The story of never-ending consumption and debt

Consumption and debt,  It’s strange to think about it, but in the United States, people with higher salaries tend to have more debt. The higher the salary, the more expenses you can cover from your monthly income, so you can live without debts, and even if you have debts, you should be able to repay quickly and become Debt Free. It’s natural logic, but the opposite is true. Rather than borrowing because you don’t have money and you have trouble living, you can see and hide the American consumer society that even if you have money, you have an infinite number of things you need and you have to keep borrowing to meet them.

Credit card debt

The higher your household income, the higher your credit card debt.

Below is the average amount of credit card debt for each household income. You can see that the amount of credit card debt increases as household income increases. For households with a household income of $ 160,000 or more, the average credit card debt is $ 11,200, which is less than twice the average debt of $ 5,800 for households with a household income of $ 70,000 to $ 114,999. You can see that the theory that the higher your income, the lower your debt, is not working perfectly here.

Household income credit card

Average debt

Less Than $ 24,999 $ 3,000
$ 25,000 to $ 44,999 $ 3,900
$ 45,000 to $ 69,999 $ 4,900
$ 70,000 to $ 114,999 $ 5,800
$ 115,000 to $ 159,999 $ 8,300
$ 160,000 + $ 11,200

Over the last decade, total credit debt across Amelia has grown steadily, but there is one interesting factor. That is, while total debt is increasing, the proportion of people with credit debt to the American population is declining. This means that more and more people do not have credit debt, while those who have credit debt have more debt. Moreover, as you can see from the increase in total debt, it also means that people with credit debt are increasing their debt at a faster pace than ever before.

The average household credit liability in the United States is $ 5,700, which is just the average for those with and without debt. This averages $ 16,048 for those who have credit debt, excluding those who don’t have credit debt (that is, those who pay monthly even with a credit card). There is a clear contrast between those with and without credit card debt: zero debt vs. $ 16,048 debt, and in recent years there has been a gradual shift from debt groups to zero debt groups. On the other hand, those who remain in the debt group tend to have more debt, and the $ 16,048 figure is a result of the yearly increase.

Our actions online are gathered without our knowledge, and even if you just research a little thing, after that, whatever you do online, you will see advertisements related to the corner. Many people will have experienced. If you buy something, the person who bought it also bought this … and the recommendation comes out without permission. People who make this a business are doing a lot of research, so how can consumers want to buy, how can they convince them that they need to buy, and how to finally click to buy I know if I can push it. People who are easy to ride on this will continue to consume more and more. The difference between zero debt and $ 16,048 may be the difference between those who are easy to get on and those who are hard to get on.

But what about other debt?

mortgage

Owned mortgages are, of course, highly correlated with income. In the case of the United States, the idea of ​​prioritizing the necessity of “how many bedrooms and how big a house is needed” is preceded by the idea of ​​prioritizing feasibility of “how much house can be bought”. It’s not uncommon for a high-income person to decide, “A functional three-bedroom home is enough, so you can buy a four-bedroom hill, but don’t buy one.” It’s not a general idea. Even online, if you search for the keyword “How much house can I afford?”, You will find many calculators. The first item to enter in the calculator is income. This is followed by down payments, and then mortgage types. It is a popular practice to buy as many homes as you can, depending on your income. Of course, the sites that offer this calculator often have a business that makes money if you buy a high-priced house, or a business that makes money if you rent a lot of mortgages.

The amount of income is also the key for loan companies to decide on mortgage lending, and it can be seen whether the Debt to Income Ratio (monthly mortgage-included loan repayment amount ÷ monthly income) is below a certain level. The higher your income, the more mortgages you can repay and the more expensive your home will be.

Of course, some people don’t reach for the “buyable” limit and are happy with a home that’s less than they deserve, but in the United States, homes are considered a status symbol, homes are an investment, and you can buy expensive homes. The justification that it is not just a luxury because it should sell as it is, and the fact that the owner’s house is very preferential in terms of tax, etc., motivates me to buy a house that is as expensive as possible.

Some Japanese people who are reluctant to borrow money think that they should pay as much down payment as possible and reduce mortgages, but this idea is not very popular in the United States. Even if you are rich and can afford more down payments, it is common to have 20% and then mortgage. The idea is that the money that floats is invested and it is better to get a higher yield than the interest on the mortgage (I don’t know because it is not the purpose of this sentence that this idea is wrong). As a result, with or without money, you can borrow as much as you can and buy a house that is as expensive as possible. How much loan you can get is more important than your needs and criteria when deciding which house to buy.

Student loan

The average student loan amount for students who graduated from college in 2015 was over $ 35,000 (according to Envisors). It was about $ 25,000 in 2010, which means it has increased by $ 10,000 in the last five years. Also, the percentage of students who have to take out a loan has increased. The result was less than half 20 years ago, 64% 10 years ago, and 71% in 2015.

Student loans may be borrowed by the students themselves or by their parents, but even parents with a certain amount of income cannot send their children to college without taking out a loan. Also, on the child side, in order to get a well-paid professional job, it is necessary to borrow a lot of loans and finish the university education. Of the total student loan balances as of 2013, the bottom 25% of household income distribution (poor) owes 11% of the total, while the top 25% (poor). The balance owed by the wealthy) was 47%. It means that the wealthy people have a lot of debt to receive or receive higher education as soon as they have money.

By the way, in the United States, there are unexpected jobs that cannot be obtained without receiving not only university education but also graduate school education. Also, even if you are in the same occupation, if you want to get a certain degree of management position or want to be promoted, it is unexpectedly difficult if you do not have a master’s degree or higher. For example, nurses, school teachers, physical therapists, speech therapists, speech therapists, social workers, etc. In Japan, university education alone may be sufficient, but in the United States, is graduate education a common practice? There are also many that require graduate education in order to obtain qualifications .

Students who go on to graduate school will have more student loan loans. It is 2012 data, but if you look at the loan balance at the end of the university / graduate school, the median (median. If you arrange the balance from the lowest to the highest, the balance of the person who is located in the center) The results were $ 57,600, $ 753,000 for the 75th percentile (25% of the highest balance) and $ 153,000 for the 90th percentile (90% of the highest balance). By Degree, Master of Education was $ 50,879, Master of Science was $ 50,400, MBA was $ 42,000, Master of Arts was $ 58,539, Law was $ 140,616, and Medicine / Health was $ 161,772.

Behind this is the social belief that “university education is essential for getting a good job and living a stable life” and “education to become a lawyer or doctor, even if you pay a high tuition fee. It is a good investment because you can expect a high salary after that. ” The current situation is that people are not hesitant to take on debt, with the justification that “education cannot be wasted”. What makes the business of university management different from others is that the product of university education is “what people want” even if they do not sell it hard, and consumption is already justified. What’s more, the United States is vulnerable to the word “investment,” and the (sometimes excessive) optimism that “if you invest, even if you owe debt, you will definitely get more profit in the future,” is the use of student loans. It’s accelerating, and now the US student loan balances are outpacing credit card balances. (I’m not saying that it doesn’t make sense to go to college to borrow money … but I’m just saying that unlimited optimism may be reckless.)

We are no better than living as consumers. As long as you live as a consumer, you need to keep deciding whether you need it or not, whether you buy it or not. According to the Britannica Dictionary, consumption is “the act of spending goods to satisfy human desires”, and desires are the basis of that act, but if you do not try to have your own judgment criteria, it is social. Desires will always be created by the media, advertisements, etc., and we will continue to consume to satisfy them and continue to borrow to continue to consume. It’s very difficult to have your own criteria, and I’m not sure if I can do it, but whether or not I try to have it … may make a big difference. I think every day.

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