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Debt Figures Show that Americans are in Denial

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After decreasing their overall credit card debt by nearly $33 billion in the first quarter of 2011 and leading many to believe that a corner had been turned, U.S. consumers added upwards of $18 billion in new debt during the second quarter of the year, according to a recent credit card debt study.  This development begs the obvious question:  What gives? 

Post-holiday hangover?

It’s become a pattern that consumers pay down their debt during the first fiscal quarter of each year.  The timing of this coincides with tax refunds, annual salary bonuses, and New Year’s resolutions to reduce spending and debt.  Almost like a reverse law of gravity, however, what goes down must come back up when it comes to consumer credit card debt because over the past couple of years a first quarter debt decrease has been followed by three consecutive quarters of debt increases.  While you might therefore be inclined to chalk up the Q2 2010 spending spree to normal cyclical spending patterns, what we’re seeing now certainly isn’t normal.

Going the right way slower and the wrong way faster

Not only did U.S. consumers add to their credit card debt during the second quarter of 2011, but they did so at an alarming rate, adding 66% more debt than during Q2 2010 and a whopping 368% more than during the same period two years ago.  This follows on the heels of a first quarter debt pay down that was 25% smaller than what we witnessed in 2010 and 30% smaller than in 2009. 

The bubble’s burst

From the looks of the debt figures, the farther we get from the worst of the economic downturn, the less cautious people are being about their spending habits.  The thinking appears to be that we battened down the hatches on our bank accounts and rode out the storm and now we can return to “normal.”  The problem is that the lifestyles many of us were able to maintain prior to the Great Recession were far from normal.  After all, a bubble by definition is not sustainable, and the housing bubble fueled the incomes of a very large number of people in the United States, from real estate agents to contractors to plumbers to housekeepers to the Average Joe who was able to get a $200K home equity line of credit, and the list keeps on going.

U.S. consumers are hitting the snooze button

The Great Recession was a wakeup call for all of us, but we need to stop hitting the snooze button.  Whether you believe that the country is fated for a double dip recession or not, the economy is in a much different state than it was just a few years ago, and we need to recognize this fact.  We can’t just revert to pre-recession spending habits, and we need to avoid the self-defeating habit of overleveraging ourselves.  People have gotten used to the idea that debt is a fact of life, that if you are only spending within your means, you aren’t spending enough.  What we need to get used to instead is always paying for everyday purchases in full and using debt strategically, rather than casually.   

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About A Finance Geek

  • Arch Conservative

    The abuse of instant credit is just a manifestation of the larger problem which is the dumbing down of the American culture. We’ve become a nation of materialistic, crass, superficial, ignorant, infantilized, cry babies. The greatest generation would regurgitate in their collectives mouths at the sight of what has become of the nation they once knew.

    No keeping score in little league because someone’s feelings might get hurt? Too f-ing bad junior. That’s life. It’s sometimes harsh and more often than not unfair. Always been that ways and always will be. Kill yourself or get the f— over it!

  • Jordan Richardson

    We’ve become a nation of materialistic, crass, superficial, ignorant, infantilized, cry babies.

    And you’re sure playing your part well.

    It’s telling that, instead of dealing with the economic points in the article, you go off on raging tangents about “no scoring in Little League” (really, so they don’t keep score in the Little League World Series?) and the “harshness” of life.

    Some of us, Arch, actually believe in caring for one another and for uplifting society as a whole rather than condemning it to a life of “harsh” reality and “tough shit” ideologies.

    The “dumbing down” of a culture comes when it ignores warnings, scientific fact and economic reality in favour of blanket “tough guy” mythologies and silly testosterone-fuelled notions. The “dumbing down” of our culture comes when we worship wealth without work and deprive hard workers of the fruits of their labour while telling them to “not whine about it.”

    The “greatest generation” grew up in the Great Depression and did not live in times of such gross economic inequality. They also lived in times of the excess profits tax (a “progressive” tax instrument designed to help generate more wartime income), something you would doubtlessly whine and cry about today. And in 1916, they adopted “reporting at the source” to ensure that corporations reported salaries, dividends and so on.

