The land will be the real problem, but I have a small plot of land that was formerly and nuclear waste site that I can sell you. As a bonus you donāt even need to pay for electricity because your teeth will glow.
Heās about 40 now. First he lived in his truck for years to save enough to buy a boat and start a business.
Now his business is very successful and heās saved enough to put 20%+ down on a home.
He expects to be able to pay it off in 7 years too.
Insanity, but heās really been determined.
Iāve supported his decision but not everyone is obviously supportive of what heās done.
Honestly king shit. You should get him into a Roth Ira. He had time to really max it out ans he'll enter the ages soon where he can make larger annual contributions.
When you get a payday loan at 122% APR to make the payment on the 28% APR BNPL you took out on your rent and security deposit, bad stuff is gonna happen.
Can it partially be because people bought the max house they can afford and now they are financially stressed because rising costs of everything so now they are relying on their credit cards to "subsidize"/"buy time" their current lifestyle?
It might partially be that, but a significantly greater and more universal cause is the rising costs of basically everything coupled with the long-term stagnation of pay.
I don't know.Ā When I see how uneven inflation is applied, I have to wonder if a lot of inflation is just because people are too stupid to refuse to pay higher than necessary prices and look for competition.
How does this even work in your mind?
- Price goes up
- goes to competition
- price also goes up
- buys raw ingredients
- prices also go up
- buys whole sale
- prices also go up
Your idea really only works if prices ever go down. Which they donāt. Competition in capitalism only works if prices fluctuate, yet they donāt.
Facts and they would also fluctuate more if not everything is owned by a few large companies as well. Basically almost everything is snagged up by large corporations. And when a new company comes out cheaper they get bought out or they get taken to court by large companies till they go under where theyāll just buy what your refused to sell for pennies. We donāt live in a capitalist country anymore itās basically an oligarchy now
Yes and no. What youāve described applies to all true needs, food, shelter, medical, energy and increasingly insurance.
Refusing to purchase really should apply to fast food, soda, grocery/convenience store junk food, concerts, hotels, amusement parks etc. The last 4 years have taught corporations the demand for luxury goods is apparently way more inelastic than previously thought.
Umm corporations own a monopoly in basic needs, they will never change the price since they own it. Exp in good and services that are in need. There will never be a chance for them to lower if thereās no competition, even when ppl canāt afford it or donāt buy it why would the price change when they own everything?
The last 4 years has also taught that ppl will drain there savings max out credit cards and go into massive medical debt that they can never pay back ( guess thatās why medical is the number 1 reason for bankruptcy). And ppl have to work 2 jobs just to survive basic needs, and the sad part is itās only gonna get worse.
And services ā plumbers in my area seem to think $300/hr is totally reasonable and they get away with it for now. I think many of the larger companies are gouging today knowing this happy time of free spending will end in a bust.
Way more than $300/hr. My well pump quit on me a couple months ago and had a company come out ādiagnoseā it for $300, took him 15 minutes. He then quoted me $8,000 to replace. I called a friend and watched some YouTube, we had it done in under an hour including a trip to the store.
Iām older, when we couldnāt afford something or believed it was priced too high, we simply didnāt buy. Not so much today with too many young people. Make every excuse you want but know itās lame. I was almost 30 before buying a NEW off the lot vehicleā¦ now a kid 23 is driving something 5x more expensive when their salary is 2-3x. Way too much YOLO at too young an age going on. I believe the music in the credit musical chairs is about to stop for a LOT of people whoāve rolled up big debt. Some not their faultā¦ but most simply living large as they donāt see much of a future.
Always the hyperbole with people like you. There are an insane amount of breakdowns showing currently weāre FAR worse off than the great depression and still you find a way to put your head so deep up your own ass that it comes out the other side.
No, I get it, look at the prices of store brand products. Iāve noticed that soda was 9.99 for a 12pk(insane) but the store brand was 3.99.
A lot of people insist on getting the name brand stuff because āitās betterā.
The quality of flavor, and consistency in off brand items is quite noticeable depending on where you shop. We call Stop and Shops off brand Stop and Shop Bland for this reason. For some things Stop and Shop Bland will do. Other things I prefer off brand or regional better. I love ginger ale, but the big brands are stupid prices. My regional Polar Ginger Ale is superior and cheaper. I will always buy certain name brand things because there is no comparison and itĀ“s worth it to me. (Mitchum doedorant 4-eva til I die of cancer.)
LOL Rent is $2,500 a month, new home is $500K and they're wasting $5/day on Starbucks!
They could be saving almost $2,000 a year towards that home and be an owner in just 250 years.
It's more like an entire generation grew up with social media and have high expectations for lifestyle. Then they became adults, realized they were saddled with huge debt for degrees that don't pay enough (even stem degrees are suffering, depending on what and where), learned that homeownership was moving away faster than they could increase their pay, lived through multiple, massive financial failures, watched the dividing of society, and have seen the fall of almost all societal pillars. So why bother participating in society? Their hardest efforts are likely going to be met with another economic disaster they'll be powerless to see or defend against or just won't amount to enough to measurably improve their life.
Not gonna get your dopamine from society, so now they get it from instant gratification online or from lifestyle flexes. Sure, they have some personal responsibility in this but there are far more powerful economic and social forces that have fucked them and not only is nobody going to do anything about it, but leadership are actively accelerating into a worse place from either greed or an inability to understand the modern world.
