I was watching a show on Fox Business and a guest made the statement "household debt should not exceed 40% of your income".
None of the other guests blinked an eye.

40% of your income....really? There is no way a person can sustain that kind of debt and expect to maintain a secure future.
Another quote by a different guest...call her Mrs. Obvious..."Banks must lower the debt/income ratio...in the last 20 years it has risen to now it being common for a mortgage to be extended that is 55% of the household income...in the 1970's that level was 25%.
Damn.

Today 60% of Americans have OVER 60% of their net income paying debt.
Total debt to income has risen 475% since 1960.

WHat is everybody thinking?

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I have absolutely no idea what my generation did to improve our democracy. We dropped the ball. We entered a period of complacency and closed our eyes to the public corruption of our democracy.
Wynton Marsalis

My thinking would be that if you must go into debt by accepting the lousy choices handed to you by our financial institutions, make sure that that debt doesn't exceed 20% of the lowest paid income of the household or lowest paying job you ever had in your life. People don't seem to get that you should hope for the best but prepare for the worst. Don't amass or assume more debt than can be paid off in one month's time.

I do not have any debt and have not for over 15 years.

Paying off the mortgage was my #1 financial priority. I have never borrowed money for anything except my mortgage and my student loans (which were paid off in 18 months after I graduated.) I have always saved 15 to 25 % or more of my income (in addition to paying off the mortgage) and the net result is at 54 I can retire now and have a really nice lifestyle. I would retire tomorrow but am still enjoying working.

(Really, I found something I love to do and have stayed in the same field for almost 33 years and am looking forward to making 35 years full time before I look a series of short term assignments with long holidays between them.)

A person should only borrow money for something that will get used over time and should plan to have the debt paid before the value of the asset purchased becomes zero.

To buy a house you should be able to afford a $1,000 surprise bill once a year and a $5,000 planned major maintenance (usually re-shingling the rood or replacing the furnace/air conditioner) every 5 years. That is over and above your other expenses for the car and general living and is outside your retirement savings.

The US has had a negative saving rate for years. This combined with the government deficits and balance of payment deficits has resulted in the current financial situation. It has not mattered if a Dem or the GOP was in power; all they did was change what you went into debt for.

The American and western countries fixation with the short term and willingness to borrow for consumption rather than durable items is the major underlying cause of the overall poor financial situation of the west. This applies to individuals and to governments.

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I always find it strange that only reasonable people agree with me.

Mortgage calculator:
Your mortgage should absolutely, positively no exceptions be over one weeks household NET income. And that is still too much.
In reality - your total debt payments should not exceed one weeks net income....an impossibility in the minds of most people.

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I have absolutely no idea what my generation did to improve our democracy. We dropped the ball. We entered a period of complacency and closed our eyes to the public corruption of our democracy.
Wynton Marsalis

Keeping personal and national debt low is a good idea. But don't forget that debt fueled spending is the only thing that keeps this economy gong. If people had been smart about their debt wall st would have tanked 30 years ago.

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A nation of slaves is always prepared to applaud the clemency of their master, who, in the abuse of absolute power, does not proceed to the last extremes of injustice and oppression.
Edward Gibbon

A misnomer friend.
America grew to be the greatest nation in the history of the world..without it being in debt.
Your statement is only true now because we let it become that way.
We replaced a tangible economy based on production and technology - and replaced it with an economy based on financing debt...a castle made of sand if there ever was one.

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I have absolutely no idea what my generation did to improve our democracy. We dropped the ball. We entered a period of complacency and closed our eyes to the public corruption of our democracy.
Wynton Marsalis

Absolutely. But you can hardly blame individual consumers.. They didn't decide to (or even realize they did) move from a production economy to one based on consumer debt. That decision was made on wall st and in DC. The only thing workers know is that manufacturing ran overseas and worker income has been on a 30 year slide and the only way they could continue to live the kind of lives the television kept telling them they had to was to use the credit card and the 100% mortgage to do so.
Like all modern economic trends this one is the result of the manipulation of those who control economic activity and public communications and the blame cannot be laid at the feet of people who understand little to nothing about those manipulations.

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A nation of slaves is always prepared to applaud the clemency of their master, who, in the abuse of absolute power, does not proceed to the last extremes of injustice and oppression.
Edward Gibbon

That would force nearly everyone in CA to live under an overpass.

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Dems....a flash in the pan.

You are seeing the natural progression of a fiat money based economic system. Tangible items will cost more in the future because of inflation. If the inflation rate is high enough, borrowing now and paying later with cheaper dollars is actually the correct course of action. Not everyone gets the timing right, of course, and that is the main problem.

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Rightful liberty is unobstructed action according to our will within limits drawn around us by the equal rights of others. I do not add "within the limits of the law" because law is often but the tyrant's will, and always so when it violates the rights of the individual.
-- Thomas Jefferson, letter to Isaac H Tiffany (1819)

The Obama economy has gotten so bad that: If the bank returns your check marked "Insufficient Funds," you call them and ask if they meant you or them.

And why is that?
What is so fantastic about CA that makes a 3 bdrm average home cost 4 times anywhere else? The materials that built it are the same, the wages of the builders are higher, but not 4 times the national average by any means...the land? Pheh...we're not talking beachfront..just an average neighborhood home.

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I have absolutely no idea what my generation did to improve our democracy. We dropped the ball. We entered a period of complacency and closed our eyes to the public corruption of our democracy.
Wynton Marsalis

Right now I am sitting at about 45% DTI. If it were not for this whole issue with teaching jobs it would be about 30% DTI.

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(Federal Gov. = laissez faire Capitalism) (Local Gov. = Neo-Capitalism), State Choice for Gay Marriage & Pro Life, Weak Federal Government and Strong State's Rights

They were thinking that things were going to get better and they would be able to pay off the debt, or worst case, they would go bankrupt, and not have to pay off the debt.

Now a lot of that debt should be erased by bankruptcy courts, and the people who lent the money i.e. the people who saved money should be told "too bad, you lost your money".

That is the way it's supposed to work, all that money was lent by the private sector, and they should take the beating.

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“ The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state.”

Adam Smith , The Wealth of Nations 1776

"We have always known that heedless self-interest was bad morals; we know now that it is bad economics"
FDR's second Inaugural Address

Value like beauty lies in the eye of the beholder ! Remember the reported sale of Manhattan Island .....

"a 1626 letter from Dutchman Pieter Schagen about the famous purchase of Manhattan from the Lenapes tribe for $24 worth of trinkets (60 guilders) is on display at the South Street Seaport Museum, to date, no written contract for the 1624 deal bartered by New Amsterdam founder Peter Minuit has been recovered",
U.S. Politics Online: A Political Discussion Forum

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Laws are purchased-Justice is prayed for.

My only debt is my student loans. I'll probably have them for a while (and more, unfortunately). I bought my car outright, don't have a credit card, and don't buy shit that I don't need.

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First they came for the mimes, and I did not speak out, because I was a mime.