    So maybe the Greatest Generation would throw up in their mouths a bit at our relentless worship of the wealthy and our tendency to let corporate power structures off the hook while ensuring we the people don’t “whine” about inequity, racism and injustice.

  • Arch Conservative

    “Some of us, Arch, actually believe in caring for one another and for uplifting society as a whole rather than condemning it to a life of “harsh” reality and “tough shit” ideologies.”

    Congratulations Jordan. Using your superior deductive powers you were able to infer from my last post that because I don’t wholly subscribe to the woe is me, woe is us all mentality I do not have an ounce of compassion for anyone that is not me.
    Has it ever occurred to you that those who whine the loudest about the inequalities of the human condition are those who deserve the least sympathy? Has the possibility that there are those who do not even deserve my or your sympathy or compassion ever entered your mind? Has it ever occurred to you that I might be too preoccupied with such ugly and selfish notions such as providing for my own wife and children to take seriously some 22 year old dipshit in a che t-shirt at an Occupy protest who’s never paid a single f-ing mortgage bill or had to worry about the price of heating oil for the coming winter but yet feels that the four years of dope smoking and countless bouts of “yes we can” recitation that he just completed along with the ultimate injustice that employers were not beating down his door to reward the little pricks bachelor’s in art therapy or equally worthless discipline with a six figure job entitles him to lecture the rest of us as to how the world should be run? Huh? You ever thought of that?

    I have more than enough compassion for my fellow citizens. Unlike you though I am discriminating with regard to who I see as deserving of my compassion, sympathy, and empathy. Unlike you, I do not find the notion that not everyone is a victim of society a novel idea. Unlike you, the entitlement mentality that has gripped our culture like a deadly cancer and the whiney losers that perpetuate it bother me. I’ve been hearing it too damn long and it’s gotten very tiresome so please forgive me if my protestations have offended your delicate sensibilities Jordan.

  • Jordan Richardson

    …I do not have an ounce of compassion for anyone that is not me.

    “Compassion” is generally not the first trait that I associate you with, Arch, especially when you post things like “Kill yourself or get the f– over it!”

    Has it ever occurred to you that those who whine the loudest about the inequalities of the human condition are those who deserve the least sympathy?

    No?

    It’s not about sympathy, either. It’s about justice.

    Has the possibility that there are those who do not even deserve my or your sympathy or compassion ever entered your mind?

    Of course.

    But I’m hard-pressed to find an instance where you’ve considered that anyone’s “deserved” your compassion. You’ve blanket-judged the Occupy Wall Street movement as a “bunch of idiots,” yet you’ve provided no reasoning to back that up. Your judgements tend to come from a place of anger, not of clarity, so you’ll forgive me if I don’t associate you with someone who’s generally empathetic.

    Has it ever occurred to you that I might be too preoccupied with such ugly and selfish notions such as providing for my own wife and children to take seriously some 22 year old dipshit in a che t-shirt at an Occupy protest…run?

    Another colourful mischaracterization of the OWS movement.

    It apparently has never occurred to you that many of those in the OWS movement are veterans screwed out of health care, mothers and fathers also trying (like you) to look after their families, educated students looking for jobs that aren’t there, business owners tired of getting screwed, senior citizens tired of paying into plans that don’t produce, and so on. There are people who have been screwed out of their homes and mortgages, who’ve probably paid a whole lot more than you have into a system that’s screwed them over.

    There are countless people just like you standing in occupation of the world’s financial sectors, Arch. Your failure to see this is largely wrapped up in your general rage. You’re so angry, rightly so, but you’re directing it at the wrong people. You’re directing it at people JUST LIKE YOU.

    If you have “more than enough compassion for your fellow citizens,” why do you seem to shit on them at every corner? Why do you discard their very real concerns as bullshit and “whining?”

    They aren’t suffering from an “entitlement mentality.” They simply want what BELONGS TO THEM. They aren’t looking for hand-outs or to take from you. They are looking to have the system work for everyone, not just a few.

