Something To Think About The Next Time You Pull Out Your Credit Card

According to Bob Lawless at The Credit Slips Blog, if no one in America spent any of this year’s personal income on “trivial” things like food, shelter, taxes, and medical care,” it would still not be enough to pay off all of our mortgages, credit cards, and other “other personal indebtedness.” In 2003, this wasn’t true.

Something to think about before you charge something you don’t really need. —MEGHANN MARCO

One to Lie Awake at Night About [Credit Slips]
(Photo:DCVision2006)

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  1. gameraboy says:

    So if I don’t spend money on shelter, I’d be able to pay for my shelter, i.e. my mortgage? Confusing.

  2. catnapped says:

    But if we don’t use our credit cards, don’t the terrorists win?

  3. Beerad says:

    Isn’t that the entire point of a mortgage? Of course my income for a year isn’t going to be able to pay off several hundred thousand dollars at once. Instead I get to pay it off over 20 – 30 years, and it’s going to take a long long time before the balance of my loan equals my total annual income.

    Not sure what this proves, except that housing costs are expensive (and probably skew the data, given that the size of a mortgage likely overshadows all other debts combined).

  4. quagmire0 says:

    I guess I have a problem then. I can’t help but stick to a budget and pay off my credit card bill every month. Is there someone I should talk to about this?

  5. TinaB says:

    @quagmire0:

    Obviously you have not been buying enough crap.

  6. Rajio says:

    The USA National debt is something like Nine Trillion Dollars. Good luck with that 1 Trillion dollar war in Iraq and resolving those debt problems.

  7. thrillhouse says:

    The point is the difference in the combined amount owed on mortgages and consumer debt between 2007 and 2003. I’m assuming that this was intended to not only point out the steady incline of what America owes on plastic (was over 600 billion last time I check, but thats been a while), but also the increasing amount being borrowed on homes and how it is not proportional to our incomes and year to year raises.

    This would likely correlate with our country’s fabulous negative savings rate. The point is not if your years salary would pay off your mortgage or even your total debt. Very few would. This is being averaged across all income – whether you have a mortgage or not (renters would fall in here.


    But I could be wrong.

  8. Buran says:

    @quagmire0: Sure. Talk to the “You’re Smart” club. I like my fraud protection and the fact that the money doesn’t actually come out of my account til I pay the bill in full every month.

    I have carried a balance temporarily before, but then too I budgeted how much to pay towards it monthly, paid it off, and will do it again if I ever have to.

  9. j-o-h-n says:

    @quagmire0:
    That’s admirable, but it may not always be to your best advantage. I am particularly fond of the N-months no interest promotions that stores often offer (with the hope that you won’t pay it all off and get stuck with a big interest bill at the end).

    I like to imagine them crying each month when they see my check for exactly total/N dollars.

  10. zolielo says:

    The old rule of thumb was to only purchase a home which was the equivalent of 2 or 3 years of annual income. Realistically in many locations home prices are significantly greater…

    I do not pay off my mortgage nor my student loans in a single shot for the nature of the term of the loans would make it a foolish. I could move or get my employer to pay off portions of my student loan over years, for example.

  11. juri squared says:

    I have never been less stressed about money than I am now that I have zero credit cards. You can’t spend credit you don’t have.

    Granted, I learned this the hard way, but that’s another story.

  12. FLConsumer says:

    I’ve had a credit card since I was a teenager and can’t say they’ve ever been “free money” to me. The only debt I’ve ever carried is a mortgage, and I only did that so I can use the bank’s money for other investments at much higher rates than have all of my money tied up in the house. Then again, I’m not a typical American and still haven’t figured out much of why America does what it does.

  13. Anitra says:

    Wonder how much this has to do with the increasing cost of college tuition and student loans? I know the price at my alma mater has gone up over 25% since 2003. And with fewer grants and more loans in their “aid packages”, graduating students end up further and further behind.

  14. MrEleganza says:

    If you’re smart with your money and credit cards, there’s no reason this stat should make you “lie awake at night.” If the point of the “lie awake” part is that everything’s gonna come crashing down and America and the world will be thrown into financial chaos, well…you STILL shouldn’t lie awake at night worrying about it because there’s nothing you can do about it if true, except perhaps do some volunteer credit counseling work for the less-savvy.

  15. Rusted says:

    What mortgage? What credit card? What car payment? I got away from all that. Worked like a dog, traded down in real estate, and got off that train.

  16. Papa Midnight says:

    Why am I failing to suffer surprise?