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Addictive Credit Card Use Generates High Debts
In his article "Climbing Out of Debt: Recovery Can Be as Tough as Breaking an Addiction," (Washington Post, October 14) Michael S. Rosenwald describes America as a nation of debtors with a collective household debt of $11.8 trillion.
Some 75 percent of households in the U.S. have debts that are growing, with credit card debt alone jumping from $69 billion in 1980 to $1.8 trillion in 2005.
According to financial planners and counselors the money mistakes that lead to debt come from a variety of sources including borrowing too heavily against home equity or buying a home that is simply too pricey with financing that is risky at best. Those without health or property insurance are at danger as are those who simply spend beyond their means.
Rosenwald cites the case of an independent contractor who used his credit card to pay for trips across the country that usually totaled around $1,500. Although the man was reimbursed by clients, he did not apply the payments to his credit card debt and wound up maxing out his own credit cards as well as those in his mother's name, eventually running up a $50,000 load of debt. Approximately $20,000 of that would not have existed had he spent the reimbursement checks appropriately.
The young man described his own problem as being similar to that of an alcoholic. He was addicted to the use of credit cards and had to get his "sobriety" back to get a handle on his debts.
The ease with which one or two fundamental mistakes can plunge an individual deeply in debt worries financial advisors in America where credit is acquired and used all too readily.
The full text of Rosenwald's article can be found at washingtonpost.com.
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