The Debt Burden of American Families
American families are drowning in debt. The last 20 years of hedonistic spending is finally coming back to bite the average American. Currently the average family is almost $175,000 in debt and much of that can be blamed on unchecked deficit spending. Credit cards are everywhere and the average household now carries 13 active cards with a balance, and the family has maintained a balance of over $4,000 for twenty years, leading to a point where four percent of total debt is high interest credit cards.
Add to that the habit many Americans have in buying a new car every 18 months or so leading to an indebtedness of over $14,000 on vehicles alone. Americans have not been able to leave their home equity alone either, pulling $24,000 out of the value of their homes, and most of that has not been used to increase the value of the home.
Of course, the value of the home is compounding a household’s debt problem. Before the “housing bubble” burst in 2005, it was not uncommon for a family to refinance the house every couple of years or so, or to “buy up” getting more expensive homes and now 63 percent of a family’s debt is in the home. Unless the economy turns around, the 75 percent of Americans in debt must attempt to discipline their spending – but do the current statistics even offer room for such efforts?
