45% Of Americans Spend Up To Half Their Income Repaying Credit Card Debts

Tyler Durden's picture

On several occasions we've pointed out that the baby boomer generation is, to put it mildly, ill-prepared for retirement.  In fact, over 50% of baby boomers have basically no savings set aside for retirement at all.  Now, a new survey from Northwestern Mutual helps to shed some light on why Americans are completely incapable of saving money. 

First, roughly 50% of Americans have debt balances, excluding mortgages mind you, of over $25,000, with the average person owing over $37,000, versus a median personal income of just over $30,000. 

 

Therefore, it's not difficult to believe, as Northwestern Mutual points out, that 45% of Americans spend up to half of their monthly take home pay on debt service alone....which, again, excludes mortgage debt.

 

Of course, if Americans are incurring this much debt then it must be for absolute necessities like healthcare and basic nutritional needs, right?  Afterall, the entire federal entitlement farce is dependent upon helping good hardworking, trustworthy Americans who, for the most part, spend their money wisely but sometimes need just a little extra help to make ends meet.

Well, at least that's the illusion that Democrats would love for you to subscribe to...unfortunately it couldn't be further from the truth.  In reality, the Northwestern Mutual survey found that Americans spend 40% of their monthly income on discretionary expenses including "entertainment, leisure travel and hobbies." 

Adding insult to injury, nearly a quarter of all respondents said that "excessive/frivolous spending" was the cause of their debt problems.

Aside from basic necessities, on average, Americans spend about 40% of their monthly income on discretionary expenses such as leisure travel and hobbies. In fact, one quarter cite “frivolous/excessive spending” as a financial pitfall.

 

Meanwhile, nearly 20% of people can only afford to make minimum payments each month on their credit card debts.

 

So, for the taxpayers of this great country, rest assured that your tax dollars are being put to good use to buy Joe and Jill Schmo a nice annual trip to Cancun.

Full survey results here:

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espirit's picture

 

No,no,no. Don’t touch that Kool-Aid.

 

reader2010's picture

DEBT is the money of the poor.

WayPastCaring's picture

I am atheist and even I know the old one about the grasshopper and the ant.

Fucking grasshoppers - I hope they all go bankrupt.

FIAT CON's picture

A good government would teach the people not to go into massive debt for anything! A good gov would teach the people about compounding interest.

 But wait that wouldn't make the true rulers of the world (the banksters) any money. It also wouldn't keep the ponzi fiat scheme alive.

 There are two types in this world the Hunter and their Prey.

techpriest's picture

A politician can't be a savior when everyone is already doing OK.

Fundies's picture

New age card playing.

economessed's picture

If they're going into debt to buy guns and ammo, I say keep spending it patriots!

RafterManFMJ's picture

It's hard to repossess a locked and loaded .308 :)

how_this_stuff_works's picture

I'm not sure how those numbers could add up given the expense of a mortgage, taxes, upkeep, utilities, food, and maintaining some form of transportation.

Seems like everything together would be more than 100% to me.

hedgeless_horseman's picture

 

Seems like everything together would be more than 100% to me.

Exactly. 

That is called a deficit.

They learned this "financial strategy" from our government.

ScratInTheHat's picture

That 16% 1k to 5k is deceptive. I run most of my bills through a card that pays me to use it but the balance is paid every month. There are a lot of people that do that and they don’t have CC issues because they have the cash to cover the CC bill every month.

ToSoft4Truth's picture

The huge advantage to a 401K, it's basically shielded from BK's.

 

If you went overboard on cards, stop paying and max out the Roth portion of your 401K.

 

Ditch the phone you used ot get the credit cards.  Start using Tracfone® burners to avoid the mess. 

Ignorance is bliss's picture

I think they meant to say. Americans spend half their expendable income on CC debt. Not on savings, food, Obomanation care but on CC debt. What does that mean...we are fucked as a nation. And I for one am pissed to be indebted in a completely armed and indifferent third world fuck hole. As you probably can tell..I've had to downgrade my Scotch from MacCallen to GlenMorange because inflation is effecting my choice in alcohol. For those that don't know MaCallen for the big nboy bottle has gone from 90 ish to 140ish. Total B.S.

Catullus's picture

They pay as much as they're willing to pay each month

DEMIZEN's picture

I get cents on 1000  on my IRA. I come to the same bank and they want to lend me my money back at 8 apr. secured. what a bunch of shameless motherfuckers. if your cash flow depends on these roaches you are half dead.  never.

saldulilem's picture

up to is not a good way of posing your headline (discount up to 75%, lose weight up to 50 lbs?). Based on the data, a more impactful headline would be '37 % of Americans spend more than a quarter of their income ....' And ZH again is loose on facts on the title - it's not 'credit card debts', it's 'non-mortgage debts' according to the original report.

techpriest's picture

Indeed. Too click-baity. Still, When I read those stats and look around the neighborhood, it makes you think "How many are in that 37%?"

xrxs's picture

That's like paying alimony to bankers.  No thanks.

