to borrow money to finance my education. And thank God there were student loans because thanks to them I got my degree. I did not default on them but when I graduated and could not find work I applied for a deferral. When I did finally find work, I borrowed more money to buy a car. The US practically forces you to buy it because public transportation is very inefficient and can be dangerous. So, five years after I graduated I was still $26,000 in debt. I went to Japan to work and there, with low taxes and housing paid, I paid off a large chunk of the debt. I then ran up more debt and when it hit 27K , I went to Saudi Arabia to work where it was paid off in 18 months and I still had some money left over. Now, I only have a car loan because I need liquidity and do not want to part with cash which I have saved up. I also have some passive online income paying off half of that car loan every month.
    Moral of the story- one needs to be creative in paying off loans and a good way is to include other countries which pay higher salaries and have lower taxes and free housing which makes it easier to pay it off in one chunk. Also, there are some ways to make money online ( passive income) and then let that income pay your monthly payments.

  • Sandra

    I don’t have debt. I will do everything in my power to not go into debt. Credit rating be damned. There’s no such thing as “good” or “bad” debt…there’s just debt. Either you are or are not willing to take it on. I am not.
    I own my car. I own my house that I built myself. I don’t spend a lot of money. I live on less than $8000/year for 2 people. I’m happier than I’ve ever been in my life.

  • Dingbat36

    We don’t have debt…… some other dummy can have our “share” of that load. Our kids are grown and gone and we own our home and a 3 unit investment property free and clear. We have 3 credit cards and carry NO month to month balances on any of them.

    We have three vehicles, all of which were purchased with cash and we DO NOT trade them in…………we use them up.

    Oh yeah, I guess we do have one small debt…………like most people, we can’t say we truly own our home or income property, we rent them from the county in the form of annual property taxes. Amazing how those property taxes provide less and less as the years pass AND how the taxes none the less, continue to increase. I guess the tax slavery is the only onus we, like most people, bear!

  • Jack Maxwell

    What is the author last name?

  • Live Life Lite

    It would be better for all to stop contributing to debt it contributes to personal financial problems as well as US debt. . Materialism is a temporary escape from facing the reality of oneself’s shortcomings. I had encountered a tragedy early on in my life ( 19 yrs old) just after I purchased my first home. It was then I learned the value of life and the burden of debt. I pledged to myself never to borrow money again and 30 years later i shine above the rest! ANCHORLESS

  • Mother Jones

    The author has forgotten the other side of debt slavery: th
    at it exists because we have given up our right to a living wage and think we have to take whatever employers are willing to let us have. We have given up collective bargaining and solidarity in exchange for credit.

  • wow

    america is controlled by interest rates

  • Mrbill

    I still would like to know the percentage of Americans that are in debt?
    I am not one of them. I paid off my home, never have and never will take a loan for a car or anything else. What percentile do I fall under?

  • Jake Bradney

    I like that you isolated the debt into it’s different sources, but you seem to have left one out: Income tax pays a debt that you, as an American, were born into. If you draw a wage in this country, you are indebted to it. Every working American is a slave, regardless of debt incurred personally.

  • David


  • proudistmonkey

    Great article! I am just stumbling upon this article today. I made a mistake and cosigned for someone not to long ago for a car loan for about $12000, yikes!!!. I was being way to nice which can be my downfall. Luckily and hopefully they are the type of person to repay the loan on time. I’ll never make the same mistake twice though so that is not happening ever again because now I realize that was a mistake. nevertheless I realized about 5 years ago that debt was evil and made a descion to live “debt free”, which basically meant that I had no credit cards even though I had a car loan which I thought I needed. Walking away from a somewhat high paying job and going in a humble living with a low paying job has been a eye opener. I sold my car that I had debt on and cleared up the loan and then used money that I had from severance and brought a used car outright. the only debt I own now is the 12000 debt that I stupidly cosigned for and taxes to the government for about $2000 but after this point I plan on truly living a debt free lifestyle with a true minimalist attitude.

  • Jeannie Wood-Ramberg

    I teach my children not to get ensnared as debt slaves. Buy what you can afford with cash. Dont get credit for anything. The only way for people to end their slavery is to starve the ruling class out. We have the power.

  • Richard Eastman

    The question is — should the American people address this situation imposed by
    the financial and money system alone as individuals or single households or
    should they find the reason why the monetary and financial system has gotten the
    entire nation in this position?

    Do you need advice on how you can apply austerity and make sacrifices and
    pay down your debt? Or do you want to unite with all of the victims of all of
    the above financial exploitation – and devise a plan that will enable immediate
    repudiation of all this debt while simultaneously providing a new money that
    will immediately be provided to every household debt free — so that they may go
    out and spend it into existence creating non-debt-financed consumer demand that
    will make the enterprise of the average entrepreneur profitable and for the
    better than average entrepreneur, make his venture so profitiable that he can
    finance his own expansion without loans — just from profits. Such a system has
    been devised. It is astoundingly simple and easy to achieve — because
    astounding simplicity is absolutely necessary — for popular support, for
    set-up and for continued operation. Only the simplest system of providing new
    money to the economy and of producing loans by the banking system is
    compatible with democratic republican (Jeffersonian) government – where the
    people can both watch and understand all that is going on in money creation and
    business and home-buyer lending.

  • mamus4 .

    Brilliant writing , thank you, nice to see a well written thorough article and a reality check all in one

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  • Metalhead

    Debt is debt, there is no such thing as good or bad debt, I never went to traditional college, I am currently doing community college and studying a trade. Best ways not to go into debt, don’t think you always need the next greatest thing just because it’s “In the moment” you can buy a used car with PLENTY of options on it compared to a new car with no options and tons of debt. Another good way is don’t assume you need to live in the nicest neighborhood just because of “statistics” the moment YOU and that’s right, I say YOU go into debt, the moment you are a slave. Don’t just go with the flow, as media encourages, go the opposite direction of society, traditional college is useless nowadays. people were in disbelief when I wanted to go study a trade at Community College, now those same people are chained by their ankles to debt slavery because they were naïve enough to believe everything they were told.