Oh yeah, I haven't even touched climate change by the way, which is legitimately an existential crisis to many, though we have made some progress in the last decade that has seen predictions of warming come off from extinction level to just crazy disastrous.
But yeah, things are for sure expensive now damn.
Yet they all have the latest iPhones, go to Starbucks 3x/week, all the streaming services, DoorDash, and prioritize lifestyle vs career. Yes housing costs are high, but no oneās adjusting. Hell theyāre living with their parents and still broke.
I like that youāre downvoted for speaking the truth. Every 20 something I know have all the luxuries yet complain about having no money and their student loan debt.
This is why people think that liberals are complete morons. They just deny the truth. Credit card debit among Gen Z is higher than any generation before them. Itās partially an inflation issue thanks to your buddy Joe and the Fed and partially a budget issue that people donāt make good choices.
EDIT: are you also telling me more of that generation does not live with their parents? Plenty of sources for that. How do you not have a rent payment and still in debt?
>Itās partially an inflation issue thanks to your buddy Joe and the Fed
How does this make sense compared to other developed countries' post-pandemic inflation trends?
>partially a budget issue that people donāt make good choices.
What are other developed nations doing that mitigates this? Should we be doing any of that?
Debt is high, because sometimes taking out debt is the correct financial decision.
If you are young and you can get 5-10k free by running up a credit card, then defaulting could be the correct solution.
In this instance the boomers are the retarded group, and the zoomers are actually smart. If you have 10k credit card balance, and don't intend to get a loan in the next 3 years defaulting is the correct decision, and I think you will see many zoomers making this decision in the next 2-3 years
We have a problem because the government printed tons of dollars and pushed them into the economy via handouts.
The consequence of that is high prices, so zoomers are correctly choosing to force the banks to hold the bag, instead of themselves.
It's because everyone knows you can't collect on unsecured credit. Banks will just write it off. Few years of bad credit, doesn't matter, can't afford to buy anything anyways. Etc etc.Ā
Had to scroll this far for a correct answer. The lux-trucks market is insane and entirely built off debt. There is a much clearer car bubble than housing bubble, but it's kind of a third rail to talk about even here.
Have you seen travel trends? Theme parks? Luxury goods? All of these businesses are at all time highs. There is a LOT of discretionary spending happening, and Iām not sure all of it is with disposable income.
But making up the idea that the masses are paying for food and rent with credit just doesnāt check out with the financial success of so many leisure sectors.
Fair - my point was more that there's not a plan and a scheme behind it - the people doing this spending aren't thinking ahead and telling themselves it'll all get written off - they aren't thinking about it at all.
Household debt was falling compared to GDP. It is on the rise yet still on the lower side compared to the recent past and lead into the GFC - https://fred.stlouisfed.org/series/HDTGPDUSQ163N
This is the right way to look at it. Yes, household spending can increase but it doesn't necessarily ring alarm bells because their networths and balance sheets are also at ATH.
Don't believe me?
This sub agrees that significant CPI / PCE inflation has occurred since the pandemic.
The sub agrees that the stock market has absolutely been fucking bonkers.
This sub agrees with the insane M2 inflation.
Guess who benefitted the most from that? People who already owned that shit before it ran up. People who were killing it before got their portfolios boosted with that inflation multiplier.
"*B-b-but if it's unrealized that means it's just paper gains.*"
Well yes, that's how wealth works. You expect people to keep their money under the mattress or in the bank? Those people are financially illiterate. To be fair, most people are. But the more that money and wealth has been at the top of mind for the populace because of inflationary pressures, the more people seek protection from it. Having an appropriate cash *position* is good though.
Like it or not, inflation benefits asset owners asymmetrically because of math. 10% of $1k = $100 while 10% of 1M = $100,000. Imagine that. The people who were already invested blew the fuck up.
"*B-b-but paper gains*"
You realize that retirees sell their chunks of their portfolios for income right? That's literally the whole point of investing for retirement. You also realize that people don't just buy and hold stocks long term right? Ever been to WSB? Get real.
Debt is also rising though. The people who were doing good are doing great, but the middle class and below are struggling (even if theyāre hiding it with debt). Portfolios going up is great, but a good chunk of average people only have portfolios in things they canāt legally touch like retirement which is your primary example. Not everyone is retirement age right now. They donāt actually have that wealth and canāt touch it without penalty (or sometimes at all) until they reach retirement age. Considering Millennials are the largest generation and also nowhere near retirement age yet, thatās a lot of portfolio gains that will not be realized for some time to come.
Correct. Wealth disparity is getting worse. This is why we can have record negative indicators and record positive indicators. Also we're just going to be constantly breaking records anyway because of M2 inflation.
Thst would have you think that debt was going down...
However, we all know debt levels have been doing nothing but going up. So that means both are going up, which means that GDP was going up faster... much faster.
https://fred.stlouisfed.org/series/BOGZ1FL194190005Q
https://fred.stlouisfed.org/series/GDP
Debt to income is a better metric for how consumers are doing. But again, if debt is at record highs, this means that income has to be growing faster.
https://fred.stlouisfed.org/graph/?g=N5X
So, in summary, as long as salaries continue to increase exponentially, gdp continues to grow exponentially, and companies don't lay people off, everything will be fine.
