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If the debtor pool varies as widely as you claim, that reinforces something I've been wondering for a while: Is it true that Americans are in debt because they

by dstorrs 16y ago

If the debtor pool varies as widely as you claim, that reinforces something I've been wondering for a while: Is it true that Americans are in debt because they are fiscally irresponsible, or is it because the playing field is tilted? It is hard for me to believe that 33% of all Americans can't grasp the idea of "spend less than you make". Sure, a lot of it is consumer culture / media pressure, etc. But other countries have the same sort of culture and lack our level of credit card debt. Could it be that the field is tilted -- e.g. wages are simply at a level that does not allow the average person to save much even if they try, meaning that as soon as they hit a financial bump (job loss, non-insured surgery, car repair) they are in debt and the interest rates on the card spiral? This is not a conspiracy theory -- I don't think there is a literal collection of people in a room saying "how do we stick it to them this week?" -- but I do think that many economic actors (credit card companies, credit bureaus, major retail stores, etc) act in their own self-interest to continue this situation. I've seen bits and pieces that support this theory, but I lack the economic and political background to tell if this is right or not. Can anyone point me at good sources?

ithayer 16y ago
One interesting tidbit: the most popular support request we've received since launching is to make the service available in the US and Canada. One natural reason that this situation has gotten worse is that the credit card market has become completely saturated (everyone who wants a card has one [almost]). This, combined with relatively easy credit recently has resulted in the card companies marketing to people that they would previously had stayed away from. We've learned that people often become accustomed to credit at an early point in their lives (college), rely on it for awhile, then don't suffer any explicit repercussions, and so grow accustomed to it until the problem grows and it's too late. I don't really think it's a 'conspiracy' either, since it's clear what the motivations for all of the involved parties are. Would love to chat about this more, but I need to tend to the serverz :)
bkmartin 16y ago
I think that the tilted playing field is a great analogy. This has been my biggest complaint. There are many actors as you say, and when you add situations in there that are beyond our control it snowballs quickly. Take myself for instance... Me and my wife are both college graduates. We both come from non rich, roughly impoverished backgrounds. Her mom was a single mother, my dad is a small farmer. So we went off and had to pay for it ourselves. College isn't cheap, that means loans. Lots of loans. So we walked out of college with 80k total in just student loans. We both worked summer jobs, plus jobs during the school year as much as we could. Now, neither of us had nice cars, so they needed to be fixed from time to time. You know, a head gasket here and new transmission there. It all adds up. Then we had this crazy idea... Lets get married! Nice, but now we have to pay for that as well. So I've got a mountain of debt that we're both working to pay off (very slowly) and its not like I have a flat screen tv or any of that stuff to show for it. We don't spend more than we make, but we have a huge hole to climb out of that leaves us with very little at the end of every month. And our expenses aren't getting smaller... health care goes up, so does food, and gas, and heating oil. Welcome to the new American Dream. My hope is that my bootstrapped web hosting service will someday allow me the flexibility I long for, but its a lot of sacrificing of sleep and some family time.
yummyfajitas 16y ago
But other countries have the same sort of culture and lack our level of credit card debt. Could it be that the field is tilted -- e.g. wages are simply at a level that does not allow the average person to save much even if they try,... Most other countries have considerably lower wages (PPP-adjusted, not nominal) than we do. http://en.wikipedia.org/wiki/List_of_countries_by_household_income http://en.wikipedia.org/wiki/List_of_countries_by_household_... http://en.wikipedia.org/wiki/List_of_countries_by_average_wage http://en.wikipedia.org/wiki/List_of_countries_by_average_wa... If an average American reduced his consumption to the same level as a profligate Swede of average income (i.e., one who spends his entire paycheck every month), he would be saving about $15k/year.
- lutorm 16y ago
  The average American is a mirage. Replace that by the median American, and it's immediately down to $7k. Then notice that this "excludes most non-cash income(e.g., like employer contributions to social insurances, or the value of government provided health care and education)" and we can argue whether, after paying for health insurance and retirement/kids college savings, the median American really is better off.
  - yummyfajitas 16y ago
    International comparisons are hard to come by, but here is one which is US vs Sweden (one of the richer "other countries"): http://super-economy.blogspot.com/2010/03/income-distribution-in-us-and-sweden.html http://super-economy.blogspot.com/2010/03/income-distributio... This attempts to include the value of assorted government benefits (health care, education, etc), ignores deadweight losses (e.g., $1 in govt costs providing only $0.90 in benefits), and ignores the value of employer provided insurance (all of which favor Sweden). Americans are still considerably richer (though the bottom of Sweden is better off than the bottom of the US). The gap gets even bigger if you restrict the comparison to Americans of Swedish descent. http://super-economy.blogspot.com/2010/03/super-economy-in-one-picture.html http://super-economy.blogspot.com/2010/03/super-economy-in-o...

