Wednesday, August 23, 2006

Easy money

Robert Samuelson writes that with the Fed steadily raising interest rates, the age of easy credit is coming to an end. Good thing, too:

In 1946 households had 22 cents of debt for each dollar of disposable income. Now they have $1.26. Behind these numbers lies a profound social upheaval: the "democratization" of debt. Everyone gets to borrow. But this process may have reached its limits.
The banks have done a superb job erasing the stigma of borrowing:

The origins of today's credit culture date to the 1920s and the advent of installment lending for cars and appliances (stoves, refrigerators, radios), says economist Martha Olney, author of "Buy Now, Pay Later." Attitudes changed. In the 19th century, "it was thought that only irresponsible families bought on credit," she says. "By the 1920s, it was only foolish families that didn't buy on credit and use it while they were paying for it." In the mid-1920s, 60 to 70 percent of cars were sold on one- to two-year loans.
PBS had a great Frontline special on the credit industry and the tactics they use to keep people charging and in debt. Ben (“Bueller?”) Stein said that he pays off his credit card every month and people like him (and me) are ironically called “deadbeats” by the credit industry.

3 comments:

JorgXMcKie said...

I'm even worse. We pay off our credit card (we normally use only one and we use it as much to keep track of expenses as anything else) every month, but when we can make use of credit, we do.

We just remodeled a bathroom. We got contractor prices thru Lowes thru our contrator, paid with the Lowes credit card we practically never use, get 0% for 6 months, and we have set aside the money to pay before that time.

Essentially, we put $10,000 in a 6 month CD (got 4.75, I think), got free use of the money for six months and paid without borrowing, while increasing the value of our home by at least 8,000 if not more.

Gotta make that money work for you.

传世私服 said...

????
??????
????
??????
?????
??????
??????
????
????
????
??????
????
??????
??????
????
??????
????ip
????
????

Scott Arthur Edwards said...

Dear friend, Here is an opportunity for you that is taking over the internet. The compensation plan is second to none. The spill over will blow your mind and the educational products are of the highest quality. Knowledge is power and nobody can ever take that away from you. Join me in this business and see for yourself what you will be getting. Click here: FREE Information