Household Debt in the United States is on an upward trend for the 13th consecutive quarter according to the Federal Reserve. This is a new milestone in household debt, as it has exceeded its peak in the third quarter of 2008. As a result, delinquency rates in credit-card and auto debt have also risen. Overall, household debt has skyrocketed by more than 16% in just the last 5 years.
Share of Consumer Debt
In looking at the breakdown of the total consumer debt balance, you are correct if you guessed that housing debt such as mortgages and home equity loans make up the lions share at 71.4%. Student loans is number 2 in the total share of consumer debt at 10.6%, with auto loans following closely behind at 9.2%. Credit Card debt makes up 6.0% of the total amount of household debt and rank as the 4th most common form of household debt.
How to Avoid Debt
One key way to avoid credit card debt is to leave your plastic at home such as a safe. By not having your credit cards on you and instead paying in cash, you become more conscious of your spending. With cold hard cash, you only spend what you have instead of charging it and having to deal with the payment plus interest later. Secondly, the simplest, yet hardest way of avoiding debt is to delay instant gratification. Studies have actually shown that children that are able to delay their gratification typically perform better as adults, and it’s not a fluke. When you are able to delay instant gratification, you are more likely to avoid using credit cards for personal property purchases, as well as, high interest loans.
If you currently find yourself buried in debt that you are unable to dig yourself out of, you owe it to yourself to make an initial consultation with a Houston bankruptcy attorney. You’re under no obligation and an experienced bankruptcy lawyer can help people facing lawsuits, damaged credit, repossessions, and home foreclosures stop those processes and formulate a real plan to get out of debt.