US consumer borrowing rises to record $2.75T

[Omaha Steve]

Source: AP-Excite

By MARTIN CRUTSINGER

WASHINGTON (AP) - Americans swiped their credit cards more often in October and borrowed more to attend school and buy cars. The increases drove U.S. consumer debt to an all-time high.

The Federal Reserve said Friday that consumers increased their borrowing by $14.2 billion in October from September. Total borrowing rose to a record $2.75 trillion.

Borrowing in the category that covers autos and student loans increased by $10.8 billion. Borrowing on credit cards rose by $3.4 billion, only the second monthly increase in the past five months.

The strong rise in borrowing came in a month when Americans cut back on consumer spending, reflecting in part disruptions from Superstorm Sandy.

FULL story at link.



Read more: http://apnews.excite.com/article/20121208/DA31AHUG1.html

[lunatica]

1. Going through bankruptcy is a mixed bag, but I'm glad I had to

I've had to live on only my salary since July of 2010 because I had to declare bankruptcy after my mother died. I work in administration in UC Berkeley. If things break down and it costs money they don't get fixed right away. They just get added to the list of things to fix. I've learned to be very careful about how and where I spend money. I've also learned the wonderful value of shopping at the dollar store.

It can be a constant struggle, but my state of mind is so much better than when I was in too much debt because of the credit cards. I much prefer to have a dollar or two in my bank account for the last week or two of every month than to have to use credit to live. Most of the time I feel lucky not to have any credit cards.

[jtuck004]

2. Isn't the pull of the dark side amazing? We wipe out our debt, put ourselves in

a much better position, yet the whole of life is structured around sucking fees of some kind out of one's pocket, "just sign here". We know to stay away, but it's like being a recovering addict. I don't mean just the shopaholic, but we are all conditioned to it like animals in one of Skinner's chicken boxes.

(For those I have read who think this is the easy path after shedding the debt, you are in for an awakening if you ever get to try, I promise.)

I'm sorry about your mom., but it sounds like you are doing ok.

[lunatica]

3. I think of it as being mesmerized

It's so seductive to live in the fantasy that you can have everything you see on TV if you have credit cards. Every once in a while I think about trying to get some credit to have a way to fix something in the car or the refrigerator or getting needed tires, etc., then I remember how easy it was to wrack up the charges and how easy it is to get out of hand, even if I used a credit card sparingly. So I decide not to get credit and feel instantly better.

I not only went through bankruptcy that year. I was laid off too later in the year. But I've landed much better than others. I was rehired by the same department that laid me off and I was able to get a mortgage modification. All that makes for some powerful memories that are very unpleasant so I have a lot of incentive not to repeat the behavior that caused it.

I am better off now.

[jtuck004]

8. We've been mesmerized as a country for 40 years. We need interventions to get better. <G> n/t

[zazen]

4. my debt's largely from medical bills

Or, I have that debt and try to pay it off, which makes it more likely that i have to borrow to buy groceries.

And believe me, I avoid going to the doctor at all costs. There are some situations (and especially with my kids) where you risk their dying, and at that point, I relent.

I'm struck that Americans are taught to hate ourselves for having certain types of debt that wouldn't exist in the first place in Canada or France or the UK or Scandinavia.

[lunatica]

5. I'm very lucky to be healthy

It really is a tragedy that Americans don't have universal health care. In this country and in this century it should not be like this.

[davidpdx]

11. I almost ended up in a similar situation with medical bills

I'm an American living outside the US and have insurance where I live, but of course none in the US. When I visited home last year I was in the hospital for 5 days with pneumonia and ran up a bill in excess of $30,000. I had to be isolated in a room for most of the time and have special treatment as I had waited so long to go to a hospital. Thankfully I ended up going to the closest hospital to where I was staying. In the end their foundation covered all the costs except for a $140 I paid for external charges. I was extremely lucky.

That being said, I still have student loans which are much much worse.

[Sunlei]

6. so 2 trillion debt is from medical treatment debt and those crazy interest payday loans?

wish we had universal healthcare and loan sharks were against the law.

[slackmaster]

7. I'm still paying my credit card off in full every month

I recommend it.

[aquart]

9. Banks rejoice. Award bonuses.

[Quantess]

10. Still getting worse!?

I thought the trend was going back down. Guess not.

[davidpdx]

12. Student loan relief

Please please please! I'm on the far side of the plank on student loans.

[smccarter]

13. A big lack of common sense....

Many years ago, I found myself with $5,000.00 of credit card debt. It didn't "sneak up on me", I wasn't bedazzled, or fooled into making purchases. I wanted the items I purchased so much that I allowed myself to go in debt to purchase the items. At the 5,000 dollar mark, I developed a bit of sense about what I was doing. I took out a 5000 dollar simple interest loan, paid off the credit card and tore it up. I haven't carried a credit card since.

It's very simple. If you can't afford to pay cash for what you want to purchase, you don't need to purchase it.

Since that time, I either save until I can purchase a car with cash, or have to borrow so little that I can pay them off in about a year. I've paid the mortgage off on the house I'm living in. Purchased a 2nd home and am well on my way to paying it off.

The thing is... I earn a lower middle-class income. My wife's income is very similar to mine. Combined, we earn far less than 100k per year.

Since taking the stand against mortgage and credit card interest debt, we're doing very well. We've never filed bankruptcy.

A couple of things... I don't carry a cell phone. My wife does, but without a data plan. I don't subscribe to pay channels like HBO, don't drive a Hummer - Ford Ranger and Chevy Equinox. Never purchase a new car - always used... a year or so old. Don't take annual vacations to Disney, or purchase items that I can't afford. Didn't re-finance my house for cash...

It really blows me away when I think about how simple and easy it was to put things in order financially to see articles like this one. I'm going to be harsh and say that Americans have become too irresponsible for credit. This is one issue I wish Washington would handle for the masses. It should be much more difficult to get a loan or a credit card.

And now for the angry responses.....

[Odin2005]

14. Debt is slavery.

I refuse to have a credit card.

[dmallind]

15. Not all necessarily bad

Why should I spend 100% and risk losing cash forever when I can get 1-2% discount and no risk by paying it all by credit card then one free bank transfer a month to pay it off? All with no fiddly germ-laden heavy change. I am a few thousand of that "debt" myself - which is just accrued expenses I can easily cover from checking rather than real term interest bearing debt.