- cross-posted to:
- news@lemmy.world
- cross-posted to:
- news@lemmy.world
Americans’ credit card debt levels have just notched a new, but undesirable, milestone: For the first time ever, they’ve surpassed $1 trillion, according to data released Tuesday by the Federal Reserve Bank of New York.
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A single income used to afford a house, and family, a car or two, vacations, and retirement savings.
Then we needed families to have two incomes to have that lifestyle.
Then we held on to that system, but had that lifestyle, WITHOUT the building up of any savings, and without the vacations.
Then we needed two incomes just to be able to LEASE that watered-down lifestyle.
And then we needed two incomes and good credit to juggle that watered-down lifestyle, and deferring debt to some point down the road when we assumed we’d be high-income earners.
Now we are in stunningly dangerous territory. We’ve largely given up any luxuries, and we struggle to find the CREDIT to LEASE basic essentials like housing, food and medicine. Often we fail to do so.
Inflation has hit us incredibly hard, but when student loan payments start up in mere weeks from now, it’s going to be CRIPPLING, not just to those with debt, but EVERY business that needs those people to buy their goods and services.
We’ve been robbed of our future by corporate greed and the psychopathic cruelty of the boomer-run government.
… And just in the past 6 months we’ve seen the invention of the first artificial general intelligence. Even if it never got any better than it is today, it would still decimate the workforce. But it is getting better. At a staggering rate. We are headed for a jobs crisis the likes of which has never been seen in all of human history.
Add to that the rise of fascism in a global scale.
Add to that the hundreds of millions of anticipated climate change refugees, and potentially catastrophic failures of the ecosystems which sustain various crops.
Add to that that all of human experience and evolution has left us WILDLY unprepared to understand let alone solve problems of this pace and magnitude.
It is difficult to see how we survive this.
Just to be fair, chatgpt isn’t an artificial general intelligence.
GPT4 absolutely is the foundational block of the first AGI.
I’ve been working with it exhaustively since it was released. I’ve built frameworks around it to give it a memory and other supplements. I have ZERO doubt that this is the first AGI, or at least it’s the engine that powers real AGI.
If you haven’t read this paper, you should: https://arxiv.org/abs/2303.12712
That was researchers using gpt4 before it had guardrails put on its behavior, but also without any supplements to it’s functionally.
Hard definition to fit because it all depends on what you define as ‘general’. Its not great but tbh you can ask it a question about anything and it will give an answer, so I’d argue that’s general enough
“It is difficult to see how we survive this.”
We probably wont.
Rome always falls in the end. The law of entropy is absolute. Like so many empires before us, the sociopathic greed/glut/power lust by the “winners” will be our end. Our height was WWII, I see no shame in that. We did a good thing after centuries of committing enslavement and genocide, then we declined into the sunset for the next empire to write about in its history books.
When the system has become this exploitative, some sharp short/medium term pain is better than limping along for another generation or two when we’ll have to collapse or revolt and do the work of rebuilding we already need to do anyway.
Reminder: being comfortable passing the buck of consequences to future generations is why we’re here.
I racked up $12k in credit card debt after college. It was the result of a low paying, dead end job (GameStop), wanting to be independent and live on my own, and no financial education beyond my parents telling the the very basics.
That all changed when I decided I didn’t want to live paycheck to paycheck the rest of my life. Got some licensing and a career type job, met my wife, and the rest is history.
I paid off my credit card debt within the first year at the job, we both paid off our student loan debt (totalling ~$90k within the first 5 years) and now the only debt we have is our mortgage which is fixed at 2.75%. We could pay it down rather aggressively if we wanted but at that rate we we’re simply maxing retirement accounts and putting the remainder into taxable investments instead.
Fuck credit card debt. I believe every high school in America should have a required financial literacy class. Not just balancing a checkbook, but how to build good credit, the dangera of credit card debt, predatory loans, the benefits of saving for retirement early, basic investment principals, and anything else that would make a young person financially literate early in life.
America has never had a larger population. More people, more credit cards, more credit card debt. Seeing a per capita breakdown, or defaults per 1000 people might be better indicator of economic turmoil.