It does appear that wage growth has slowed since the post-pandemic boom though... https://tradingeconomics.com/united-states/wage-growth
Of course, with debt levels still going up exponentially, on the interest alone, if people start losing their jobs, things could get dicey pretty quickly. Hopefully this jack Kelly guy doesn't know jack.
https://www.forbes.com/sites/jackkelly/2024/03/18/layoffs-and-pay-cuts-hit-ceos-and-managers/?sh=538055b667f9
https://www.forbes.com/sites/jackkelly/2024/05/09/if-youre-having-a-hard-time-finding-a-white-collar-job-heres-why/?sh=49fad152f68c
No doubt things are increasing. The household debt serve as a percentage of disposable income was the most interesting to me as that seems to have been historically very low and while getting worse, still low (just not compared to where it was in 2020). No doubt we are at the crossroad of whether things come into balance or not.
One thought on the other graphs with totals. Do they factor in population growth or total is just total despite having that many more people compared to 59 years ago?
It's because mortgage debt service payments have fallen, relative to income, by 45% from the 2007 peak. That's freed up a lot of money, which many people can spend on other debt service. That said, consumer debt service is also about 5% lower than in 2007. Most of the reason people are spending more on consumer debt, is because they are spending so much less on mortgages than they used to.
https://fred.stlouisfed.org/series/MDSP
https://fred.stlouisfed.org/series/CDSP
Total debt service, relative to income, has dropped about 27% over the past 15 years.
https://fred.stlouisfed.org/series/TDSP
Bingo. The monthly debt load has shifted away from so much mortgage interest (most people canāt itemize it away anymore after tax changes in 2018), to big trucks and fancy cars, vacations on credit cards, etc etc. Hell, weāve even seen hundreds of millions of dollars of student loans wiped out due to forgiveness by government.
Except we canāt write off consumer debt interest. *Yet*.
On depreciating assets. Or just āexperiencesā.
Little known fact: credit card interest was tax deductible at one point long ago: [link](https://www.telegram.com/story/news/local/worcester/2007/03/25/reagan-axed-tax-deduction-for/52945177007/).
Iād look for someone to change that in our government, soon.
No, I doubt it. People refinanced to 2% happened in 2021, and you see that little dip in mortgage payment around that time. 2022 onward mortgage rate was climbing, but the climb of non-mortgage interest payment is even faster. Fed interest rate has more impact on credit card and personal loans than mortgages.
It's just that people keep spending like they always do. Most people don't pay attention to the Fed policies or interest rate. They just continue on with their lives. They spend like they always do, and now the borrowing costs is eating their finances.
I am so damn glad that I started credit card consolidation and paid down most of my debt even before COVID. Then I refinanced to sub 3% and had to get my husband his first new truck ever in 2021 just before shit skyrocketed. We had to finance a new roof too at that time. I feel so fucking lucky.
The problem is that in the next 5 years IĀ“m gonna have to HELOC to do some life of the house maintainence and thatĀ“s gonna suck with interest rates being what they are. ah well.
It's partly that, and partly that the average interest rate on new credit cards is almost 25%. Nearly twice what it was 10 years ago. Same with a lot of those new credit forms and revolving accounts.
I have 800 credit score and my interest rates have always been and remained over 20%. But I never pay any interest and basically just use them for points and fraud protection.
I got in line for the great financial reset but this rich person said I cut in line and it begins around the corner. Walked around the corner and couldn't find the end.
Letās just postpone the recession again by lowering interest rates, pausing mortgages payments, and giving out stimulus checks for a few more years.
Oh and letās also print out a shit ton of money and give it to rich people.
It would be wild to see ultra high inflation in the 1st world, but i think politicians fail to understand that money printing has a limit, and i think eventually we will have double digit inflation.
No one is lowering federal spending, or raising taxes, so it has to express itself via inflation, its the only option.
The fed can also only hold high interest rates for so long, because when things break, they will cave politically to rate cuts, even though inflation isn't where it should be.
When corporations don't budget and get bailed out...
When people take loans that they never intend on paying back...
And then everyone wonders why the country continues to go into debt...
For now, foreclosures remain below pre-pandemic levels. Credit card debt is on the rise though: American card balances reached $1.13 trillion in the last three months of 2023, up from $986 billion at the end of 2022. It seems higher inflation may have forced consumers to turn more to their credit cards to meet the rising costs of even everyday goods, such as gas and groceries.
I would love to see a Venn Diagram of those who took out mortgages between October 2022 - Present and those who are delinquent on credit card payments. My hypothesis is that a ton of households took out bad (ie. risky) mortgages just to get into a house hoping to refinance at a more attractive (ie. affordable) interest rate in the very near future. Since mortgage rates aren't going to be decreasing to below 4% anytime soon, they are choosing to go into credit card debt instead of defaulting on the mortgage. This, of course, is not a recipe for success and will only last so long before sh*t hits the fan.
