Americans may have learned a sense of frugality in the tough days following the 2008 financial meltdown, but those thrifty ways seem to have gone by the wayside.
According to the Federal Reserve, U.S. consumers now owe almost $13 trillion for car, home and credit card loans, a number that’s even higher than it was before the days of the Great Recession.
Spending may help keep the economy buoyant and be beneficial to the country’s hospitality, service and tourism industries, but there are also some key concerns to watch as that collective debt load grows ever larger.
Student Loan Debt at Record Numbers
While home and car loans do help produce a bit of equity and keep America on the road, our staggering student loan load has become a significant burden for more and more graduates, especially those who haven’t been able to land the higher-paying jobs they’d hoped their degree might help them get.
Americans now owe $1.34 trillion in student loans – a number about the same as the annual gross domestic product of Russia – and with college tuitions on the increase and more students heading to universities or trade schools each year, that number is rising at a fast rate.
Student loan debt can also become a serious burden for workers, most of whom would rather be spending that money on new purchases or rent, and almost 11 percent of student loan holders are now 90 days or more behind on making their payments.
Car Loans Also on the Increase
If there’s one thing Americans love, it’s new cars, and with average transaction prices on the rise and the SUV and pickup truck craze filling the country’s garages with large, high-value, low-mileage vehicles. It’s a $1.17 trillion part of the economy, with record sales.
And as those costs go up, car buyers are also signing much longer and longer car loan agreements to lighten their monthly payments, with the average car loan now 62 months or more.
Making a hefty monthly payment for almost six years can become a strain on many consumers’ budgets, not to mention the ever-escalating prices for car insurance, and about the only respite is low fuel prices – though they are sure to not last forever.
Charging it is Back in Style
Credit card debt is also a major part of America’s overall, escalating debt load, with three-quarters of a trillion dollars now on consumers’ monthly bills.
And with deepening credit card debt comes credit issues – missed payments, total defaults or consumers carrying balances that are too large or spreading their credit too widely with too many bank, department store or gas station cards.
Those who realize that they’ve spent themselves into a spot that they can’t get out of may also want to consider some professional help. Are you looking for credit repair services?