The rocket launched
Consumer spending and debt over the past decade has shot up like a rocket straight into the sky. The days of work hard, save your money, and spend strategically is over and I don't foresee those days ever coming back with our consumer mindset. There aren't any people in the modern world that think we are fine and living prosperous; all of the nations of the world and their citizens are hurting. Debt has been a huge thorn in people's sides and this last decade has proven to be the worst we have experienced yet when it comes to spending and debt. Living beyond our means causes us to turn to expensive borrowed money, to which many have shown they can't afford. Let's explore some startling statistics and where we are today and what can be done to alleviate these problems we are experiencing.
Debt over the decade
Household and consumer debt has climbed radically over the past decade. People aren't saving money and living frugally anymore, instead they are racking up credit cards left and right without even a conviction for savings. According to recent results just for 2009 - 2011, consumers in the US racked up over $48 billion in new credit card debt. This is over 400 percent higher than new debt in 2010 and over 550 percent in 2009. These numbers are staggering and shows that people have a hunger for things more than their financial wellbeing. Bankruptcies are through the roof and people are going delinquent on loans and credit cards faster than ever in the history of the world.Credit: Wikimedia Commons
The rate that we are spending is outpacing any other time period in our existence. This doesn't indicate prosperity though, as many foolish news reporters will tell you. They think that if spending is up in the markets and in retail that we are recovering. The vast majority of spending is on credit cards and borrowed money, and with the bankruptcy rate at record high levels it means people aren't prospering but instead are borrowing money and then defaulting. This isn't healthy, in fact this is destructive towards our economy which is why when I hear these reports I roll my eyes. The spending we do as consumers is out of control and the debt we are incurring is only hurting families and making lives miserable.
Student loan debt
Student loan debt is the next bubble to burst in the consumer debt realm. People are trying to better themselves by getting education and paying for it by incurring student loan debt. This isn't necessarily a bad thing, though debt is never recommended. However student loan debt has outpaced even credit card and loan debt. This wouldn't really be a problem if people were paying it back, but the dangerous trend is our economy. People are getting degrees to get better, higher paying jobs and when they graduate they are working part time in retail or at a fast food restaurant. So now they are just like the other employees but they have $50,000 on their backs that are reaching their hand out asking for payment. This is almost a crime in a sense because there should be some kind of promise of better work for college graduates, but there isn't. This leads to higher credit card and loan debt, which tacks right back onto the problem we're having that I just addressed. Now students have credit card debt, loans, and student loans piled on them and they are working part time for $10.00 an hour.Credit: www.doctorhousingbubble.com
There has to be change in our countries and world system to make sure consumer spending and student loan debt isn't an issue. I really like the idea of governments paying for student education instead of spending their money on useless things that won't benefit the country they serve. This would increase the wellbeing of a nation and help people get on their feet to a more successful lifestyle. Until we get a grip on this problem and change laws so student loan debt can be managed in a useful way we will continue to see the total debt increase and defaults continue to happen with there being no work out there.
Dangerous road ahead
Debt is out of control and until things change where people can find better work and higher paying jobs, this trend will continue. Bailouts have been suggested to give money to the people, but this will never work because everyone who suffers with debt will take that money and pay off debt. This means that there is no stimulation to the economy and that money is eaten up and basically disappears. Real reform and changes need to be made and I'm not feeling too hopeful right now about that with how our governments are prioritizing things.