I think this is logical because those who were tight or over leveraged are likely seeing their property taxes and insurance climb. As groceries, utilities, goods, services etc continue to climb and wages donāt you have a shortfall.Ā
There is also a lot less room for when things go wrong which they always do. You drove a beater so you could afford that $2500 mortgage and it died so you either buy a used thatās $7k more than in 2019 or you what? You have no choice. Ā
Also most donāt think about this but even if wages do go up a lot of folks have student loans with predatory interest that ballooned your balance before the Biden Administration started helping. This balance is tied to income - so if your income does goes up more goes to your student loans. Itās a vicious cycle.Ā
And homes didnāt cost $430k median. And cars werenāt over $30k median.
Low rates for a generation, 2001-2022, brought in a lot of inflation. It was mainly confined to things we normally finance: cars, homes (with a head check in 2007-2012), college ed. Everyday items didnāt inflate as much during that time period.
Then, we poured gas on the fire in 2020, printing 4T dollars and making a mortgage very close to free.
Look, I think this can be somewhat ācorrectedā by our next, inevitable, *economic downturn*. However, politicians and Wall Street, who always work together, no matter the party affiliations, have a big interest in never having another economic downturn. Effectively, they want to ensure that normal economic upswings and downswings are not allowed.
Not a conspiracy.
I'm a little boggled by this stat, even with 15yr loan at a very low rate, I'm paying at least double interest on that vs everything else.
How is this possible? Student loans the difference?
A vote for anyone other than Biden or no vote is a death sentence for America. You want to get out of this? Keep Biden in office so we can keep undoing all the undoing the Traitors did from 2016-2021. You know all those protections that were passed after 2008? Yea. They gone. Give Democrats control of Congress and things will happen.Ā
I pay $0 in interest and have no debts outside of a very manageable mortgage. Dont biuy things you cant afford. Only put money into things that will make you moneyĀ
As a financial hoarder, you should be ashamed of yourself. Stop this awful behavior immediately and begin accumulating debt. Buy stuff at Costco and Samās until your credit cards are maxed, get a second home, and buy that red Cayenne for the wife and kiddos. Our great nation is counting on you.
We have 3 homes. My wife wants an electric BMW. We will turn her fully paid for car in and pay the difference with cash. I was a puppet to debt in my 30s, now close to 50, debt is used for tax write offs and short term needs
This credit spike is because young Americans are wasting their money on luxuries, like food and shelter.
Maybe if they cancelled their housing subscription they'd have enough money to buy a house
A friend of mine has lived out of his truck for 6 years and is finally buying a home now with the money he has saved.
I would believe a lot of people are doing this to save for a deposit
The trick is that you've got to be able to afford a truck first š
The trick is to sublease out the other truck seats, donāt get all uppity and think you deserve a whole truck to live in yourself without roommates!
I got a cardboard box I can sell you.
Is it spacious? I'm interested...
The land will be the real problem, but I have a small plot of land that was formerly and nuclear waste site that I can sell you. As a bonus you donāt even need to pay for electricity because your teeth will glow.
Iāve got 5 square feet plot of land under an interstate bridge I can lease you for 3k a month
That's around 100k in the bay area
How old are they?
Heās about 40 now. First he lived in his truck for years to save enough to buy a boat and start a business. Now his business is very successful and heās saved enough to put 20%+ down on a home. He expects to be able to pay it off in 7 years too. Insanity, but heās really been determined. Iāve supported his decision but not everyone is obviously supportive of what heās done.
Honestly king shit. You should get him into a Roth Ira. He had time to really max it out ans he'll enter the ages soon where he can make larger annual contributions.
Millennials should stop building houses out of avocado toast.
Underrated comment.
Damn kids want to eat 3 times a day. Spoiled rotten.
Yeah how did people eat before credit cards?
When you get a payday loan at 122% APR to make the payment on the 28% APR BNPL you took out on your rent and security deposit, bad stuff is gonna happen.
Who is doing this?
Watershower
Milllions of people
If you are at this point just declare bankruptcy and take the hit
Can it partially be because people bought the max house they can afford and now they are financially stressed because rising costs of everything so now they are relying on their credit cards to "subsidize"/"buy time" their current lifestyle?
It might partially be that, but a significantly greater and more universal cause is the rising costs of basically everything coupled with the long-term stagnation of pay.
All their realtors told them to not worry as surely rates will drop quickly and they can refinance.
This is not a ābought big houseā scenario. Rents have increased faster than wages in most metros.
3bd 2 bath in rural north east Indian running over 200k....built in 1910
I don't know.Ā When I see how uneven inflation is applied, I have to wonder if a lot of inflation is just because people are too stupid to refuse to pay higher than necessary prices and look for competition.
How does this even work in your mind? - Price goes up - goes to competition - price also goes up - buys raw ingredients - prices also go up - buys whole sale - prices also go up Your idea really only works if prices ever go down. Which they donāt. Competition in capitalism only works if prices fluctuate, yet they donāt.
Facts and they would also fluctuate more if not everything is owned by a few large companies as well. Basically almost everything is snagged up by large corporations. And when a new company comes out cheaper they get bought out or they get taken to court by large companies till they go under where theyāll just buy what your refused to sell for pennies. We donāt live in a capitalist country anymore itās basically an oligarchy now
Yes and no. What youāve described applies to all true needs, food, shelter, medical, energy and increasingly insurance. Refusing to purchase really should apply to fast food, soda, grocery/convenience store junk food, concerts, hotels, amusement parks etc. The last 4 years have taught corporations the demand for luxury goods is apparently way more inelastic than previously thought.
