How Much Is The US In Debt?

A couple are depicted calculating their debt
America’s Debt Culture And The Financial Crisis
Part 1 How Much Is The US In Debt?
Part 2 The Effect Of The Federal Reserve On Debt
Part 3 The 2008 Financial Crisis And Its Effects
Part 4 When Did American Payday Lending Become Popular?

Can anyone live without debt? Unsurprisingly most Americans feel that this would be impossible with seven out of ten thinking that they could not manage unless they had access to borrowing. But, how did this addiction to debt become a normal state of affairs? There are many who think that the current system is designed to keep everyone in debt until the day they die. In this article we will look at the culture of debt that is ingrained in the American way of life and also take a closer look at the 2008 financial crisis that rocked the whole of the western world:

  • America’s debt culture
  • Starting young with debt
  • Ambition fueled by deferred payment
  • The social perspective of debt

Indebtedness often starts with a student loan to pay for college and continues when you borrow money to buy an automobile. Then comes the mortgage for a home and by that time it is just normal to use a credit card to finance a lifestyle that enables you to keep up with everyone else.

Credit cards pay for designer clothes and the latest media devices. Clever advertising persuades us to stump up $1,000 for the latest iPhone although most people know in their heart it is really not worth the money.Even though there is a hope and belief that the day will come when they are out of debt, for most people it never seems to happen.

Changes in attitude about being in debt

Adults who had been through the depression of the 1930s instilled into their children that borrowing and credit should only be used in emergencies. And, even though many of the new generation took on board the principles of their parents, the normalization of being in debt somehow seeped through and now most believe that living life in the American Way is all about taking on debt.

College tuition fees have risen by  1,120% since 1978 in the US

Asked how they reconciled their view of debt being a bad thing with consistent borrowing, it became clear that most people want to enjoy all the trappings of a good middle class life including a car, owning a home and enjoying a decent consumer goods laden lifestyle. And, probably quite rightly, they feel that this cannot be accomplished without using credit.

Ambition fueled by deferred payment

Americans are pragmatic about using credit and for the middle classes debt is an inevitable situation. Most average families could not send their children to college unless they were funded by a student loan. So, if you want to get a college degree which is going to lead to a better career, you have to borrow. The fact is that college tuition fees have risen by 1,120% since 1978 so for most students, a large amount of debt as they start their working life is inevitable.

A couple are meeting their financial adviser before taking out a loan

Furthermore, in today’s world it is becoming almost impossible to live without a credit rating. Never having borrowed means you will get a low credit rating and this can lead to a situation where you are considered not normal.

With no credit rating, credit card or loan history, it becomes more difficult to travel, book a hotel and you may be denied a cellphone contract. Retailers appear to look down on those with no access to credit and it is often the case that cash is unacceptable.

Multiple credit cards

One of the problems with modern credit is that it has become very easy to become mired into large amounts of debt. The most responsible person finds it easy to get multiple credit cards which can lead to constant borrowing, transferring balances and as long as the minimum payment is made each month, the finance companies are going to be very happy as they count their profits.

With no credit rating, credit card or loan history, it becomes more difficult to travel and book a hotel.

This situation can lead to debt problems but equally it can lead to a better credit rating which allows you to get a mortgage or larger loan in the future. So, being in debt is not always a bad situation but should it be this way?

The social perspective of debt

Taking on debt also has a social aspect. Young people often feel that it gives them independence and freedom from parental control. In addition, since everyone is in the same boat , there is little stigma attached to owing money to big corporations and in some quarters it could be considered to be patriotic to continue spending and help the American economy. Furthermore, some sources have pointed out that debt is a great leveler and that communities that were previously segregated have now found common ground by being part of the culture of debt.

America’s Debt Culture And The Financial Crisis
Part 1 How Much Is The US In Debt?
Part 2 The Effect Of The Federal Reserve On Debt
Part 3 The 2008 Financial Crisis And Its Effects
Part 4 When Did American Payday Lending Become Popular?

About the author

Mark Larsen

Mark Larsen has worked in the finance industry for over 20 years. Over the course of his career, Mark has amassed experience in personal finance and especially short-term lending. He shares his valuable insights on onlinecreditusa.com