by dstorrs 16y ago

ithayer 16y ago

One interesting tidbit: the most popular support request we've received since launching is to make the service available in the US and Canada. One natural reason that this situation has gotten worse is that the credit card market has become completely saturated (everyone who wants a card has one [almost]). This, combined with relatively easy credit recently has resulted in the card companies marketing to people that they would previously had stayed away from. We've learned that people often become accustomed to credit at an early point in their lives (college), rely on it for awhile, then don't suffer any explicit repercussions, and so grow accustomed to it until the problem grows and it's too late. I don't really think it's a 'conspiracy' either, since it's clear what the motivations for all of the involved parties are. Would love to chat about this more, but I need to tend to the serverz :)

bkmartin 16y ago

I think that the tilted playing field is a great analogy. This has been my biggest complaint. There are many actors as you say, and when you add situations in there that are beyond our control it snowballs quickly. Take myself for instance... Me and my wife are both college graduates. We both come from non rich, roughly impoverished backgrounds. Her mom was a single mother, my dad is a small farmer. So we went off and had to pay for it ourselves. College isn't cheap, that means loans. Lots of loans. So we walked out of college with 80k total in just student loans. We both worked summer jobs, plus jobs during the school year as much as we could. Now, neither of us had nice cars, so they needed to be fixed from time to time. You know, a head gasket here and new transmission there. It all adds up. Then we had this crazy idea... Lets get married! Nice, but now we have to pay for that as well. So I've got a mountain of debt that we're both working to pay off (very slowly) and its not like I have a flat screen tv or any of that stuff to show for it. We don't spend more than we make, but we have a huge hole to climb out of that leaves us with very little at the end of every month. And our expenses aren't getting smaller... health care goes up, so does food, and gas, and heating oil. Welcome to the new American Dream. My hope is that my bootstrapped web hosting service will someday allow me the flexibility I long for, but its a lot of sacrificing of sleep and some family time.

yummyfajitas 16y ago

But other countries have the same sort of culture and lack our level of credit card debt. Could it be that the field is tilted -- e.g. wages are simply at a level that does not allow the average person to save much even if they try,... Most other countries have considerably lower wages (PPP-adjusted, not nominal) than we do. http://en.wikipedia.org/wiki/List_of_countries_by_household_income http://en.wikipedia.org/wiki/List_of_countries_by_household_... http://en.wikipedia.org/wiki/List_of_countries_by_average_wage http://en.wikipedia.org/wiki/List_of_countries_by_average_wa... If an average American reduced his consumption to the same level as a profligate Swede of average income (i.e., one who spends his entire paycheck every month), he would be saving about $15k/year.

lutorm 16y ago
The average American is a mirage. Replace that by the median American, and it's immediately down to $7k. Then notice that this "excludes most non-cash income(e.g., like employer contributions to social insurances, or the value of government provided health care and education)" and we can argue whether, after paying for health insurance and retirement/kids college savings, the median American really is better off.
- yummyfajitas 16y ago
  International comparisons are hard to come by, but here is one which is US vs Sweden (one of the richer "other countries"): http://super-economy.blogspot.com/2010/03/income-distribution-in-us-and-sweden.html http://super-economy.blogspot.com/2010/03/income-distributio... This attempts to include the value of assorted government benefits (health care, education, etc), ignores deadweight losses (e.g., $1 in govt costs providing only $0.90 in benefits), and ignores the value of employer provided insurance (all of which favor Sweden). Americans are still considerably richer (though the bottom of Sweden is better off than the bottom of the US). The gap gets even bigger if you restrict the comparison to Americans of Swedish descent. http://super-economy.blogspot.com/2010/03/super-economy-in-one-picture.html http://super-economy.blogspot.com/2010/03/super-economy-in-o...