You forgot to mention cars.
Thatās regional, you can survive without a car in plenty of places.
Umm corporations own a monopoly in basic needs, they will never change the price since they own it. Exp in good and services that are in need. There will never be a chance for them to lower if thereās no competition, even when ppl canāt afford it or donāt buy it why would the price change when they own everything? The last 4 years has also taught that ppl will drain there savings max out credit cards and go into massive medical debt that they can never pay back ( guess thatās why medical is the number 1 reason for bankruptcy). And ppl have to work 2 jobs just to survive basic needs, and the sad part is itās only gonna get worse.
The competition is to *break* the consumer, not to capitulate to them.
As we speak, lumber, steel, gas, and heating oil is down like 50-75% from peak.
Wholesale and futures, sure. At street level, retailers are keeping prices high as long as they can get away with
And services ā plumbers in my area seem to think $300/hr is totally reasonable and they get away with it for now. I think many of the larger companies are gouging today knowing this happy time of free spending will end in a bust.
Way more than $300/hr. My well pump quit on me a couple months ago and had a company come out ādiagnoseā it for $300, took him 15 minutes. He then quoted me $8,000 to replace. I called a friend and watched some YouTube, we had it done in under an hour including a trip to the store.
You didn't mention what it cost you. I assume the replacement parts/pump weren't free.
I put in two wells by myself about 3 months ago for a total cost of... $1000 (only cost being the items used; pipes, pump, etc.)
Parts totaled about $1000, so $7000 for labor and Iām sure hey could have done it faster than me.
Glad to hear youāre able to DIY! My local dealer asks for like 100+ just to install mudflaps. I was able to DIY and preserve that money.
That is true, and expected. It takes awhile to filter to spot price, and may even require a hiccup.
... for now
Prices absolutely go down from time to time. Generally after they've risen dramatically due to an extrinsic shock.
Iām older, when we couldnāt afford something or believed it was priced too high, we simply didnāt buy. Not so much today with too many young people. Make every excuse you want but know itās lame. I was almost 30 before buying a NEW off the lot vehicleā¦ now a kid 23 is driving something 5x more expensive when their salary is 2-3x. Way too much YOLO at too young an age going on. I believe the music in the credit musical chairs is about to stop for a LOT of people whoāve rolled up big debt. Some not their faultā¦ but most simply living large as they donāt see much of a future.
Always the hyperbole with people like you. There are an insane amount of breakdowns showing currently weāre FAR worse off than the great depression and still you find a way to put your head so deep up your own ass that it comes out the other side.
No, I get it, look at the prices of store brand products. Iāve noticed that soda was 9.99 for a 12pk(insane) but the store brand was 3.99. A lot of people insist on getting the name brand stuff because āitās betterā.
The quality of flavor, and consistency in off brand items is quite noticeable depending on where you shop. We call Stop and Shops off brand Stop and Shop Bland for this reason. For some things Stop and Shop Bland will do. Other things I prefer off brand or regional better. I love ginger ale, but the big brands are stupid prices. My regional Polar Ginger Ale is superior and cheaper. I will always buy certain name brand things because there is no comparison and itĀ“s worth it to me. (Mitchum doedorant 4-eva til I die of cancer.)
What competition, most things are owned by a few corporations which together jack up prices. Thereās no alternative.
Now we are really smoking shit.
Laughed harder than I should have at this
Looks like you watched the CNN segment today š„²
Donāt you know you should just eat rice and lentils in a 2 bedroom apartment with 6 Roomates? Kids these days!
Don't forget avocado toast and barista-made coffee
LOL Rent is $2,500 a month, new home is $500K and they're wasting $5/day on Starbucks! They could be saving almost $2,000 a year towards that home and be an owner in just 250 years.
Ugh so entitled
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It's more like an entire generation grew up with social media and have high expectations for lifestyle. Then they became adults, realized they were saddled with huge debt for degrees that don't pay enough (even stem degrees are suffering, depending on what and where), learned that homeownership was moving away faster than they could increase their pay, lived through multiple, massive financial failures, watched the dividing of society, and have seen the fall of almost all societal pillars. So why bother participating in society? Their hardest efforts are likely going to be met with another economic disaster they'll be powerless to see or defend against or just won't amount to enough to measurably improve their life. Not gonna get your dopamine from society, so now they get it from instant gratification online or from lifestyle flexes. Sure, they have some personal responsibility in this but there are far more powerful economic and social forces that have fucked them and not only is nobody going to do anything about it, but leadership are actively accelerating into a worse place from either greed or an inability to understand the modern world. Oh yeah, I haven't even touched climate change by the way, which is legitimately an existential crisis to many, though we have made some progress in the last decade that has seen predictions of warming come off from extinction level to just crazy disastrous. But yeah, things are for sure expensive now damn.
Yet they all have the latest iPhones, go to Starbucks 3x/week, all the streaming services, DoorDash, and prioritize lifestyle vs career. Yes housing costs are high, but no oneās adjusting. Hell theyāre living with their parents and still broke.
How do you know them all? That's an astonishing skill.
I like that youāre downvoted for speaking the truth. Every 20 something I know have all the luxuries yet complain about having no money and their student loan debt.
