Do Americans spend way too much on credit?

Question

Im doin a research on consumer debt and just want to know do we as Americans spend way too much on credit and why? And can there be ways to fix this problem?

Answer 1

Yes. The average US family owes over $8000 in credit card debt alone. I think that the overspending has a lot to do with "keeping us with the Joneses." A lot of Americans feel that they need to have the latest flat screen TV, two cars, a large house, etc. A societal attitude change would be necessary to fix the problem.

Answer 2

Are you writing a paper? Hopefully the "Im doin a research..." portion of your question is just for us, because if you start a paper out like that...you may very well get a failing grade. This despite your best intentions.

Many people are in deep debt. Our Administration seems to be fond of borrowing billions of dollars and so I would say the answer to your question is Yes. However, personal debt is quite a different thing than say -- the National Debt. Many countries borrow money from the USA and fail to repay it. Do a search on these subjects and see what comes up. Good Luck.

Answer 3

Probably. But many Americans don't understand how credit works. That said, I think Americans understand credit much better than the rest of the world, as credit cards introduced lately in other countries have been a disaster. People seem to think they don't need to pay them back.

I think there should be classes in school on credit so people know how to deal with credit properly. It's a major part of most people's lives, and something we as consumers don't know enough about.

You can find more info at http://www.thetruthaboutcreditcards.com

Answer 4

Yes - the same people who fuss like mad over filing and paying taxes pay 21-32% over their debt in finance charges and another 11% on average in fees. It is a huge problem but it keeps our consumer index high. If we all lived on a cash basis billions of dollars in jobs would be lost. It is a necessary evil. If a person or family wants out of credit debt there are thousands of free credit services as well as books and agency's to help by reducing the debt and setting you on a payment plan that totally eliminates the debt in 24 months on average. Then it is up to the consumer to stay that way.
As to why Americans are in so much debt - ease of availability of credit and a myriad of things to buy with it. It is just super easy to get credit and even more so to use it up on clothes, jewelry, vacations and the ever important electronic gadget of the day. It takes discipline to stay on a budget and credit eliminates that need.

Answer 5

Credit spending in this country is out of control, look at the increase in personal bankruptcies. Very sad, too, because once you've gone that route, you credit rating is trashed for life. Used to be a time when people waited to buy something until they had the cash to pay for it; now people are so greedy & have to have things NOW, then they worry how they are going to pay for it later, and often they can't. I doubt there is a solution, the credit card companies are delighted & getting richer by the day. The only solution is for individuals to cut up those credit cards & refuse to rely on them.

Answer 6

USMcsting not withstanding, the answer is obviously yes. As individuals we seem to lack discipline and a sense of personal responsibility. As a society, we borrow from the future to pay for dubious gains and pleasures of the moment.

Some folks really really seem believe that we have an obligation to enrich the private class, perhaps under the mistaken impression that with endless frivolous buying we help the overall economy.

The overall economy would be much better served by people living within their means and not giving merchants and vendors the erronious impression that we will endlessly pay ever more for their goods. It's that impression that has created the continuous inflation of all our basic commodities.

If people just stopped buying all the silly stuff, the economy would cool down to a rational level. No one would lose their jobs, and prices would come down. People could afford houses, education and medicines if they didn't waste their money on plasma tv's and ipods. It's really pretty obvious.

Answer 7

We do spend too much on credit and debt, and I read an interesting theory the other day on why that is. The author, Dave Ramsey, said that when we move out of our parents' houses, we want to live at the same level of luxury that we had there, so we charge to get there. What we fail to see is that it took our parents YEARS to get to where they were when we lived with them.

I read one of the other responses that said that debt is what keeps the economy going. That couldn't be further from the truth. Sure, it helps the banks and credit card issuers, but it takes spendable money out of the hands of the consumer.

My wife and I have paid off everything but our house, and the next car we buy, we will pay cash for. No more loans, no more borrowing. No more debt!

Answer 8

Oh, yes, indeedy! I know very few people who wouldn't be devastated if they lost their job and suddenly had to live and pay all those bills out of their non-existent savings.
For many years, I didn't have a credit card, because I didn't make enough money to qualify. Imagine that. Now the hubby and I have ONE card. I haven't used the thing for 3 years and it's not because we're rolling in dough. We just don't believe in buying anything that we don't need on credit. We did use it for his cataract surgery and that was partly because we got a 15% discount from the doctor for paying immediately and in full. We Americans buy so many things that we can easily do without, at least until we get the last purchase paid for. Advertisers and self-worth "pundits" keep telling us that it is our God-given right to live as high on the hog as we can. They don't bother to mention that we also have a right to live without crushing debt and the tension that arises from it. Our government encourages us to spend, spend, spend, because that keeps the fat cats happy and puts mega-bucks in sales and use taxes into the treasury, so our government, with our tacit permission, can continue on the merry road of deficit spending.
What can we do about it? Tighten our belts, realize how much that easy credit is really costing us in terms of interest rates and stress. Try to keep your spending to the things you NEED, not the things you WANT. It's easy to tell the difference...need is when you are in danger of dying when you don't have it. You know, Basic food, basic shelter, and basic clothing. Anything after that is a luxury.

Answer 9

Really, spending anything on credit is too much unless it is an emergency. Why can't you just wait until you save up the money?

No giving people an easy way out (like bankruptcy) would kick that problem. It's too early to tell if the new bankruptcy laws will change anything.

Answer 10

Advertisers tantalize people with their ads and TV commercials which flaunt every product imaginable and create a demand.
Very few citizens have unlimited finances even for the necessities so when they want the new car, vacation, the latest fad in clothing, they charge it.

The realization that the small payment is costing them up to 21% in interest each month and pushing up the cost of the product is not advertised and most people don't realize the reality until they are in debt over their heads.

The only answers are self-control and education by the government (that would mean they lose their sales tax) so we can forget about that.