Originally published April 7 2005
Consumer debt rises to 20 percent of average household income
by Mike Adams, the Health Ranger, NaturalNews Editor
Consumer debt, or debt that includes credit card charges, but excludes home mortgages, rose to $1.4 trillion nationwide, according to economics correspondent Paul Solman. Further reports state that the rate of consumer debt is rising twice as fast as wages, due to high interest rates and because credit card spending doesn't register with consumers the way cash spending does. Finally, the accessibility of credit cards at a young age is another reason why young and old alike are having trouble staying debt free.
Toward the end of the last decade, economics correspondent Paul Solman reported that consumer debt -- debt that includes credit card charges and auto loans but not home mortgages -- had risen to $1.4 trillion nationwide.
In a CBS News report, correspondent Mika Brzezinski told of a single mother with 12 credit cards.
Brezinski stated, "What you have to pay in those extra interest points isn't always obvious.
For example, a credit card balance of $4,000 at 25 percent would take 27 years to pay off, making minimum payments, for a grand total of more than $12,000."
Credit cards literally are being thrown at young people as they graduate from high school and enter college.
Bob Schroeder, who heads the Illinois Community Credit Union in Sycamore, said, "We try to provide financial education and coach people.
"From my experience, people with problems like shopping or gambling addiction have to look into the mirror and ask for help," Schroeder said.
Asked what parents can do to prevent their teens from becoming credit card debtors, Schroeder said, "One of the best things parents can do is get them involved in a savings account early on."
As other businesses have done, the credit union has increased deductibles---from $250 to $750---for employee health insurance.
While a few decades ago they spent about 25 percent of their income on mortgage payments, it's up to 30-33 percent --- even 38 percent now," Schroeder said.
Schroeder praised his staff and their expertise, adding that there has been little staff turnover.
He said some individuals come in the door wanting a typical loan and the credit union suggests a second mortgage, which will lower their interest rates, provide a tax benefit and lower their monthly payments.
Schroeder also quoted from a study on bankruptcy, which reported that 30 percent of bankruptcies are related to health issues.
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