Puerto Rico Defaults
Reining in Your Debt
Submitted by Ferguson Financial Inc. on March 21st, 2015
As the Great Recession faded, American household debt gradually decreased. In fact, it declined by $1 trillion between mid-2008 and mid-2014, according to the Federal Reserve.1
Now household debt is increasing once more. The Fed found it climbing by $78 billion (0.7%) during Q3 2014.1
On the macroeconomic level, that can be interpreted as a positive: it hints at greater consumer spending, easier credit, and more lending taking place to accommodate consumer borrowers. On a microeconomic level, it is more troublesome. It may mean a change in perception, with debt not seeming as onerous as it once did.
If households really are looking at debt through rosier-colored glasses, they might do well to remember an inescapable fact. When they use a credit card or take out a consumer loan, they are borrowing money they do not have for things they do not absolutely need. The average indebted U.S. household was carrying $15,611 in credit card debt alone in December, the Fed notes. Even if Mom or Dad is a business owner or self-employed entrepreneur, that is an awful lot of revolving debt for a couple or family.2