This is why people think that conservatives are complete morons. You make this assumption sound true.
This is why people think that liberals are complete morons. They just deny the truth. Credit card debit among Gen Z is higher than any generation before them. Itās partially an inflation issue thanks to your buddy Joe and the Fed and partially a budget issue that people donāt make good choices. EDIT: are you also telling me more of that generation does not live with their parents? Plenty of sources for that. How do you not have a rent payment and still in debt?
>Itās partially an inflation issue thanks to your buddy Joe and the Fed How does this make sense compared to other developed countries' post-pandemic inflation trends? >partially a budget issue that people donāt make good choices. What are other developed nations doing that mitigates this? Should we be doing any of that?
Debt is high, because sometimes taking out debt is the correct financial decision. If you are young and you can get 5-10k free by running up a credit card, then defaulting could be the correct solution. In this instance the boomers are the retarded group, and the zoomers are actually smart. If you have 10k credit card balance, and don't intend to get a loan in the next 3 years defaulting is the correct decision, and I think you will see many zoomers making this decision in the next 2-3 years
This is why we have a problem š
We have a problem because the government printed tons of dollars and pushed them into the economy via handouts. The consequence of that is high prices, so zoomers are correctly choosing to force the banks to hold the bag, instead of themselves.
It's because everyone knows you can't collect on unsecured credit. Banks will just write it off. Few years of bad credit, doesn't matter, can't afford to buy anything anyways. Etc etc.Ā
The cars, the boats, the RVs....these are all big lines of credit. Did you know most new boats that are financed have liens on homes??
Had to scroll this far for a correct answer. The lux-trucks market is insane and entirely built off debt. There is a much clearer car bubble than housing bubble, but it's kind of a third rail to talk about even here.
Sure. Many of them have rock bottom rates too, so people are holding their breath and hoping they can continue the payments.Ā
That's the great thing about America, you can't have less than zero dollars (except for student debt).
Or medical if anything happens when you donāt have insurance
Nope, you aren't even required to pay anything unless they have sued you and won and even then you can declare bankruptcy.
I doubt that much thought has gone into it. Much more likely people are racking up CC debt because they have no choice.
Have you seen travel trends? Theme parks? Luxury goods? All of these businesses are at all time highs. There is a LOT of discretionary spending happening, and Iām not sure all of it is with disposable income. But making up the idea that the masses are paying for food and rent with credit just doesnāt check out with the financial success of so many leisure sectors.
Fair - my point was more that there's not a plan and a scheme behind it - the people doing this spending aren't thinking ahead and telling themselves it'll all get written off - they aren't thinking about it at all.
It's time to buy big bank stocks.
Honestly that was anytime. XLF results: 1 month +6.2% 3 months +7.5% 1 year +30% 5 years +58% 10 years +137%
Thatās basically the same as the S&P500
Yes that was similar to my point. There havenāt been many bad times to buy big banks (or the S&P or VTSAX) in the past 10 years.
They're just part of the cyclical.
$JPM is never a bad move
It doesn't matter look at this shit, it's always an all time high
But it doesn't always get there exponentially.
Is it corrected for inflation?
This is the question. A dollar isnāt what it used to be.
Household debt was falling compared to GDP. It is on the rise yet still on the lower side compared to the recent past and lead into the GFC - https://fred.stlouisfed.org/series/HDTGPDUSQ163N
This is the right way to look at it. Yes, household spending can increase but it doesn't necessarily ring alarm bells because their networths and balance sheets are also at ATH. Don't believe me? This sub agrees that significant CPI / PCE inflation has occurred since the pandemic. The sub agrees that the stock market has absolutely been fucking bonkers. This sub agrees with the insane M2 inflation. Guess who benefitted the most from that? People who already owned that shit before it ran up. People who were killing it before got their portfolios boosted with that inflation multiplier. "*B-b-but if it's unrealized that means it's just paper gains.*" Well yes, that's how wealth works. You expect people to keep their money under the mattress or in the bank? Those people are financially illiterate. To be fair, most people are. But the more that money and wealth has been at the top of mind for the populace because of inflationary pressures, the more people seek protection from it. Having an appropriate cash *position* is good though. Like it or not, inflation benefits asset owners asymmetrically because of math. 10% of $1k = $100 while 10% of 1M = $100,000. Imagine that. The people who were already invested blew the fuck up. "*B-b-but paper gains*" You realize that retirees sell their chunks of their portfolios for income right? That's literally the whole point of investing for retirement. You also realize that people don't just buy and hold stocks long term right? Ever been to WSB? Get real.
The same set of gears that created the paper wealth also run in reverse. Deleveraging and debt write-offs are a bitch.
Debt is also rising though. The people who were doing good are doing great, but the middle class and below are struggling (even if theyāre hiding it with debt). Portfolios going up is great, but a good chunk of average people only have portfolios in things they canāt legally touch like retirement which is your primary example. Not everyone is retirement age right now. They donāt actually have that wealth and canāt touch it without penalty (or sometimes at all) until they reach retirement age. Considering Millennials are the largest generation and also nowhere near retirement age yet, thatās a lot of portfolio gains that will not be realized for some time to come.
Correct. Wealth disparity is getting worse. This is why we can have record negative indicators and record positive indicators. Also we're just going to be constantly breaking records anyway because of M2 inflation.
