Monday, 22 April 2019

Debt Chatter

I sat and watched a YouTube video documentary over the weekend entitled 'What Killed The American Middle Class'.

It's a 30-minute piece which is kinda curious and interesting.

Basically, they lay out this downfall of the American middle-class, and the economic woes that they've suffered through.

Some folks have had to declare bankruptcy.  Some have gone to two jobs.  Some have gone to depression stages.

At the end of this....I sat there and did a fair amount of pondering.

What happened, if you didn't really notice the past three decades....people were building mountains of debt...either because of bad decisions on home-purchases, or via credit cards, or buying cars beyond their lifestyle, or via college loans. That meant that they were gradually going paycheck to paycheck, and that only increased in the past decade. The people who avoided the debt-bomb....have survived, and are doing quite well. It's not capitalism that bankrupted these's the failure to recognize the problem of debt and how much you can legitimately carry on your back.

I worked with a guy in DC, whose combined household income (him and his wife) was near $200,000.  Both nearing 45 years old....had mountains of debt.  They'd bought a half-million-dollar house.  They'd bought high-cost cars (one a BMW and the other a Infiniti).  One still owed $20k on college debt.  I never asked about credit cards, but I'd assume that they had that issue existing as well.  Luckily, no kids.  But the guy admitted....they were reaching a stage where debt was consuming one-third of their total income (on top of taxes, social security, etc).

I give some credit to the documentary folks for the style and quality of the video, but the truth of the matter is that the middle-class folks who missed the 'debt-bomb', are doing very well, and still enjoying life.  The other folks?  They screwed up, and just never got that lesson on spending and saving.

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