    What’s offensive, Arch, is how misguided you are. It’s like you come here to dump your little pockets of rage, lacking regard for the complexities of the problems of others and swinging at everything from Little League to pot-smoking hippies.

    And here’s the real kicker: you’re a whiner.

    You do nothing but whine about the views of “leftists” and others who, according to your warped worldview, want nothing more than to take from you and make your life inconvenient.

    Has it ever occurred to you that most people in the world, your fellow citizens no less, want nothing more than to make an honest living without corporations and politicians always taking from them to finance wars, no-bid contracts, bullshit financial schemes, artificial price controls, and other measures of economic injustice? Huh? You ever thought of that?

  • zingzing

    here’s a demographic breakdown i found…

    In terms of demographic characteristics of the sample, we found that,

    64.2% of respondents were younger than 34 years of age.

    While the sample is relatively young, one in three respondents is older than 35 and one in five respondents is 45 and older.

    7.9% of respondents have a high school degree or less.

    92.1% of the sample has some college, a college degree, or a graduate degree.

    27.4% have some college (but no degree), 35% have a college degree, 8.2% have some graduate school (but no degree), and close to 21.5% have a graduate school degree.

    This is a highly educated sample.

    26.7% of respondents were enrolled in school and 73.3% were not enrolled in school.

    50.4% were employed full-time and an additional 20.4% were employed part-time.

    13.1% of the sample are unemployed.

    2.6% of respondents were retired, 1.3% disabled, 2.6% homemakers and 9.7% are full-time students.

    47.5% of the sample earns less than $24,999 dollars a year and another quarter (24%) earn between $25,000 and $49,999 per year.

    71.5% of the sample earns less than $50,000 per year.

    15.4% of the sample earned between $50,000 and $74,999.

    The remainder 13% of the sample earn over $75,000 with close to 2% earning over $150,000 per year.

    27.3% of respondents considered themselves Democrats, another 2.4% said they were Republican.

    Interestingly, a very large proportion of the sample, close to 70.3%, considered themselves Independents.

    66.4% in the sample agree somewhat or strongly that they regularly use Facebook.

    28.9% in the sample agree somewhat or strongly that they regularly use Twitter.

    73.9% in the sample agree somewhat or strongly that they regularly use YouTube.

    Our data suggest that the 99% movement comes from and looks like the 99%.

    the full paper is available here.

    archie, and other right wingers, might want to reevaluate who they think these people are. will they? doubt it. that would take some thought.

  • zingzing

    archie: “…I do not have an ounce of compassion for anyone that is not me.”

    you cannot have compassion for yourself. that’s reserved for other people. so you do not have an ounce of compassion, period. and you need a dictionary.

  • zingzing

    but that does make you selfish, a crime i can’t deny i’m guilty of at times, but hell… at least i don’t celebrate it. this is why people are revolting and revolted by the likes of you, archie. you’re not “free” or celebrating “liberty,” you’re inhuman. if you have a wife and child (or children) and you proclaim that you don’t “have an ounce of compassion,” i’d reconsider your point of view.

    obviously, it must be rhetoric and nothing more. or else you’re a bad… well, i won’t go so far as to tell you you are a bad husband/father, but your rhetoric would label you as such. you are your own worst critic.

  • zingzing

    archie, hrm. ok. i made a mistake. i took jordan’s quote and ran with it. shouldn’t have done that. i sat back for a minute and thought it smelled fishy. so i looked it up… should have done that in the first place. sorry about that.

    ugh.

  • zingzing

    comments 6, 7 and 8 (and now this) can be deleted and it wouldn’t bother me one bit. but if you want my folly to stand, let it be.

    damn your quoting, jordan. damn it.

  • http://blogcritics.org/writers/dr-dreadful/ Dr Dreadful

    Ah, I see that Archie’s abhorrence of punctuation has got him into trouble here. Allow me to help him out by clarifying things a bit.

    Archie was not saying that he himself doesn’t have an ounce of compassion (although his seems mostly to be reserved for unborn babies). He was sarcastically commenting that this seemed to be the inference his foes tended to draw about him.

