America’s Poor, Deeper in Debt Than Ever

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U.S. consumers have made a lot of progress in paring down the extreme debt loads that helped make the 2008 financial crisis such an epochal disaster. Fresh data from the Federal Reserve, though, offer an important caveat: Millions of the poorest families are still very deep in the hole — and might be getting deeper.

The triennial Survey of Consumer Finances, released by the Fed last week, confirms an overall improvement in the state of U.S. household finances. The average debt burden for all families stood at about 105 percent of pretax income in 2013, down from about 125 percent in 2010 and the lowest level since the 2001 survey.

The improved finances, along with more recent signs that consumers are feeling comfortable about borrowing again, has given some economists cause for optimism: The more progress households make in getting out from under their debts, the logic goes, the greater the chances that renewed spending will boost growth.

A closer look at the Fed data, however, suggests that the financial improvement is far from evenly distributed. The least wealthy families have made the least progress, and by some measures are in worse shape than ever.

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3 thoughts on “America’s Poor, Deeper in Debt Than Ever”

  1. I really don’t know how people are making it these days. We have three kids and it’s a struggle every month, as the prices continue to go up. We hedge our bets with a garden and responsible shopping habits, but I know there are so many hungry and poor kids than there used to be in this country. May God be with them and those that need Him the most during this trying time in these here United States.

    • I live in South Carolina, and a local food bank that had 13 distribution centers recently had to close almost all of them due to a lack of donations.

  2. It all boils down to what you do with what you make in the way of income from any source.
    Poor people do not manage the money right. That doesn’t mean there is any management system out there that will make a difference. It is hopeless for a lot of people under the current system of rules.
    Go to any grocery store in this country and sit down and watch people check out through the cash registers. That can be highly entertaining!
    Then observe the people coming through the lines.
    How many are on Food Stamps?
    How are they dressed?
    How many have kids?
    What is in the grocery cart?
    Is the cart full of TV Dinners or wholesome food to be cooked at home?
    Look into their eyes, do they look like they are very tired?
    Looking closer, how many women have a wedding ring on their finger?
    How many are Single Female Moms with more than one kid?
    How many are buying cigarettes?
    How many have popcorn and hi-carb foods like Potato Chips?
    Is there pet food in the cart?
    All of which are in the liabilities column when we research what people do whether or not they can afford it or not. Kids are the big debt item no matter what you do. Kids get sick and need treatment and often bankrupt a family thanks to the doctors throwing them into hospitals when they need home care. Single Moms have a real problem balancing home with work.
    The basic budget formula no longer works. I always tried to place 10% of my income into a savings account of some kind reserved for the emergencies of life. I was only able to do this in 1969 because I was learning a trade. In the next five years I became a Journeyman Printer which essentially doubled my net income. I started at 50% of scale wages. By the end I was making 95% of the Journeyman Scale of Wages. I married BEFORE I had kids.
    I had no tuition debt to repay.
    The worst mistake any person makes is to go into debt for future earnings that may or may not ever occur. Millions of people have fallen into this trap thanks to the colleges giving bad advice to people that need that debt like a hole in the head.
    I think the colleges need to be sued for the advise they give students. These are simple people out of high school with no idea what they are getting themselves into.
    When I was struggling to make ends meet, things were different. Congress had different game rules for the poor. In 1969, I actually got over 800 dollars back from the income tax because I got married.
    In FInance and Appraisal we study inflation. Under those rules of inflation I made close to 8,000 dollars in 2014 dollars back from the income tax.
    Congress closed that little rule over the years so that we get about 1/10th of that back today.
    Part of that return was because on a dime, I bought a house through my GI Bill. I took a huge chance buying that home on little income. Today I could not get away with it.
    The poor are by design by the RICH and they have NO INFLUENCE with the Congress at this time.
    The next step is cull the herd. That will be done with this EBOLA epidemic that is all ready planned.
    The other reason I succeeded was we had professionals negotiating wages for us in the form of Contracts and a Union. That gave us basic rights. I gave the government better tax returns.
    All of which are now history. The RICH have decided to not have anyone make a decent living which means we are all amongst the poor now.
    If people had a clue . . .
    The Congress would be fired over the next six years and people for the working class of this country would be put into office in their place.
    The President would be fired.
    The courts would have all of these judges replaced with people that are not pro-lawyer to the extent that it becomes extortion.
    A working person with a work-related injury under the current system gives up 1/3rd of that income of the first check which contains all the back pay. Anyone without a lawyer does not even get a court hearing under this system.
    The lawyers at your local business make sure every case is challenged. It is lawyers making income for other lawyers and judges all of which are worse than any union we have ever had out there.
    Meantime, back in the world of the RICH Congress, we have them giving away 300 million dollars to one country alone. They shit on the public poor every chance they get.

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