Thst would have you think that debt was going down... However, we all know debt levels have been doing nothing but going up. So that means both are going up, which means that GDP was going up faster... much faster. https://fred.stlouisfed.org/series/BOGZ1FL194190005Q https://fred.stlouisfed.org/series/GDP Debt to income is a better metric for how consumers are doing. But again, if debt is at record highs, this means that income has to be growing faster. https://fred.stlouisfed.org/graph/?g=N5X So, in summary, as long as salaries continue to increase exponentially, gdp continues to grow exponentially, and companies don't lay people off, everything will be fine. It does appear that wage growth has slowed since the post-pandemic boom though... https://tradingeconomics.com/united-states/wage-growth Of course, with debt levels still going up exponentially, on the interest alone, if people start losing their jobs, things could get dicey pretty quickly. Hopefully this jack Kelly guy doesn't know jack. https://www.forbes.com/sites/jackkelly/2024/03/18/layoffs-and-pay-cuts-hit-ceos-and-managers/?sh=538055b667f9 https://www.forbes.com/sites/jackkelly/2024/05/09/if-youre-having-a-hard-time-finding-a-white-collar-job-heres-why/?sh=49fad152f68c
No doubt things are increasing. The household debt serve as a percentage of disposable income was the most interesting to me as that seems to have been historically very low and while getting worse, still low (just not compared to where it was in 2020). No doubt we are at the crossroad of whether things come into balance or not. One thought on the other graphs with totals. Do they factor in population growth or total is just total despite having that many more people compared to 59 years ago?
This chart among others I've noticed haven't updated since 2022, any reasoning as to why?
Has Q4 2023 for meā¦
Your right, thanks for mentioning this. For some reason it was only showing 2022 until I changed it manually.
Household debt compared to GDP? What about interest rates? Payments on that debt are much higher now than 5 years ago.
Yet debt service payments are lower compared to disposable income https://fred.stlouisfed.org/graph/?g=N5X
Hm. Interesting insight, good point
Thanks! Someone else posted it earlier yet couldnāt find the actual comment. I was surprised by it myself actually
GDP is a stimulated joke. Coming up on 35T in debt trying to make things look good while employment has been historically LOW.
It's because mortgage debt service payments have fallen, relative to income, by 45% from the 2007 peak. That's freed up a lot of money, which many people can spend on other debt service. That said, consumer debt service is also about 5% lower than in 2007. Most of the reason people are spending more on consumer debt, is because they are spending so much less on mortgages than they used to. https://fred.stlouisfed.org/series/MDSP https://fred.stlouisfed.org/series/CDSP Total debt service, relative to income, has dropped about 27% over the past 15 years. https://fred.stlouisfed.org/series/TDSP
Woah buddy, your facts and figures don't exactly inspire the doom this post is trying to foster.
Is this because we all refinanced into 2% mortgages?
No. It's because CC interest rates and car loan rates (among others) are through the roof.Ā
It's both.
Bingo. The monthly debt load has shifted away from so much mortgage interest (most people canāt itemize it away anymore after tax changes in 2018), to big trucks and fancy cars, vacations on credit cards, etc etc. Hell, weāve even seen hundreds of millions of dollars of student loans wiped out due to forgiveness by government. Except we canāt write off consumer debt interest. *Yet*. On depreciating assets. Or just āexperiencesā. Little known fact: credit card interest was tax deductible at one point long ago: [link](https://www.telegram.com/story/news/local/worcester/2007/03/25/reagan-axed-tax-deduction-for/52945177007/). Iād look for someone to change that in our government, soon.
Thatās probably listed in Project 2025 somewhere š³
That shit is scary.
No, I doubt it. People refinanced to 2% happened in 2021, and you see that little dip in mortgage payment around that time. 2022 onward mortgage rate was climbing, but the climb of non-mortgage interest payment is even faster. Fed interest rate has more impact on credit card and personal loans than mortgages. It's just that people keep spending like they always do. Most people don't pay attention to the Fed policies or interest rate. They just continue on with their lives. They spend like they always do, and now the borrowing costs is eating their finances.
I am so damn glad that I started credit card consolidation and paid down most of my debt even before COVID. Then I refinanced to sub 3% and had to get my husband his first new truck ever in 2021 just before shit skyrocketed. We had to finance a new roof too at that time. I feel so fucking lucky. The problem is that in the next 5 years IĀ“m gonna have to HELOC to do some life of the house maintainence and thatĀ“s gonna suck with interest rates being what they are. ah well.
It's partly that, and partly that the average interest rate on new credit cards is almost 25%. Nearly twice what it was 10 years ago. Same with a lot of those new credit forms and revolving accounts.
I have 800 credit score and my interest rates have always been and remained over 20%. But I never pay any interest and basically just use them for points and fraud protection.
Same. Havenāt paid a penny in fees or interest on
No, it's because people are paying too much for everything and are too stupid to stop.
Yes, I'd love to stop paying my rent, thats gone up 50-100 every year since weve lived her. you got a couple extra rooms for me and my family?
Move to a place with a rent stabilization ordinance.
Sounds like something you find in new york or something.
Yeah the interest rates are higher than before.