Stop trying to throw statistics into sensational headlines!
Or maybe interest paid. I sometimes have a higher balance for the month, but I always pay it off entirely. Nonetheless, my credit score fluctuates based on the balance at the time of reporting.
I’ve noticed that too. It should not count as a balance if you pay in full every month. I assume this is counted towards this trillion dollar amount too which it should not.
Undesirable? The system is working as designed. The world is $59 trillion in debt to ITSELF. Which makes no sense.
Sure it does. You got ground level which is trust, above that central bank, above that fiat currency, above that companies/people, and above that banks.
You orders machine from my employer. You put some down and the rest you pay on delivery. To buy the raw materials from middlemen, we put some money down and pay the rest on delivery (or use a po but that is complicated way of nearly the same thing), the middlemen put some money down and pay the rest on delivery, and the employer of them hasnt been paid enough yet so is borrowing some from the bank and is depending on two week payperiods. The employees are renting and owe money at the end of the month to a landlord who is still paying off a mortgage to a bank, who is using deposits that can be summoned at all times…
The same x amount of money is multiplied. This x amount of money becomes y*x amount of debt. It is all abstractions on abstractions with no bottom. Since even if you say trust is the bottom it is really just trust that the top of this process will continue to work.
Sleep tight.
Wait wait wait., but that just sounds like feudalism with fucking hedge fund bros, real estate speculation, and a bunch of extra goddamn steps…
Well I mean I don’t think your life is as bad as a 12th century Russian serf.
Indeed, even Kings would envy us right now. Just even the luxury of having to not slave away for weeks just for a lump of stale moldy bread is a marvel.
We have an hyper abundance of food at our hands. You can even drink a delicacy called coffee together with another delicacy called cinnamon without murdering countless on the way to your table together with the miracle of milk kept fresh through days or even weeks or months without it even getting a stale whiff.
There is even more to that, but the luxury of partaking in it and complaining about it, thinking our lives are somehow worse, while trying to destroy what countless generations sacrificed themselves for, knowingly or unknowingly, is the biggest luxury of them all.
Paying a portion later means more cash can flow through the business and provide utility today. Your post implies that every business operating this way is effectively insolvent without access to credit, but even if your employer has the money to pay for the raw materials today, it generally isn’t in their best interest to do so
Sure. There is going to be variation. Some companies are going to be money empires, I have heard ship builders usually are but can’t confirm that. Plus you got like tech startups that can spend a decade without making a penny.
And yes it generally isn’t a good idea for a business to pay for everything right away. If they run low on cash they will have to borrow vs delayed payment means an interest free loan. Back in my freelancer days I used to get furious about net-90. Do all the work, lay out all the expenses, and still have to wait 90 days to get paid.
Without trust the whole thing burns to the ground. Good thing everyone trusts that the banks won’t fuck us over and demand a bailout, that will never happen.
Funny how the “You took a loan, pay it back” idiots never seem to care about dischargeable credit card and business debt.
I guess that kind of debt needs a safety net since they might have some of that kind, while new adults who committed the crime trying to better themselves, that pursue integral vocations that society desperately needs but don’t pay well, like teaching and counseling, should just fry like piggies while their fellow Americans laugh at them out of sweet, sweet schadenfreude.
Our values are wrong.
Man, I knew that COVID-19 caused reductions in spending, but I hadn’t realized that it had caused such a significant payoff of debt. Like, I could have believed it causing an increase rather than decrease in credit card debt.
I’m surprised by the increases before and after, though. You’d expect some increase over time just due to inflation and growth of the economy. And that chart isn’t zero-valued.
Lets check how much is just inflation…
gets inflation calculator
Okay, so inflation is responsible for a 32% increase between 2013 and 2023.
There was a 49% increase in credit card debt over the same period.
So most of the increase in the chart is just inflation.
Population increased by 6.5%.
So that explains a 40% increase, together.
And there’s a gradual increase in the size of the economy over time. I don’t know how that’d best be measured in terms of what should translate into credit card debt.
