Drowning In Debt: 35 Percent Of All Americans Have Debt That Is At Least 180 Days Past Due

drowning-help-public-domainMore than a third of all Americans can’t pay their debts.  I don’t know about you, but to me that is a shocking figure.  As you will see below, 35 percent of the people living in this country have debt in collections.  When a debt is in  collections, it is at least 180 days past due.  And this is happening during the “economic recovery” that the mainstream media keeps touting, although the truth is that Barack Obama is going to be the only president in United States history to never have a single year when the economy grew by at least 3 percent.  But at least things are fairly stable for the moment, and if this many Americans are having trouble paying their bills right now, what are things going to look like when the economy becomes extremely unstable once again.

The 35 percent figure is a nugget that I discovered in a CNN article about Detroit that I was reading earlier today

And the city’s troubles have left a mark on the financial stability of its residents in a big way, according to a new report from the Urban Institute.

About 66% of residents have debt in collections — meaning more than 180 days past due — at a median amount of $1,847. Across the U.S., 35% of Americans have debt in collections.

It is hard to believe that 66 percent of the residents of one of our largest cities could have debt in collections, but without a doubt the city of Detroit is a complete and utter economic wasteland at this point.

But to me, the 35 percent figure for the nation as a whole is a much greater concern.

And much of the debt that is in collections is credit card debt.

In the immediate aftermath of the last financial crisis, many Americans started getting out of debt, and that was a very good thing.

Unfortunately, that trend has completely reversed itself over the past few years, and now credit card balances are rising at a pace that is quite alarming

Using data from the U.S. Census Bureau and the Federal Reserve, ValuePenguin found that the average credit card debt for households that carry a balance is a shocking $16,048 — a figure that has risen by 10% over the past three years. At the average variable credit card interest rate of 16.1%, this translates to nearly $2,600 in credit card interest alone. And many credit cards have interest rates much higher than the average.

Even scarier, consider that based on the average interest rate and a minimum payment of 1.5% of the balance, it would take nearly 14 years for the typical indebted household to pay off its existing credit card debt, at a staggering cost of more than $40,200. Keep in mind that this assumes no additional credit card debt is added to the tab along the way.

Those that have been there know exactly how it feels to be drowning in credit card debt.

You know, they don’t teach you about credit cards in high school or in college.  At least they didn’t in my day.  So once I got out into the “real world” and discovered the joy of instantly getting whatever I wanted with a credit card, I didn’t understand how painful it would be to pay that money back someday.

If you have credit card balances that are out of control, they can keep you up late into the night.  The worry and the fear can eat away at you like a cancer, and many people play a game of moving balances from one card to another in a desperate attempt to stay afloat.

Fortunately I learned my hard lessons at an early enough age to get things turned around.  Now I warn others about the danger of credit card debt through my writing, and my hope is that the things that I share on my websites are doing some good for others that may be struggling financially.

When you are deep in debt, it is exceedingly difficult to build up any wealth of your own.  This is one of the primary reasons why 69 percent of all Americans have less than $1,000 in savings today.

In essence, more than two-thirds of the country is living paycheck to paycheck, and that is a recipe for disaster when the next major economic downturn in the U.S. strikes.

Overall, household debt in America has now reached a grand total of 12.3 trillion dollars.  When you break that down, it comes to $38,557 for every man, woman and child in the entire nation.

So for a family of five, your share of that total would be $192,785.

And remember, that is just household debt.  That total does not include any form of business debt or any form of government debt.

We truly are a “buy now, pay later” society.  We were the wealthiest and most prosperous nation on the entire planet, and previous generations handed us the keys to the greatest economic machine in world history, but that wasn’t good enough for us.

We always had to have more, more, more – and now we have accumulated more debt than any society in the history of the globe.

It is inevitable that this giant debt bubble is going to burst.  Anyone with an ounce of common sense can see that.

What we experienced in 2008 was just a preview of the hard times that are coming.  The next recession is going to be even worse, and most economists are convinced that it will happen within the next four years no matter who is elected president in November.  The following comes from the Wall Street Journal via the Calculated Risk blog

Economists in The Wall Street Journal’s latest monthly survey of economists put the odds of the next downturn happening within the next four years at nearly 60%.

Just like the last time around, millions of those that are “living on the edge” financially will fall out of the middle class and into poverty when they lose their jobs.

Hopefully most of you that have been reading my work for an extended period of time have already been getting out of debt and have been building up a financial cushion.

Sadly, most of the country continues to act as if they are living in a pre-2008 world, and the economic wake up call that is coming is going to be incredibly painful for those that thought they could get away with being exceedingly reckless financially.

