Why do people in developed countries still fall into the "debt trap" ?

May 2017
172
Monterrey
#51
It's worth noting that money isn't really something natural either. There's this strange myth that people who can make money are somehow superior. In truth, someone who is good with money is really no different than someone who is good at something else. I would go as far to argue that the rest of us are in fact starting to suffer from it. Not because we aren't "good with money" but rather because it has taken precedence over everything else. In a way, even if you are not good with money you have to have it....and debt is the only way for that.
 
Jan 2011
13,755
#52
I'm not sure where you got that statistic but if it were true on a per capita basis, it must include corporate debt and probably government debt as well. If so it would not be out of line with most developed countries and in and of itself is neither good nor bad. For government debt, it should be evaluated in relation to GDP and growth rate. For corporate debt it should be evaluated against shareholder equity, growth and interest rates. For households it should be evaluated against income, savings, interest rates and future earning prospects.
No , this does not cover government debt or corporate debt, ... It is stuff like credit card debt, car loans, personal loans, student loans...



Fed Says US Household Debt Higher, Not A Risk | PYMNTS.com

U.S. consumer debt is now above levels hit during the 2008 financial crisis

Bloomberg - Are you a robot?

US national debt is above 100% of GDP and stands at almost $70 000 per citizen (and this does not include the above household debt... it is a different category)

https://www.usdebtclock.org/
 
Jan 2011
13,755
#53
It's worth noting that money isn't really something natural either. There's this strange myth that people who can make money are somehow superior. In truth, someone who is good with money is really no different than someone who is good at something else. I would go as far to argue that the rest of us are in fact starting to suffer from it. Not because we aren't "good with money" but rather because it has taken precedence over everything else. In a way, even if you are not good with money you have to have it....and debt is the only way for that.
No , debt is not the only way.... One can live debt free (or at the very least debt free besides mortgage for it can be argued that rent is also debt) if one spends less than one earns
 
Jan 2011
13,755
#54
" Why do people in developed countries still fall into the "debt trap"
people in developed countries are just people , Indian farmer get into the debt trap too
a story in progress is Chinese people falling into the debt trap , they are willing and eager and it only want a better debt trap

debt is sweet , and like sugar , highly addictive
The GDP per capita in India is about 20 times lower than in the US... So in their case I find it more understandable... For an indian farmer, debt can be the difference between living and dying.... This is not the case in developed countries for most people
 
Likes: chefren
Jan 2011
13,755
#55
Wages have not kept pace with the cost of living.

In many cities the working class are effectively being priced out by the costs of owning a home in the city of their employment, and rent may leave them with little in the way of savings. Add to that the disappearance of many blue collar jobs and the rising costs of education and the associated debt that many people take on.

That isn't to say that some people don't also get themselves into trouble by making poor financial decisions, but politicians shouldn't be let off the hook for the sorry state in which the working class now finds itself.
Was that not always the case though ? I mean city centers (in large cities) were always too expensive for the working class, whether in Paris, London or New York (except perhaps for run down and crime ridden neighborhoods)
 
Jul 2019
86
Pale Blue Dot - Moonshine Quadrant
#57
Who is the debt owed to? For people to have debt, there must be creditors to whom all of the money is owed, right? Possibly the creditors are foreigners, but I don't think that is the case.
Some of these links are a little dated but in general the debt is owned by foreign nations (China and Japan typically the largest foreign holders), retirement funds (especially Social Security and government pensions), and the Federal Reserve is sitting on a good chucnk of it.

Here’s who owns a record $21.21 trillion of U.S. debt

who holds the us public debt

The Real Owner of the U.S. Debt Will Surprise You

Who Owns the National Debt? - zFacts

Who actually owns it is not especially relevant however because working people are the ones who are expected to pay - there is no one else who actually generates wealth - and their wages have been stagnating for quite some time.

The fact that retirement plans are such heavy holders of these "promises to pay" exposes the fact that a "debt jubilee" which has occasionally been seen in the past is probably not an option in the current situation.

In a traditional debt jubilee the wealthy got a "haircut" - usually to avoild further radicalization of the poor and shrinking middle class that threatened social stability. Today that "haircut" would effectively wipe out private and public retirement plans on which the poor and middle class are dependent.
 
May 2017
172
Monterrey
#58
No , debt is not the only way.... One can live debt free (or at the very least debt free besides mortgage for it can be argued that rent is also debt) if one spends less than one earns
Debt-free besides mortgage? That's probably the biggest debt you'll ever have. And no, you can't argue that rent is debt. And of course you can live debt-free if you have more money than you need...but if you want to live like the vast majority of people live, debt is the only way. That's how things work from the individual to nation-states.
 
Jun 2014
6,169
US
#59
Debt-free besides mortgage? That's probably the biggest debt you'll ever have. And no, you can't argue that rent is debt. And of course you can live debt-free if you have more money than you need...but if you want to live like the vast majority of people live, debt is the only way. That's how things work from the individual to nation-states.
I have already posted that I know several families who, aside from their mortgage, who do not engage in debt. Granted, most are quite elderly and I think this was common among their generation. My neighbors have two autos, easily over 10 years old. They will purchase one with cash when ready. Not new, because that is more costly. They don't have credit cards. If they don't have the money, they wait. They live simply. Noo smartphones or cable either. It is a challenge in toady's world, one that I can't adhere to, but a way that was quite common in the U.S. until a few generations ago among many people.
 
Apr 2017
3,419
Las Vegas, NV USA
#60
No , this does not cover government debt or corporate debt, ... It is stuff like credit card debt, car loans, personal loans, student loans..
.

This source gives a lower value for non mortgage household debt, the greater part of which are student loans which affect only some households. I don't know how you extracted your figures from the Debt Clock.


The Average American's Debt Balances: Anything Look Familiar?
 
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