| 25 Fascinating Facts about Debt |
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Andrew
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| 25 Fascinating Facts about Debt |
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Debt. It's been a problem for almost everyone at some time, from the ancient Greeks to modern movie stars.
Throughout history if you didn't have the drachma, you literally could be enslaved by your debt, and you'd become the property of your creditor.
About 200 years after the first Olympic Games, ancient Greek lawmaker and statesman, Solon, changed that for his countrymen, outlawing debt bondage and canceling all outstanding debt at that time -- a highly popular move for those with rash spending habits, even before credit cards.
Today, many Greeks are wondering if the old sage will bail them out of the $6 billion in debt the country has racked up to host the 2004 Olympics. It's estimated it will take 40 years to pay it off, but that's not bad when you consider Montreal is still paying against its Olympic debt of $2 billion, held 28 years ago!
If you think those debt numbers are amazing, consider these:
* Some 1.6 million U.S. households -- one of every 73 -- filed for bankruptcy in 2003.
* There are roughly 1.2 billion credit cards in use in the United States.
* The original Diners Club card was issued in 1950 to let businessmen charge meals. It was pasteboard with a list of the 27 restaurants that accepted it printed on the back. The first plastic card came out in 1955. Today, there are about 20,000 different cards available in the U.S.
* Studies show the average consumer is exposed to more than 3,000 marketing messages every day. In the last decade, it's been estimated, solicitations jumped from 1.52 billion annually to 4.29 billion.
* Today roughly 24 percent of personal expenditures in this country are made with credit and debit cards.
* Average per household debt in the U.S., not counting mortgage debt, is about $14,500 -- especially noteworthy because before the 1930s, most middle and working class people had no major debts. Banks would not lend to them; they rented their homes and if they did own a house, it was paid for as it was being built.
* A typical credit card purchase ends up costing 112 percent more than if cash were used.
* A $1,000 charge on an average credit card will take almost 22 years to pay, and will cost more than $2,300 in interest ($3,300 total) -- if only 2-percent minimum payments are made.
* Some 40 percent of American families annually spend more than they earn.
* About 60 percent of active credit card accounts are not paid off monthly.
* Average credit card debt among all American households is $8,400.
* Average card debt among people who have at least one card is $9,205 -- triple what it was in 1990.
* Average personal wealth of a 50-year-old American, including home equity: less than $40,000.
* A typical American family today pays about $1,200 annually in credit card interest.
* The average interest rate on credit cards is 18.9 percent.
* Last year the credit card industry took in $43 billion in card fees.
* Nine of 10 Americans claim credit card debt has never been a source of worry.
* But 47 percent would refuse to tell a friend how much they owe.
* Twenty-three percent of Americans admit to maxing out a credit card.
* Eleven percent of Americans admit card debts went to collection.
* Thirteen percent of Americans have been 30 days late paying credit card bills in the past year.
* The average graduate student has six credit cards and one in seven owes more than $15,000.
* People using credit cards in fast food restaurants spend up to 50 percent more than when they pay cash.
* The personal savings rate in the United States has dropped from 8 percent in the 1980s to just under 2 percent since 2000.
* Medical debts sink the ship in one of every 20 bankruptcies. Typical health care debt: $25,000. Typical victim: a senior on a fixed income. Typical scenario: pricey prescriptions bought on high-interest credit cards.
Bankrate.com
25 fascinating facts about debt
Wednesday October 6, 6:00 am ET
Paul Bannister
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Tue Oct 19, 2004 7:24 pm |
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BlankenshipFP
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VERY fascinating facts, Andrew.
Particularly fascinating, well, chilling actually, was the last factoid regarding seniors in bankruptcy due to charging prescription expenses to high-rate credit cards.
My first inclination is that the system's fundamental problems must be dealt with in some fashion and soon. As soon as I come up with the answer to that one, I'll be sure to let everyone know.
Is there anything else that can be done about this, on a grassroots basis? Educating the senior citizen about good habits with regard to credit usage is one thing, but that can be likened to rearranging deck chairs on the Titanic.
Just musing - anyone else have ideas that we can all implement?
Jim Blankenship, CFP�, EA
Blankenship Financial Planning, Ltd.
www.BlankenshipFinancial.com
Standard IRS Circular 230 Notice Applies
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Thu Oct 28, 2004 2:44 pm |
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Andrew
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As they say "an ounce of prevention is worth a pound of cure"...
One thing that we can all do is try to stay healthy and in-shape. I walked up 7 flights of stairs this morning for some good aerobic exercise, and it's pretty obvious to me that I need to do more work in this area. We can all age a bit more gracefully if we put in the time and effort to stay healthy. This is something that certainly won't eliminate the possible need for meds when we get elderly, but I think it would go a long way in reducing health care costs and the financial burden on our society.
Also I think that some meds are just way too expensive. Sure the pharma companies need to recoup their costs and get funding for more research, but in some cases costs seem artificially high. Bulk buying by health care organizations and a more open policy for Canadian pharmaceuticals should help.
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Thu Oct 28, 2004 4:59 pm |
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Andrew
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quote:
R u sure
Sure about what, UnXpected?
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Mon Nov 01, 2004 6:17 pm |
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extremist
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thx for the info!
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Wed Nov 17, 2004 4:39 am |
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sagetips
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quote:
A typical credit card purchase ends up costing 112 percent more than if cash were used.
Interesting stat. I wonder if anyone's computed a figure for the savvy minority that's able to use credit cards prudently and pay in full the monthly balance? I would guess the figure to be about 95% or less:
- 1% or 2% credit card reward or cash back earned
- 1% for time value of funds (i.e 25-day grace period)
- 2% or 3% for extra consumer protections using credit cards and better expense records
- 1% for unaccounted cash loss (incorrect change, theft, loss, etc)
Credit cards surely aren't for everyone, but if you're disciplined to play the game right, they are great (IMHO).
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Sat Nov 20, 2004 4:48 am |
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xboxundone
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quote:
Originally posted by sagetips
quote:
A typical credit card purchase ends up costing 112 percent more than if cash were used.
Interesting stat. I wonder if anyone's computed a figure for the savvy minority that's able to use credit cards prudently and pay in full the monthly balance? I would guess the figure to be about 95% or less:
- 1% or 2% credit card reward or cash back earned
- 1% for time value of funds (i.e 25-day grace period)
- 2% or 3% for extra consumer protections using credit cards and better expense records
- 1% for unaccounted cash loss (incorrect change, theft, loss, etc)
Credit cards surely aren't for everyone, but if you're disciplined to play the game right, they are great (IMHO).
I use my discover for most fo my purchases get my 1% back and then pay it off at teh end of the month its great 
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Sat Nov 20, 2004 2:05 pm |
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Doro Ajani
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I use prepaid MasterCards.
The only way I would entertain use of a conventional credit card would be through a business structure, whereby the business applies for the line of credit.
As the credit line is essentially a short-term loan at a high interest rate, it's best to use it in such a way so as to generate additional funds, pay back the portion of the credit line used, and pocket the difference.
Doro Ajani
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Sun Nov 21, 2004 5:05 am |
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robmejia
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If only people learn how to take care of themselves and to spend only within their means, then it's possible to be debt-free! And when you're debt-free, you can even save up for your long term care and not worry about having to rely on Medicare.
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Sat Dec 17, 2011 3:14 am |
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