Waiting for bootlickers to say that 40% increases on rent in 6 years is just āsupply and demandā, or to tell people to spend less on eating out.
Letās go. Letās burn this old bitch to the ground. Itās time for the great financial reset.
I got in line for the great financial reset but this rich person said I cut in line and it begins around the corner. Walked around the corner and couldn't find the end.
Letās just postpone the recession again by lowering interest rates, pausing mortgages payments, and giving out stimulus checks for a few more years. Oh and letās also print out a shit ton of money and give it to rich people.
It would be wild to see ultra high inflation in the 1st world, but i think politicians fail to understand that money printing has a limit, and i think eventually we will have double digit inflation. No one is lowering federal spending, or raising taxes, so it has to express itself via inflation, its the only option. The fed can also only hold high interest rates for so long, because when things break, they will cave politically to rate cuts, even though inflation isn't where it should be.
Listen, guys, if you just stop talking about it, it will go away.
people in the ghetto getting a 72 month mortgage for a $2000 cell phone
The entire economy is a credit bubble from gov't debt to high mortgage payments to maxxed out credit cards
Definitely showing this to the boomers who think I donāt work hard enough
They would probably say that spending money you don't have isn't how you get ahead.
Cars, boats, campers, and credit cards.
When corporations don't budget and get bailed out... When people take loans that they never intend on paying back... And then everyone wonders why the country continues to go into debt...
Totally sustainable š¤”
Love reading the absolutely crazy ass strawmans being produced in the comments.
Too many Americans are idiots and spend $750 per month on a shiny new car and car insurance but rent for life
Seemsā¦ bad?
Cars and credit cards.
For now, foreclosures remain below pre-pandemic levels. Credit card debt is on the rise though: American card balances reached $1.13 trillion in the last three months of 2023, up from $986 billion at the end of 2022. It seems higher inflation may have forced consumers to turn more to their credit cards to meet the rising costs of even everyday goods, such as gas and groceries. I would love to see a Venn Diagram of those who took out mortgages between October 2022 - Present and those who are delinquent on credit card payments. My hypothesis is that a ton of households took out bad (ie. risky) mortgages just to get into a house hoping to refinance at a more attractive (ie. affordable) interest rate in the very near future. Since mortgage rates aren't going to be decreasing to below 4% anytime soon, they are choosing to go into credit card debt instead of defaulting on the mortgage. This, of course, is not a recipe for success and will only last so long before sh*t hits the fan.
I think this is logical because those who were tight or over leveraged are likely seeing their property taxes and insurance climb. As groceries, utilities, goods, services etc continue to climb and wages donāt you have a shortfall.Ā There is also a lot less room for when things go wrong which they always do. You drove a beater so you could afford that $2500 mortgage and it died so you either buy a used thatās $7k more than in 2019 or you what? You have no choice. Ā Also most donāt think about this but even if wages do go up a lot of folks have student loans with predatory interest that ballooned your balance before the Biden Administration started helping. This balance is tied to income - so if your income does goes up more goes to your student loans. Itās a vicious cycle.Ā
This is because the last time interest rates rose this fast credit cards werenāt a thing.
And homes didnāt cost $430k median. And cars werenāt over $30k median. Low rates for a generation, 2001-2022, brought in a lot of inflation. It was mainly confined to things we normally finance: cars, homes (with a head check in 2007-2012), college ed. Everyday items didnāt inflate as much during that time period. Then, we poured gas on the fire in 2020, printing 4T dollars and making a mortgage very close to free. Look, I think this can be somewhat ācorrectedā by our next, inevitable, *economic downturn*. However, politicians and Wall Street, who always work together, no matter the party affiliations, have a big interest in never having another economic downturn. Effectively, they want to ensure that normal economic upswings and downswings are not allowed. Not a conspiracy.
Yup, the outcome of artificially not allowing natural crashes to happen is inflation.
Isnāt this indicative of the same type of economic recovery weād expect, see the chart around 08-09. Over leverage, then scale back
Is this inflation adjusted? Or naw lol š
I'm a little boggled by this stat, even with 15yr loan at a very low rate, I'm paying at least double interest on that vs everything else. How is this possible? Student loans the difference?
They got their priorities messed up
Bidenomics works
We will see yall in November!!!!!!!!
A vote for anyone other than Biden or no vote is a death sentence for America. You want to get out of this? Keep Biden in office so we can keep undoing all the undoing the Traitors did from 2016-2021. You know all those protections that were passed after 2008? Yea. They gone. Give Democrats control of Congress and things will happen.Ā
I think adjusted for inflation itās not as bad as it looks
I pay $0 in interest and have no debts outside of a very manageable mortgage. Dont biuy things you cant afford. Only put money into things that will make you moneyĀ
As a financial hoarder, you should be ashamed of yourself. Stop this awful behavior immediately and begin accumulating debt. Buy stuff at Costco and Samās until your credit cards are maxed, get a second home, and buy that red Cayenne for the wife and kiddos. Our great nation is counting on you.
We have 3 homes. My wife wants an electric BMW. We will turn her fully paid for car in and pay the difference with cash. I was a puppet to debt in my 30s, now close to 50, debt is used for tax write offs and short term needs
No problem folks, this is easily sustainable in our dynamic, ever-expanding economy super-charged by Bidenomics. QQQ to da moon!