The Federal Reserve Bank of New York is reporting that the U.S. household debt stands at a record $15.24 trillion, compared to the over $28 trillion in federal debt, and an estimated $3 trillion in state debt, not including trillions in unfunded liabilities like health care and pensions for retired state workers. Unlike government debt, of which 60 percent is held by the public and 40 percent outside the country, simply paying off interest rates on debt for individuals and households leaves an ever growing balance that is an ever present threat to one’s lifestyle. Debt during the pandemic was lower because no one was out and about buying anything, but with COVID protocols relaxed for retail stores and restaurants, and foot traffic in commercial areas increased with office reopenings, people are now “eager” to spend money—or rather, have more opportunities for “impulse” buying.
After a slow-down, housing construction is up, but not enough to fill the demand, thus driving up prices and debt to claim them. As a New York Times YouTube presentation tells us, “liberal” states like Washington are not fond of building affordable housing. Take for example in Kent, where a half-dozen new apartment complexes have been built in a 10-block square space over the past decade, meant to attract yuppies and professional types who can’t find housing in Seattle—not for people who work for minimum wages in Kent's ever expanding industrial parks, such as in the grounds of Boeing’s former “space center,” gutted out and now almost completely filled with still empty warehouse construction on land that the state’s department of ecology did not exactly give the thumbs up for the safety of the previously Super Fund-like water quality.
The latest apartment construction, Midtown64, looks like a small village and has every amenity you can think of—except that, well, only certain “kinds” of people can afford to live there. I’ve walked past the place a few times recently, and it still appears to be mostly free of occupants despite the offer of the first month’s rent free. “Affordable” housing in Kent is mostly older apartments that have seen better days; affordable houses are mostly just a step or two away from having a “condemned” sign put on the door. It’s “amazing” how many abandoned houses there were in Kent that homeless people squatted in, and then accidentally burned down because fires were lit inside them after the electricity was turned off (Kent, of course, had previously rejected an offer by the Union Gospel Mission to build a homeless shelter “downtown” at its own expense for the usual NIMBY reasons). Naturally this formerly reliable getaway for anti-Seattle right-wingers was happy to see these abandoned houses burn away (cheaper than paying someone to do it), and the fire department was helpful in being as far away as possible (closer to Tukwila and Renton than anywhere in Kent) to do anything about those, or any other, fire.
Well, OK, I’m way off topic there. Households and individuals face more immediate problems than government concerning debt; you can’t “evict” a government—only replace it with another—but you can evict a tenant who is behind in their rent. If someone is behind in their car payments, someone just comes to take their car. If you can’t pay the mortgage, you and your belongings are out in the yard. If you try to ignore your credit card debt, someone from a collection agency will sue you in court and garnish your wages—unless, of course, you go into bankruptcy proceedings, which destroys your ability to get credit or borrow money for years.
There was a time when I was a really big fan Apple computers, since I first used those tiny-screened things they had in the computer labs in college. Computers were certainly “cool” back then, much easier to write a paper on than a typewriter, and in between even play Asteroids. The problem with Apple then is that they never gave you fair warning of what was coming next on the horizon. One day I purchased an expensive Classic II on credit, and the next day there was the Color Classic on the shelves. There was always something “cooler” that appeared, like the iMac, and then the PowerPC came out. One of the most annoying things about Motorola chips was that unlike Intel chips, you could never count on the “next generation” processors to be able to add any real speed boost, especially when the operating system and programs had to be run through emulation when the PowerPC first came out.
Eventually I just had enough with Apple and its expensive product and limited software and moved on to Windows. But in the meantime my credit card debt just piled up, since I couldn’t afford to pay $2,000 for a Mac on $7-an-hour. At least with Intel-powered computers, you had the nomenclature that gave you an idea on how long the computer was good for. And then one day my brother paid me a visit and dropped off a used 1988 Beretta as a birthday present; actually it was my sister’s car, but apparently she wanted it off her hands and couldn’t get anyone to buy it. I wasn’t exactly looking for a car at that point, but I said OK, thanks, and I spent the next two years adding another $4,000 in credit card debt in repair bills before I had to call a junkyard to take it away, and was told the car wasn’t worth any money for parts.
OK, so now I am again off topic. The upshot was that I was overwhelmed with credit card debt, barely being able to make the minimum payment on seven cards which did not cover the interest rate increase on the balance. What to do? I thought I would do the “right” thing, which would be to enter into a debt consolidation program. It wasn’t easy to get the banks to agree to this; the company administering the consolidation program told me not to pay anything until they accepted the terms they offered. It appeared to me since the banks knew they would lose all that high interest they were getting, they were content to allow the balances to balloon for six months; my suspicion was the debt consolidators knew this would happen, and that they were "secretly" in cahoots with the banks to allow this.
After that the total balance was consolidated so that I made just one payment a month with a lower interest rate instead of seven with high rates. It took me seven years to pay it all off. It didn’t keep my credit score from tanking, because the information the credit score companies received was that all my credit cards had been canceled. But there was a positive result from this: I learned how to live without having to use a credit card, and because of that, when I paid off the debt (about $500 every month), I found that now I had all this extra cash in my pocket. It was tough getting there, but it was more valuable than simply having all that debt disappear through bankruptcy, and not learn any lessons from that. Since then I have only one credit card for “emergency” purposes, and have only used it a couple times a year to make a full payment on it to “improve” my credit score, which is around 800 now, and only use my tax refund for a “big ticket” item like a new laptop.
So that’s your free life lesson for the day.
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