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Financial Author Points to Growing Debt Crisis in U.S.
According to personal finance writer Elizabeth Razzi, financial experts point to an ominous trend of rising debt in the United States with much of the blame falling on an overabundance of credit cards. ("The Coming Crunch: What's in Your Wallet?" Chicago Tribune)
The Federal Reserve reported that the amount of outstanding consumer credit doubled in the first six months of 2006. Numbers for the past two years are no more encouraging. Non-mortgage debt is up by 12.5 percent to an average of $11,669 while the number of late payments increased 19 percent indicating the difficulty consumers face in managing their debt load.
Other warning signs in the U.S. economy include rising mortgager rates, flagging health-insurance coverage, wages that are for the most part stagnant, and the steady increase in college-tuition costs that fuel the amount of debt related to student loans.
College students, in fact, represent a growing class of debtors with the typical graduate leaving school with approximately $15,500 of instant debt. Graduate students take on about $24,600 worth of obligations. Most likely their parents have also taken out home-equity loans to help finance their children's education thus spreading out the effect of the debt.
The overall effect of these factors and others Razzi discusses, including mortgage foreclosures and bankruptcies, point to a serious debt crisis in the United States.
The full text of Razzi's article can be found at chicagotribune.com. In addition to contributing personal finance articles to the Washington Post and Kiplinger's Personal Finance, Razzi is the author of "The Fearless Home Buyer."
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