    I do see where you might be confused. I myself did a double take at first.

  • zingzing

    glad i figured it out before you did. shit sucks, but i gotta eat it, i guess.

  • Jordan Richardson

    Sorry about that, probably should’ve quoted it more thoroughly. I didn’t mean to misrepresent Arch’s views.

    I think Arch has compassion for some people, but his rush to judge the plights/desires/views of others really doesn’t make him seem the most empathetic person.

    If he’d take the time, I’m sure he’d see that the Occupy Wall Street movement aligns with his views more than it opposes them. He, too, has expressed disillusionment with politics and business as usual, but he follows the partisan line that the protesters want hand-outs and the like.

  • http://blogcritics.org/writers/dr-dreadful/ Dr Dreadful

    One can be compassionate without being empathetic… can’t one?

  • Jordan Richardson

    I would argue you need to feel a certain degree of empathy before you can be compassionate or else it doesn’t really mean much.

  • zingzing

    ask someone else, doc. then tell them you don’t care what their answer is, i guess.

  • Arch Conservative

    Most people these days spend entirely too much time feeling sorry for themselves. Of course I have compassion and sympathy for some people but going into a lengthy discussion of just who those people are here is no going to help them. My ravign about the people that I don’t have compassion for serves a purpose though. it keeps me from punching them in the face when I have to deal with the in real life. BC is my emergency pressure valve if you will.

    Jordan keeps insisting that if I just took the time to look closer I would see myself in the occupy movement. I know this for a fact to be demonstrable false. In the park across the street from where I work there is a little mini occupy protest…nothing quite like New York or other large cities but I have seen first hand with my own eyes the signs they carry, heard the chants they shout and observed how they conduct themselves and they and I are nothing alike. That combined with the internet’s wide offering of video clips of the most vocal at these occupy protests let’s me know just how dissimilar are my views from their’s.

  • Jordan Richardson

    Arch, that can’t possibly be true.

    I’ve heard you rant and rave here about the comfortable relationship politicians have with lobbyists, about unfair taxation, about idiotic bailouts, about the criminality of Wall Street and governments, about the lack of jobs and the lack of movement on jobs by the president, and about crony capitalism in general.

    You’ve opposed all of the above.

    Given that, how can you say that you and those supporting the movement are “nothing alike?”

    You’re basing your views on the chants and the conduct of some, not on the message of the whole. WE are fed up; YOU are fed up.

    This crosses party lines, Arch. There are even calls for the OWS movement to join forces with the Tea Party because of the mutual ground.

    I challenge you, Arch, to look past the appearance, the chants and the signs of the protesters – just as I look past the appearance, the chants and the signs of the Tea Party movement.

    I think if you can do that, you’ll discover far more common ground than you’d ever have known by merely listening to your prejudices.

  • Arch Conservative

    I’ve got to hand it to you Jordan. Nobody beats a dead horse like you.

  • Jordan Richardson

    You’ve been essentially making the same single comment for years here, Arch. I wouldn’t call that a point of pride.

    My error is in thinking you can actually be reasoned with.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    I don’t see what’s the big deal. Arch is the kind of (dead?) horse that can’t be lead to the water by the nose. Most Americans don’t realize the unlimited potential of OWS, so he’s certainly not alone.

    But then again, for some people, whatever changes there come, they’re always get caught with their pants down. Gadhafi met his bitter end today, as did Mubarak months ago, and there was a time no one would believe. It’s the trademark of those in power to believe their reign will never end, only to be proven wrong time and again; and the same goes for the sheeple, most of us, mere followers simply because we lack imagination.

    The great thing about the march of history, it proceeds regardless.

  • John

    ahh just get over it and keep spending…come on, its the American way! Americans love “stuff”

  • Mike

    Even if a comment is due on this topic. It isn’t worth the breath to plugged ears,drugged minds and programmed high tech media propaganda.As you realize you are living the last third of your life you begin to feel one of two extremes. Calm satisfaction, or hopelessness. Neither are relevant.
    There never was a greater generation of people and there will never be such a label applied to any human dated era of mankind ever.