2-21-06

According the most recent statistics by the Federal Reserve, consumer debt rose 3 percent for 2005.

For much of the year, debt actually decreased before jumping at the end of the year.

This is not surprising as most people's debt does tend to go up and there are always more people getting into debt every year than there are people getting out of debt.

Here's some information that I came across about debt:

20 percent of Americans have their credit cards maxed out;

25 percent of American adults have a history of credit problems;

Average credit card debt for an individual in the United States is $8,400;

Americans pay approximately 18.9 percent average on credit cards;

The average household pays $84 per month in interest on credit cards;

A typical credit card purchase is 112 percent higher than if using cash;

More than 40 percent of American families spend more than they earn;

And people wonder why people have problems with debt. A lot of that is because of the lack of education that I have discussed previously.

Another problem is the lack of discipline. I read a book by Tom Robbins that a person's behavior is based on two things: seeking pleasure and avoiding pain.

A lot of times people think that if they buy something this will give them pleasure. This is typical behavior when a person is down in the dumps or depressed.

This might provide a short-term lift, at least until the person has to pay for the purchase.

That is one reason why it is always important to put off making a major purchase until you have had time to think about it. Rash decisions are bad, which probably doesn't surprise anybody.

Whenever I buy something major, now I'll always think about it for a day. If the person trying to sell you something is too pushy, just walk away.

One thing that always amazes me is when a person finances something but never knows what the rates or fees are when the transaction is completed.

Way too many people are concerned solely with the monthly payment and not what it will cost them over the long term. This is one reason why I always advise people to keep their payments on as short of a term as possible.

There is no reason to finance a used vehicle for five or six years unless that is the only way you can make the payment.

Your payments will be lower, but you'll pay for it over the long term, which is something a lot of people don't seem to worry about until it is too late.