How do people have so much debt?

[Tennis]

I only buy things with my credit card. But I pay 100% of the balance each month. I wonder if that is being counted in this calculation?

Doubtful. I mean an average of 17K per person?

[Cheze]

lenders have strong incentives to try and fool people into taking on excessive debts, and since consumer protections in the U.S. are relatively weak that's what they do (subprime mortgages, 'adjustable' credit card interest rates, etc.) Obviously we'd like everyone to be well-educated about such matters, but most are not.

and that doesn't even cover the completely legit reasons people take on excessive debt; most personal bankruptcies in the U.S. are caused by medical expenses, not just foolish spending

[Garnier Fructis]

Debt isn't bad in and of itself. If everyone spent only what they had, we wouldn't have much of an economy at all. Enough debt that you can't keep up with payments or can't weather unexpected events, is bad.

Personally though, I'm currently debt free and I'm going to try and keep this up as long as I can.

[Spectral]

Debt isn't bad in and of itself.

Credit card debt is outside of rare circumstances. Not paying off credit cards on a monthly basis is generally a path to financial failure.

[Garnier Fructis]

Credit card debt is outside of rare circumstances. Not paying off credit cards on a monthly basis is generally a path to financial failure.

I didn't write that with rare circumstances in mind. What I'm saying is that credit card or other kinds of debt are fine as long as people aren't putting themselves in a position where they can't make payments.

[Tennis]

Credit card debt is outside of rare circumstances. Not paying off credit cards on a monthly basis is generally a path to financial failure.

Don't you end up paying interest at the end of the month whenever you haven't paid off your credit card? I imagine that can add up really quickly.

[Zmaniac17]

A lot of it has to do with impulse buying and not understanding the financial ramifications of interest.

If a person had to actually pay for everything with cash, they would be much more careful with how they spent their money. Being able to blindly put something on credit, is far too convenient (for their own good) for some people.

There should be an entire class in high school dedicated only to credit and interest. I don't even think people need to know the details about how money works and what it is. They just need to know that there is a trap there and how not to fall into it. But on top of that society should have more options for people who want to start their lives without immediately going into debt. But the whole structure of American life needs to change for that.

[matt4pack]

I pay off my credit card each month and earn rewards. I guess all these people paying interest are the ones giving me that free money.

I have a significant amount of savings because I'm just so tight with my money which I really can't help. It just helps to give me peace of mind because I'm a worrier so I don't even really get to enjoy it. I don't see how people live in debt or paycheck to paycheck. I lived like that up though high school and college of course but after that I would be so stressed out I would probably just kill myself.

[Underverse]

Don't you end up paying interest at the end of the month whenever you haven't paid off your credit card? I imagine that can add up really quickly.

Only if you don't pay a small monthly portion I think. You don't have to pay it all each month.

[Spectral]

I didn't write that with rare circumstances in mind. What I'm saying is that credit card or other kinds of debt are fine as long as people aren't putting themselves in a position where they can't make payments.

I can't see much upside to credit card debt unless someone has a very specific plan for turning it into some sort of investment. Buying toys on credit cards is a pretty stupid approach to life.

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Only if you don't pay a small monthly portion I think. You don't have to pay it all each month.

Interest accrues on the unpaid portion. This is usually a strikingly high number on credit cards..

[Ayla]

I'm around the average in debt. 90% of my debt is either related to food or gas. I'm hoping to get it paid off in the next 2 years, but school has to finish first. Sadly I expect to hit 18k before I'm out.

I'm down to 2 pairs of pants
My only pair shoes need replacement.
I'm doing pretty poorly atm.

[DrStiglit]

That is expensive. Maybe delay having a baby till financially stable.
Also wait a second, $1750 a month for a car? There really isn't a need to spend that much...

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He said $1750 for car AND house.

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Don't you end up paying interest at the end of the month whenever you haven't paid off your credit card? I imagine that can add up really quickly.

Interest is tacked onto the balance if you don't pay in full. You don't have to make a separate interest balance. That's why it takes several years to pay of small amounts if you just pay the minimum.

[Tennis]

I'm around the average in debt. 90% of my debt is either related to food or gas. I'm hoping to get it paid off in the next 2 years, but school has to finish first. Sadly I expect to hit 18k before I'm out.

I'm down to 2 pairs of pants
My only pair shoes need replacement.
I'm doing pretty poorly atm.

Why don't you get your parents and siblings to help out and then pay them back later?

[NoRest4Wicked]

I can see how it can happen, I'm working on getting my credit card down from 3300. We have 2600 in bills each month including allowances for my wife and myself, which leaves us around 1400 in free money to put towards the card. It ramped up when my father died and we had to put his burial costs on our card, that was around 5k.

[DrStiglit]

I'm around the average in debt. 90% of my debt is either related to food or gas. I'm hoping to get it paid off in the next 2 years, but school has to finish first. Sadly I expect to hit 18k before I'm out.

I'm down to 2 pairs of pants
My only pair shoes need replacement.
I'm doing pretty poorly atm.

I was in the same situation a couple years ago.. I ended up letting everything go and destroying my credit. My issue was due to loss of job and taking about a 40k per year pay cut for a bit.

If you live in NYC I'll buy you a pair of shoes. Your feet are the foundation of your body. Then need to be cared for!

[Queen of Hamsters]

There are as many reasons as there are people in debt.

The people in debt that I know myself have different ones, such as;

- Taking a loan to start a company to provide for the family, said company failing (computers before their time) and bankrupcy as a result.
- Being irresponsible with money and spending what they didn't actually have, taking micro loans and buying stuff on credit.
- Student loans for studying shit that doesn't lead to anything certain meaning the loans are left unpaid or stacking up. I also know people that had student loans, went for a proper education and are now debt free.
- Life being a douche making it hard to get by and forcing some minor loans.

I myself get mild anxiety from placing an order for goods if I can't pay them instantly... despite running a tight budget and never spending money I won't have by the time payment is required. I am however planning to take a minor student loan and then later on loan for a house. Those are debts I could live with.

[Ayla]

Why don't you get your parents and siblings to help out and then pay them back later?

Only child. Parents are in their late 70s, dad needs money to fund his projects, my mother is just a bitch.

[Caelia]

Depending on your situation in life it can be quite easy to fall in to the credit card trap.
I suffered from a hard depression for several years starting a little more than 10 years ago, during that time my debt racked up because after I used up my savings I used credit cards to pay for food and some months even rent to not end up on the street and this is in Sweden which is supposedly one of the more generous countries when it comes to welfare.
Got rid of my debt just a little over a year ago and wouldn't wish that crap on anyone.

[DrStiglit]

Why don't you get your parents and siblings to help out and then pay them back later?

That's not an option for many people. In my situation if I were struggled my mother couldn't afford to help, my brother couldn't afford to help and my father wouldn't help.

[Ayla]

I was in the same situation a couple years ago.. I ended up letting everything go and destroying my credit. My issue was due to loss of job and taking about a 40k per year pay cut for a bit.

If you live in NYC I'll buy you a pair of shoes. Your feet are the foundation of your body. Then need to be cared for!

You're sweet, but I am a West coast Canadian. I'll be buying new shoes on the next few weeks anyways,