But point is, while there’s probably some increase there, it’s not a huge one in real, per-capita terms, which is what you’d care about.
While a sanity check on the absolute value is good I would argue that the most impactful data presented here is the rate at which debt is growing.
Yes, debt was paid off during COVID but now that the free money has dried up people are racking up debt much quicker than before. So while the current value might be in line with previous trends the rate at which debt is accumulating is what is alarming.
It’s unlikely for that trend to slow or stop unless real wages increase, prices fall, or demand drops. We’re seeing some of that but apparently not enough.
I’m doing my part!
Would you like to know more?
I recently stopped paying my credit cards and negotiated with the credit card companies to settle each one. Went from owing $25,000 and some change to just a little over half. Sure, my credit took a huge hit and it took MONTHS of back and forth with both companies but I paid them both off in lump sums and now I’m credit card debt free. I’m not advising others do this because I don’t know your situation. Luckily I already own a home and a car so I don’t need my credit pulled for anything anytime soon. Divorce completely fucked up my finances(she incurred a lot of debt on a card that was in my name and used it for massive purchases and left me holding the bag). Some of the debt was mine, but the lion’s share had to do with her purchases or me using the credit lines to pay her so I could keep the house. Ugh. Fuck credit cards. I’ll never have one again. Absolute fucking nightmare.
Why did your credit take a huge hit, due to non payment for X months?
I have never had a credit card. I have no plans to get one. I have no idea what my credit rating is either. And until I have to know, I don’t care. I am not in any debt though.
deleted by creator
Ok, that is a fair argument. I will look into it. Thank you.
You can also put a freeze on your credit via the big three credit agencies. That would prevent someone from opening ip a credit card or taking out a loan in your name.
when you “have to know” is the worst time to find out that it’s not good.
Possibly, but it has not been a problem in my life so far, so either it’s good enough that no one cares when it’s come up or I’ll be in trouble one day, I guess.
yes that is indeed how you create future problems for yourself.
but it has not been a problem in my life so far
Ignoring it is a sure fire way to let someone else make it a problem for you.
Maybe, but it’s worked for 46 years now.
Tricky part here is that an easy way of building credit is by use of a credit card. If you can’t buy a house in cash, then obtaining a good mortgage becomes difficult. I’d recommend the happy medium being one of those preloaded credit cards where you pay $1000 up front or what ever and just use that for day to days… being out of debt like you are, though, is one of the most liberating things one can ask for
I was like you and got screwed by it. That’s the unfortunate part of the system for us. Credit rating isn’t rating of trustworthiness, it’s a rating of likely-to-take-debt/trustworthiness. Never having credit is often “worse” than bad credit. If you ever do try and take out a loan for a car or a house, you will have fewer and more expensive borrowing options.
The play for people like us is to open exactly 2 sources of credit, use one as autopay for static bills, and automatically pay it every month. Use the other for dynamic expenses, but monitor and pay it off in full whenever it reaches 30% utilization, or 25 days, whichever comes sooner.
One can get the benefits of credit without actually accruing debt. The way you use your cash/debit, you already don’t spend money you don’t have. Just continue to not spend money you don’t have, but get the benefits of the system. Be a “deadbeat” as they call us. Us deadbeats actively cost the system money by never carrying balances that accrue interest.
I use my credit card for every purchase I make and get 1.5% cash back. I pay off my balance every month in full to avoid any interest. That 1.5% can add up pretty quickly and it’s basically free money.
And everything costs 5-10%% than it would without all the cash back and other rewards programs.
If you lose your job though that free money dries up lightning fast
If you treat them like a debit card, there aren’t any of these issues. I have a credit card that I use for all everyday expenses. Every month it’s paid off so it never acrues interest. My credit score is great and the card offers some other benefits too.
If I lose my job the risk I have would only ever amount to one month of spending, which is easily covered by my emergency fund.
Thing is, by the time you have to know, you’ll need to have a history of good credit.
I have one credit card. It’s fully paid off every month automatically, because I spend less than I make.
