Friday, May 12, 2006

For Some, Cutting Luxuries Not Enough to Escape Debt

Author: Nick
Category: Money
Topics: , , ,

empty pockets

One advantage of staying up all night is that you get to read the next day’s newspaper while other folks are still asleep. So it’ll be a good four or five hours before most people see this headline in their copy of the Washington Post:

Basics, Not Luxuries, Blamed for High Debt

The article shares some details about the rising cost of basics like housing, health, and education which the writer indicates are more responsible for the 33% rise in the average family’s debt load between 2001 and 2004 than splurging on unneeded items. Some of the figures provided are downright frightening: average mortgage and education debt each doubled in under 15 years, and the cost of living has climbed more than 11% in the last five years alone.

The author of the recent report showcasing these findings, along with a Harvard law professor, has this to say regarding the situation.

Families that can no longer realistically afford their single-family houses should move to condominiums, consider limiting their families to a single automobile, get second jobs to pay off debt, or move to less expensive school districts that may not have the highest test scores but where children perform acceptably well. … Otherwise, many families will lose their homes through foreclosure when bankruptcy law changes make it more difficult for households to escape debts.

That’s some tough advice to take. After all, if someone told you to give up your nice single-family home and move into a condo, you’re not going to be very happy about it. While it’s a possibility that more families may need to consider, they shouldn’t see such a setback as the end of their financial security. Continuing to accumulate debt and free-falling toward bankruptcy–that might have a bit of an effect on their financial security.

No comments yet.

Sorry, the comment form is closed at this time.