So the truth is consumers are NOT paying down their debts. They are defaulting on their debts. Every G*& D*mn pop up ad I see is either telling people how to lose 50 pounds or how to get of debt. WTF??!!
How much debt is acceptable? For the VAST majority of consumers the answer is:
Damn Near Zero.
Think about it: If one is saving for a rainy day, retirement, financial security... and one is an Average Joe (like me) - what are the circumstances in which debt of any sort is acceptable?
Let's start with:
Student Loan Debt - UNACCEPTABLE (unless it is for an advanced degree in a profession where the advanced degree IS THE BARRIER TO ENTRY - surgeons, lawyers, engineers in certain fields come to mind... women's studies? African American Studies? Not so much). If you have folks with money, good for you... If not, go to state schools, work, beg, borrow, or steal... but do not go into debt for an undergrad degree.
Car Loan Debt - UNACCEPTABLE. Buy used, small, and cheap... and take a loan if you have to - then work 3 jobs until you pay it of. Don't know how to change oil or spark plugs? Or change a flat? You have NO BUSINESS owning a car. Live near work, rent cars when needed - commuting is for suckers.
Mortgage Debt - In a world with declining real estate? HAHAHAHAHAHAHAHAHA! HEHEHEHEHEHE!! HOHOHOHOHOHOHOHOHO!! Coach surf, live with parents, friends, rent a basement apartment.
Credit Card Debt - For What? Lunch Out? Those cute little shoes? Songs for your I-pod? You bought an I-Pod?? WTF FOR??!! If you are in debt, you don't need to be entertained; you need more income, and you will be plenty entertained juggling those 3 jobs. There are plenty of jobs to be had - they just aren't full time, no one wants to pay the healthcare bill for overweight Americans, and even fewer are interested in having to fund your retirement when you claim disability. I had a part time job doing fencing at my farm this summer, and I had the darnedest time getting anybody to show up for work paying $15 per hour. When I told the first guy that his cell phone and texting had to go (I was holding 70 lbs of barbed wire while he made his evening plans) he didn't show up the next day. He texted me to leave his pay in my mail box so he could pick it up, I presumed at a time that would not inconvenience his social plans...
Times ARE tough. Want to get ahead? Live small, stay clear of debt, hustle like crazy.
There was a sign in my boss' office at Bear Stearns that went something like this:
“Every morning in Africa, a Gazelle wakes up. It knows it must run faster than the fastest lion or it will be killed. Every morning a Lion wakes up. It knows it must outrun the slowest Gazelle or it will starve to death. It doesn't matter whether you are a Lion or a Gazelle... when the sun comes up, you'd better be running.” - Unknown
American's have forgotten the lost of art of getting up early, hustling all day, being humble, and packing a lunch. Its time to get back to basics. Blocking and tackling.