Deep Snorkeler's picture

Big Banks in Trumplandia

I invest in derivative financial products.

A world of wonder, contradition and criminality.

I wait for the government to bail me out,

while I sip absinthe at Le Chat Noir.

You sad Untermensch, will pay and pay.

Conned, conned again and again.

Poor fools living in Trumplandia.

 

wacky47's picture

Too much debt at all levels of society is why the economy cannot and will not accelerate! Any Trump stimulus will be short lived.

Dilluminati's picture

between the above article, AI, robotics, global deflationary pressure of naked pricing (that means your product on Amazon next to the rest) I just all jumped into cussip DSH514920.  At 2.9 and 2.8 and will ride that fucker for ten years.

If there is a rate hike then but that ten year as I did, but I don't believe we see another one becuase the consumer will pay for it in higher fees and choke the economy, and that accumulated debt will be a dragging/lagging factor for many multiples of the duration of the brief moment the fed loads a hike.

Nobody who knows debt believes the fed story.

But save yourself and stop the buying of dumb shit.



Dilluminati's picture

I lend money to Discover Credit Card company at 2.8% for 10 years,cussip DSH514920 they in turn lend it to people and ass rape them.  But the 2.8% in my 401K is good for me and I ride old cars and just don't do no stinking interest.  Buy a car?  0% interest or pay it off cash first month after taking the sucker loan the dealer offered.  Forget the nonsense of a mortgage deduction, my property is payed for.

Even if it took two jobs, or a long commute for a high paying one, I suggest getting the fuck out of debt and be the bank not feed the bank.

We don't do no stinking interest, have no interest in fees or services or any of that shit, hate the atm that steals a dollar.

Seasmoke's picture

Everyone needs to stop paying. Only 1% are wise ??? Free up that extra $500+ @ month. No different than extending your own personal debt ceiling 

ToSoft4Truth's picture

Work the crowd from Twitter.   Look at what Trump accomplished using a Twitter account. 

 

At least Obama had to write a speech.

loveguru's picture

Height of irrelevance in one article. Maybe the author should explore the fact that the society is ever more cash less and prefers to shop with their credit-cards instead. Which is a major contributor to the trend highlighted above.

brushhog's picture

In reality, the Northwestern Mutual survey found that Americans spend 40% of their monthly income on discretionary expenses including "entertainment, leisure travel and hobbies." 

Adding insult to injury, nearly a quarter of all respondents said that "excessive/frivolous spending" was the cause of their debt problems."

  Thats exactly right. And , honestly even amongst some of the non-discretionary spending there is alot fo bullshit waste. Sure you need a car but do you need a brandy-new 40k car to get you to work and the market? Do you really need an Iphone ( quick check, are you James Bond? Are you the CEO of Apple or another large company? If the answer to either of these is no, then you dont need a fucking Iphone )?

The biggest problem in America is not a lack of job, opportunity or money, its the spoiled, entitled, consumerism that most people are infected with. The inability to delay gratification, the lack of discipline and this new attitude that I have to get what I want NOW or Im being victimized. And all these spoiled people have degrees in bullshit, and they are excellent at coming up with very eloquent and complex reasons why its not their fault that they arent getting what they want, but should be. Its' evil capitalism, its the banks, the rich, the elitists, the republicans', etc, etc. And the bottom line is they have plenty and more but its not enough and will never be.

The one thing that all the education never gives anyone in America is basic money management skills. Isnt that ridiculous? 16, 18 years in school and they never learn how to spend within their means, save money, balance a check book or run a household.

Dilluminati's picture

I agree on that what is taught in school is ridiculous.  You have to teach it at home.  I took an amoritization calculator and ran the 2.83% of what Discover paid me to lend to them, and it was 13% of the total paid in interest for 10 years at 100K.

http://www.calculator.net/amortization-calculator.html?cloanamount=10000...

Want to be poorer? 

Try that rate at credit card rates

I'd be transfering balances and getting the fuck out of debt!

http://www.creditcards.com/low-interest.php

 

http://www.calculator.net/interest-calculator.html?cstartingprinciple=10...

RafterManFMJ's picture

People know the future is fire and they're - correctly - dancing before the country burns. Look at Pa with all his work and saving; fucked out of his pension, and getting .25% on his savings.

The correct answer to a system of fraud is dance and drink while you can, for tomorrow it burns.

1stepcloser's picture

Its a debt based monetary system, I'm shocked its not higher..  For Every dollar in your wallet or bank acct, Joe and Jane Smuckatelli are paying interest on it..

besnook's picture

this is such an obvious conclusion i can't believe some quant didn't come up with a model forecasting the minsky moment. it only makes sense that credit would collide with income and income wins unless there is a pay raise or a debt jubilee. who didn't think that saddling the part of the population that fuels future growth in the economy, with enormous mortgage size debt burdens would not kill the mortgage business and all the businesses under it in exchange for support of the education business with it's welfare economics model.....and then think that would be a good thing.

ToSoft4Truth's picture

How exactly does a debt jubilee work?

