Wikinvest Wire

Interesting debt data

Wednesday, July 30, 2008

The New York Times has a good series of stories and graphics on the increasing debt load carried by Americans that is well worth a look.

The animated graphic below showing debt levels for various age groups is from an interactive graphic (no direct link available) in the series. It allows you to plug in your own level of debt to see how you compare with other age groups and with households at other income levels.
Unfortunately, this data set only goes back to 2004, so you could probably slide the labels on the x-axis to the left a little bit and get a more accurate picture of the reality today.

This is the image that first grabbed my attention - part of the lead story appropriately titled, "Given a Shovel, Americans Dig Deeper Into Debt"

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Nick said...

The problem with their metric (imho) is that it doesn't factor in savings. If you assume that anyone who has extra money pays down outstanding debt it would be more meaningful, but that's not necessarily true. For example, I have much more debt than the average person of my age and income level, but I also have considerable savings, and I choose to have long-term mortgage debt because of distinct tax advantages and my estimations of near-term inflation. That is, just because I have high debt does not at all mean I'm not in a good position financially.

I think most Americans don't have much savings, so the general implication of the chart is correct, but without the savings amount it's potentially very misleading. For example, if everyone doubled their debt and investments, that would be a net zero change to financial well-being, but their debt chart would show only the debt portion. I'd be much more interested to see that chart alongside a chart of gross worth, to get a feel for where we really stand overall.

Anonymous said...

I think its also worth pointing out that given that the cost of education has increased so significantly in the last 15 years, anyone not born to well-off parents that wants to get an educatio has to incur debt which is likely to exceed 100K.

Young people are forced to start life taking a mortgage-equivalent to fund their education. Not much choice there. It would be interesting to see the type of debt across age groups...

NotASlacker said...

BS anonymous. Don't give us that sob story.

There are numerous state and other programs that provdide in-state tuition free or nearly free. You can work summers and holidays and even attend college near your parents' home and not incur the debt.

I attended college in the 80's with NO discounted tuition, but by working every summer and every holiday instead of kicking it at the beach I covered 75% of the cost of living and attending college myself (the other 25% from my parents). If I'd have gone nearer to home their input would have been zero.

Today you can even leave college with a decent savings account if you simply put some thought and hard work into it. Of course if you goof off in HS and don't get good grades (a monkey could keep an A average today) you might not qualify, but then you're probably not college material anyway.

And college is vastly overrated unless you plan on a career which specifically requires it. Most don't. My wife is a HS grad and made 6 figures in her early 30's and mid 6 figures now.

Much has been written on how we are sending too many unqualified students to college these days. That drives up the cost, btw. But please spare us the claim that one has to borrow a small house to get a college education. Class and studying took me 6 hours a day. Quit partying and goofing off and get a job and you can graduate debt free.

staghounds said...

And even if you can't do any of that stuff, the services will pay you enough cash for a full ride, plus a signing bonus. If you're thrifty, you can START college with $100,000 in the bank AND your tuition paid.

It's a fool who doesn't add to his debt. Congress and the President just pledged that the stupid savers and debt free morons will cover it.

Anonymous said...


Before answering next time, why dont you check the statistics, like the fact that college tuition has increased 375% since the 1980s while salaries increased about a third. At that rate, your 75% would have been reduced to more like 30%. Oh, and then where would the other 70% come from? Good question. I guess you are lucky to have parents who helped you pay your 25%, and maybe they could even help you pay that 70% if you were studying today. Or maybe not.

Just check your facts next time and stop judging.

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