Although credit reporting agencies have a funny way of calculating debt, which is used for your credit score as well. It's just your current balance, even if you pay it off every month and aren't in "debt". It's hard to tell from the report how they are calculating debt, but I bet it is the amount of money on the credit line waiting to be repaid, even if it isn't costing interest.
Plus, if you wait until the statement due date (which is basically a free extension of the loan, so a good idea, as long as you have automated bill pay that will make sure it makes it right under the deadline), this means that number is likely your past statement plus whatever your current purchases are. You don't control when the credit companies look at your balances, and for mine I was surprised that they were basically reporting 2x my normal revolving credit card usage over the month. I use my credit card for everything if possible, since I get 2% cash back on my Fidelity card (which is great, BTW), as well as great fraud protection and the ability to automatically get an electronic record of every transaction.
The real question is how much of the accounts are delinquent. In the linked report (https://www.experianplc.com/media/news/2019/state-of-credit-...) 6.7% of people are 90 days late on their payment.
Wouldn't how many people are carrying a balance each month (and thus paying interest, implying they very likely can't afford to pay off the balance each month even if they wanted to) be a better measure? The average worker in the US barely nets $6,500 in three months, they're definitely not charging and paying that much off every month.
The number to look for would be: average balance subject to interest.
After rent, 401k, and taxes you'd need to be making $200,000 a year to make that practical. Well over the 90th percentile of income.
If you have the self discipline to not spend more than you make putting everything on a card and paying it down to 0 every month makes a lot of sense.
Sure you could screw up and wind up making monthly payments if you spend more than you make but that's not fundamentally any different than if you bought all the essentials in cash then put the rest on credit.
The article is intentionally misleading by talking about people "paying for things" with credit cards and then talking about credit card debt (no mention of how much gets paid back before the end of the month) implying that the month to month balance people are carrying is a result of necessities rather than large purchases.
This entire article is one large assertion followed by flimsy support after another.
Maybe in the context of this article, but that's not what it logically means.
You're "in debt" when your liabilities exceed your assets. You have negative equity, and so these debts are claims against your future income.
That's what "in debt" means, in a nutshell: your future income belongs to someone else.
If we are going to write a story about how some population segment is "in debt", but we label everyone as "in debt" if they have any credit card balance, that is blatantly dishonest.
"In debt" is a loaded phrase which means that the interests against you exceed your assets. It's a common term, for which the more formal word is "deficit".
That's the interesting thing if you want a story on lots of people being in some kind of financial strain.
A temporary loan purely for transactional or cash flow convenience does not represent any sort of financial strain.
Then you're using credit for convenience, not as a loan because you don't have money.
People using crdit strictly for convenience, always paying their bill within the interest-free grace period, are not in debt (on account of that credit card).
Even people with significant loans are not necessarily in debt. If you borrowed $300K to buy a $400K home that is now worth $500, you still have a loan, but that is offset by equity in the property. It's not the same as borrowing to buy food, which is consumed and gone.
If you're successfully paying off your CC, then what are you paying off if it's not debt?
IMO, to be in someone's debt means you have to pay them back, which is regardless of what cash you have.
Are you trying to say that if I borrow money from someone and I actually have the cash to pay them back, then I'm not actually in their debt?
"In debt" is a loaded term which actually refers to a deficit situation, rather than the mere existence of loans. If we say, "OMG, X% of Americans are in debt", the reasonable interpretation is that are under financial strain due to actually running a deficit, not that some of them owe their friend ten bucks for yesterday's lunch because they forgot their wallet at the office.
Some people are simply irresponsible and bad with money. It should be quantified.
> Another 9% say the majority of their debt comes from paying for travel. Americans spend an average of $483 a month on non-essentials such as dining out, entertainment, luxury items and vacations, Schwab’s 2019 Modern Wealth report found.
I wonder how this compares to past generations, and if it's more true now, I wonder what the cause is. More aggressive advertising? Propping up one's mental health in the face of a stressful socio-political climate (its effects greatly amplified by social media)? FOMO (also amplified by social media)?
The broader problem definitely has to do with inequality, but this slice of it is surprising and really probably doesn't relate to that.
You generally can't pay rent with a CC and if rent goes up but income doesn't, then I could see people using CC to make ends meet.
Of course for some, overconsumption is the culprit, but I doubt it is for most people.
The same for "how to holiday". Holiday means today taking a plane (or in the case of USA long distance driving as well) and staying in a hotel (or Airbnb and then eating out). What happened to cheap holidays like camping and hiking? Am I just in the wrong crowd these days or has this mostly faded out?
I'm never so glad to be an introverted technophile as when I find out how much my coworkers spend on amusement. They spend $200 a month on cable and Pay-Per-View while I watch Youtube and Netflix. They pay $65 for videogames and spend thousands of dollars a year on vacations. They sink hundreds of dollars into Candy Crush and Pokemon Go. They get the newest Galaxy Note every year despite only using their phone for Facebook and texting.
If you're a casual consumer in the 21st century companies and culture will eat you alive.
What do these things have to do with being an introvert?
My strategy is, instead of budgeting or being as austere as I can, I set a mental threshold for how much fun or peace of mind or happiness a dollar is worth to me. If something is above that threshold, I spend money on it. If it's below that threshold, I don't. If I'm spending too much money, then instead of making a budget, I raise my mental threshold.
I'll spend money to have my lunch delivered because the saved time and mental energy is worth it to me personally. I will not spend money on a car that does anything more than get me around and run AC, because I'm not someone who gets great enjoyment from the car I drive. I am into gadgets and will spend money on the latest tech - even if I don't strictly need it - because I get proportional enjoyment out of it. I won't shop recreationally on Amazon for things I only kind-of want, even if they're very cheap or on sale. Etc.
The article also relies on those with debt to assess the cause of their credit card debt, but those with debt are rarely financially literate.
>In CNBC Make It's survey, 32% of people said their discretionary spending was the No. 1 cause of their current credit card debt.
I know I couldn't do this.
I live in the midwest and have trouble keeping spending around 20k post-tax. I have a wife and child through.
As others have said, roommate generally just means living in the same apartment. It's a weird term though, in that I wouldn't use "room" to refer to an entire apartment.
This is maddening. There's no helping people who don't want help (or lack the smarts to recognize the source of the problem.)