 

Once the jubilee declaration is made, do we run around touching things to take ownership?  What about large condominium buildings, first one to yell "it's mine" takes ownership? 

 

"The bridge is mine!"  "I call the Washington Monument!"

 

Yada, yada? 

 

A national lottery?  "Oh look, you win the Keystone XL Pipeline."  Next, "You win 100 acres in the high desert." 

Lost in translation's picture

True story:

Buddy of mine in AZ makes $90K annual salary and has $40,000 in credit card debt. I've shared his story here, before, but got the figure wrong - I thought he had $30-35K in CC debts, but the correct figure is $40K. Five credit cards, $40K. The $35K figure was just one of the cards.

Anyway, short version: Wells Fargo approved his request for a home loan with which to go house shopping: $280K limit.

So just like that, boom/boom, he finds a house in one weekend, makes an offer, and the deal is done. Don't know what his interest rate is but he's buying a 3-bedroom, 1 bath, 1500 square feet house (one bedroom is the converted garage) near Prescott for $170,000. Please note that the house sold for $8,000 when it was new, in 1995.

Who knew that being what my dear, departed mother used to call, "being hog-ass in debt," would not prove any kind of a financial hindrance, at all?

Mind = blown.

Falling Down's picture

I got laid off in '04, and decided to go back to school full-time for a year to complete my degree. I was in machine trades up to that point, for 5.5 years, while working my ass off, going to school part-time as a working adult on the GI Bill, etc.

A year later, with my great credit rating, I did an experiment. The credit union I was with had re-fi'd my car loan, which was great, and like I said my credit was spotless. I applied for a a "pre-approved mortgage", through their website, and got approval within 15 minutes. I was jobless, about to graduate from school, and they did not require proof of employment nor income, in a metro which is so off the radar it's laughable.

The CU approved me for up to a $170,000 loan. I still shake my head at the whole deal. Two years later I'm watching the 6:30 national news, before I moved to the Deep South (I didn't realize it at the time what was happening, I should have stayed put), and they interviewed this gubmint worker slob from Chicago who'd gotten an ARM for $400K, on his $50K/year income. I should've known, then, that the shit storm was coming to shore.

Fuck the banks, fuck the CC companies.

Harry Paranockus's picture

I'm a credit card deadbeat. I charge everything I can to my one card (food, gas, utilities, insurance, repairs, entertainment, and anything else I can) and then pay it in full every month. Haven't paid a cent in interest in 20 years. Screw them.

KayaCreate's picture

Gotta love tax free cash rewards! I'm still wondering why I don't get a 1099 at the end of the year...lol

Your Good Friend's picture

“Excluding mortgage debt”

Why exclude the very thing that has created this mess in the first place?

Paying 300% premiums for a depreciating asset like a house is never a good idea but tens of millions did just that over the last 17 years.

Falling Down's picture

Fuck the banks a CC co's, I used to negotiate lower interest rates with them, we're talking sub-8% or so prior to that shit show of a bankruptcy bill that was passed. Up to then, I always paid off CC purchases within 60 days, then would go for periods of time where I didn't use them. AmEx sent me an application in '06 or '07, just as the storms clouds were building, and I threw the app into the trash. Fuck them, and I didn't then realize just how bad things were going to be 2-4 years later (and beyond, for fuck's sake).

My father and I (bless him, he taught me the trick 20 years ago) had credit card payments timed just such that no charges, interest, etc., would be applied to a monthly bill. I don't think it can be done, anymore, I'm sure the CC co's and banks figured out what a lot of Americans were doing for quite a few years.

I haven't used a CC since. I use Craigslist, cash, debit cards, barter, etc. Amazing what a good, core group of resourceful friends can bring to one's life, too.

Fuck credit cards, and the double-digit bullshit rates they charge, these days.

Zoomorph's picture

Link in the article: C:/Users/brand/Downloads/2017-planning-and-progress-the-debt-dilemma.pdf

Whoever wrote this piece of crap article, they use Windows and their login name is "brand".

Zoomorph's picture

So... "excluding mortages"... and then 1 sentence later, or the chart beside it, mortgages are the #1 source of the debt.

The only way I can make sense of this is if "excluding mortgages" was a mistake and they really meant to say "including mortgages".

saldulilem's picture

i think they want to distinguish legitimate vs frivolous debt. 

Golden Showers's picture

Do what I do: make some wax wings and fly high. Escape the labrynth, bitchez.

onmail1's picture

Thats zion
zewish heaven
in which everyone is on debt
& they pork on whomsoever they want

Spungo's picture

What I fucking hate about these articles is that they always say education is the problem. "We need more education!" No, we  don't. People are drowning in debt because the economy is fucking terrible. How the fuck do you get out of debt when minimum wage jobs have 100+ applications?

blargg's picture

Repaying interest or simply paying the credit card company for purchses they made? If the latter, then they are really just paying for things, as someone without a credit card does.

invest3's picture

Proverbs 22:7(NIV)

The rich rule over the poor,
and the borrower is slave to the lender.