Originally published January 31 2005
Shuffling money between mortgages and credit cards can be dangerous for consumers
by Mike Adams, the Health Ranger, NaturalNews Editor
Many people are looking to home equity loans in order to bridge the gap between expenses and income. Putting money into a home equity loan is dangerous, however, as it can lead to house seizures if the loan payments are not made promptly.
Many American homeowners are addicted to a money game akin to "hot potato" that will end when too many consumers get financially burned.
The game is real and could easily be called "Extreme Household Debt."
To meet the fast-rising expenses of health care, education, gas and insurance - and, yes, often just to afford the next cool gadget - households have relied increasingly on credit card spending.
When credit card debt becomes too big, households rush to refinance their homes at seemingly attractive, low mortgage rates.
"At some point, when your income does not keep up with your expenses, it is called bankruptcy," says Javier Silva, a senior researcher at the Demos think tank in New York.
It shows how millions of U.S. households are falling into a vicious cycle of tapping their credit cards and then refinancing their mortgages to extract needed cash from the equity in their homes.
The appreciation of homes in most metro areas - certainly here in the Tampa Bay area - has been skyrocketing, adding equity for homeowners at a dizzying pace.
And leveraging that new-found wealth is encouraged by a daily barrage of credit card and low-rate home refinancing solicitations, by Federal Reserve Chairman Alan Greenspan's "no worries" remarks in speeches and even by the deficit-prone Bush administration's go-spend-your-tax-cuts appeals.
U.S. households are too quick to splurge these days.
But declining income and rising costs of basics - from gasoline to health care - are the primary reason for a financial gap now filled by credit card and mortgage debt.
In New York this week at a gathering of national retailers, St. Petersburg Times staff writer Mark Albright reports that economists are forecasting a weak year in which the "consumer may be tapped out."
All content posted on this site is commentary or opinion and is protected under Free Speech. Truth Publishing LLC takes sole responsibility for all content. Truth Publishing sells no hard products and earns no money from the recommendation of products. NaturalNews.com is presented for educational and commentary purposes only and should not be construed as professional advice from any licensed practitioner. Truth Publishing assumes no responsibility for the use or misuse of this material. For the full terms of usage of this material, visit www.NaturalNews.com/terms.shtml