21 Ways To End The Phrase ‘Americans Are So Broke…’

Coins - Public DomainDid you know that 77 million Americans have unpaid debts that are “in collections” and that Congress is actually thinking about letting post offices offer payday loans?  We live in a country where almost everyone is drowning in debt and where most people are either flat broke or very close to flat broke.  Years ago, “your Mama is so broke” jokes were all the rage, and at the rate we are going they could make a big comeback.  Some of my favorites were “your Mama is so broke she went to McDonald’s and put a milkshake on layaway” and “your Mama is so broke your family ate cereal with a fork to save milk”.  Unfortunately, the facts that I am about to share with you are not funny at all.  In fact, they are quite sobering.  Yes, things are going fairly well for the elitists that live in the good areas of New York City, Washington D.C. and San Francisco right now, but most of the country is deeply struggling as our economic fundamentals continue to crumble.  Please share these numbers with as many people as you can, because we need people to understand that there has not been an “economic recovery” for most of America.  In fact, in many ways things just continue to get even worse.  The following are 21 ways to end the phrase “Americans are so broke”…

1. Americans are so broke that about a third of them have debt collectors on their heels.  One recent study discovered that more than one out of every three adults in the United States has an unpaid debt that is “in collections“.  That is a total of 77 million people.  In other words, the debt collection business in America is absolutely booming.

2. Americans are so broke that Congress is now actually considering allowing post offices to provide payday loans and check cashing services.

3. Americans are so broke that they are keeping their vehicles longer than ever.  The average age of vehicles on America’s roads recently set a new all-time high of 11.4 years.

4. Americans are so broke that car dealers are having to go to extreme lengths to get new customers.  Last year, one out of every four auto loans in the United States was made to someone with subprime credit.

5. Americans are so broke that 52 percent of them cannot even afford the homes that they are living in right now.

6. Americans are so broke that they are falling farther behind on their student loans than ever.  The total amount of student loan debt in the U.S. has now reached a whopping 1.2 trillion dollars, and approximately seven million Americans are in default on their student loans at this point.

7. Young Americans are so broke that half of all college graduates are still relying on their parents financially when they are two years out of school.

8. Young Americans are so broke that only 36 percent of American adults under the age of 35 currently own a home.  That is the lowest level that has ever been recorded.

9. Americans are so broke that many of them can’t even afford to shop at Wal-Mart and dollar stores anymore

Discount stores are slowly dying.

Yesterday, Dollar Tree announced it would buy Family Dollar, a chain that is in the process of closing hundreds of stores and firing workers.

Other discount stores have been struggling as well, writes Heidi Moore at The Guardian. Fashion discounter Loehmann’s filed for bankruptcy, while Wal-Mart’s sales have declined for the past five quarters.

“There’s just not enough money deployed by American families to keep all the discount chains in business,” Moore writes.

10. Americans are so broke that they are running up record levels of debt.  Overall, U.S. households are 11.68 trillion dollars in debt right now.

11. Americans are so broke that the wealth of the “typical American household” has fallen by 36 percent over the past decade.

12. Americans are so broke that one out of every four part-time workers in America is living below the poverty line.

13. Americans are so broke that more than 37 million Americans are now being served by food pantries and soup kitchens.

14. Americans are so broke that there are 49 million Americans that are dealing with food insecurity.

15. Americans are so broke that the number of people on food stamps has increased by about 14 million while Obama has been in the White House.  Ten years ago, the number of women in the U.S. that had jobs outnumbered the number of women in the U.S. on food stamps by more than a 2 to 1 margin.  But now the number of women in the U.S. on food stamps actually exceeds the number of women that have jobs.

16. Americans are so broke that the U.S. government has had to spend an astounding 3.7 trillion dollars on welfare programs over the past five years.

17. Americans are so broke that more than 20 percent of all children in the U.S. are living in poverty.

18. Americans are so broke that we have a record number of kids sleeping in the streets.  In fact, we have more than a million public school children that are homeless at this point.

19. Americans are so broke that 76 percent of all Americans are living paycheck to paycheck.

20. Americans are so broke that 26 percent of Americans have absolutely no emergency savings whatsoever.

21. Americans are so broke that approximately two-thirds of all Americans do not have enough money saved up to cover six months of expenses if an emergency arose.

If things are this bad now, during the so-called “economic recovery”, how bad will things get during the next major economic downturn?

Unfortunately, most Americans have been lulled into a false sense of security.  The financial crisis of 2008 seems like ancient history to most of them now, and most people appear to believe that our leaders have “fixed” whatever was wrong the last time.

Of course that is not the case at all.  In fact, our long-term problems have just continued to grow since then.

The truth is that what we are experiencing right now is about as good as things are going to get for the U.S. economy.  When the next crisis arrives, all of the numbers in the list above are going to rapidly get a lot worse.

So enjoy the rest of this “bubble” while you still can.  It certainly will not last for too much longer.

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