Americans Hold Over $4.1T in Consumer Debt • Hacker News Board

Re: Americans Hold Over $4.1T in Consumer Debt

#61

Post by tptacek » Sun, Feb 26, 2017, 5:25 PM UTC

wtvanhest wrote: post #55

NumberSix wrote: post #30

The United States has a total resident population (as of January 23, 2017) of 324,420,000 people (about 324 million). Source: https://en.wikipedia.org/wiki/Demographics_of_the_United_Sta... Thus, $4.1 trillion in consumer debt works out to $12,638 per person. The Gross Domestic Product (GDP) in the United States was worth 18036.65 billion (about $18 trillion) US dollars in 2015. That is about $55,424 per person. Note…

I am going to split hairs... and honestly, this idea/concept isnt fully thought out so maybe someone can help me out here. Student loans would be an investment if like other investments, it could be removed from someone's 'portfolio'. IMO the fact that student loans are not dischargable means they are not an investment. Not sure what we should call student loans, but 'investment' seems like the wrong word.

"Not dischargable" means you can't rid yourself of them easily through bankruptcy. It's the nature of most loans that you can't remove them from your portfolio; you have to pay them off.

Re: Americans Hold Over $4.1T in Consumer Debt

#62

Post by wtvanhest » Sun, Feb 26, 2017, 5:30 PM UTC

tptacek wrote: post #61

wtvanhest wrote: post #55

Earlier quoted context omitted.

I am going to split hairs... and honestly, this idea/concept isnt fully thought out so maybe someone can help me out here. Student loans would be an investment if like other investments, it could be removed from someone's 'portfolio'. IMO the fact that student loans are not dischargable means they are not an investment. Not sure what we should call student loans, but 'investment' seems like the wrong word.

"Not dischargable" means you can't rid yourself of them easily through bankruptcy. It's the nature of most loans that you can't remove them from your portfolio; you have to pay them off.

I agree, but no one looks at the other forms of consumer debt as investments. If we are going to call student loans investments, we might as well call autoloans investments. The same logic could be applied. A car helps you get to a job and gives you a return.

Re: Americans Hold Over $4.1T in Consumer Debt

#63

Post by cylinder » Sun, Feb 26, 2017, 5:33 PM UTC

tptacek wrote: post #61

wtvanhest wrote: post #55

Earlier quoted context omitted.

I am going to split hairs... and honestly, this idea/concept isnt fully thought out so maybe someone can help me out here. Student loans would be an investment if like other investments, it could be removed from someone's 'portfolio'. IMO the fact that student loans are not dischargable means they are not an investment. Not sure what we should call student loans, but 'investment' seems like the wrong word.

"Not dischargable" means you can't rid yourself of them easily through bankruptcy. It's the nature of most loans that you can't remove them from your portfolio; you have to pay them off.

The loan is a liability, the degree is the asset. If the degree is unable to land the person a job, or the earnings of the job over the career do not stack up to the price of the degree, then it is an "upside down investment" just like a house with negative equity.

Re: Americans Hold Over $4.1T in Consumer Debt

#64

Post by nugget » Sun, Feb 26, 2017, 5:34 PM UTC

grandalf wrote: post #33

omilu wrote: post #2

Combine low wages, increasing loan delinquency, and the probable start of trade wars with mexico and china and I can't see how this doesn't turn out to be like 2008 on steroids.

More likely we'll see more forms of non-dischargable consumer debt. This is debt which is not discharged when someone declares bankruptcy. Every time you hear a politician advocating more student loans (rather than more affordable higher ed), one of the reasons they do this is because student loans are non-dischargeable. Think about someone who is 18 and takes on lots of debt. There would be very little reason not to…

There are debt forgiveness programs like PSLF that I expect to become wildly more popular in the future. We're only ever a Presidential election away from dramatic changes to student loan treatment.

Re: Americans Hold Over $4.1T in Consumer Debt

#65

Post by cylinder » Sun, Feb 26, 2017, 5:35 PM UTC

slg wrote: post #17

The most dangerous problem with the housing crisis in 2008 was not the amount of debt. It was the feedback loop that was created by defaulting on that debt. Foreclosed homes naturally have a lower value than non-foreclosed homes. Homes are priced by looking at recent comparable home sales. If your neighbors to both your right and left have had their houses foreclosed on, the value of your home will go down. If the va…

And with securitization of mortgages, original lender doesn't have skin in the game. The servicer has to follow the rules very tightly, so they will quickly go for foreclosure, it doesn't matter if you call them and say you just got a job offer so you can pay in a month. If loans were held on the balance sheet of the bank, you'd call up a rep at the bank and they'd work with you to figure something out. Foreclosure is the last resort for the lender because they want you paying interest, they don't want to deal with running and selling a house.

Re: Americans Hold Over $4.1T in Consumer Debt

#66

Post by cylinder » Sun, Feb 26, 2017, 5:37 PM UTC

holydude wrote: post #5

jdavis703 wrote: post #3

Earlier quoted context omitted.

Not sure why OP was being downvoted. I just bought a new truck, financed mostly with an auto loan. I couldn't remember or provide half the information required for the loan application and was told "don't worry about that." I still got approved. Another story, I recently changed rental apartments. My "credit report" was a page I printed out from a consumer credit reporting site, where I could've changed any data. My…

Cheap money is vital to the economy. I know that the market is different in the EU but look at what is happening in Germany and Greece. You would not want that.

Vital to an unstable, bubble prone economy. Long-term sustainability is not enhanced by cheap money. What we want is clever money.

Re: Americans Hold Over $4.1T in Consumer Debt

#67

Post by makecheck » Sun, Feb 26, 2017, 5:44 PM UTC

The trend is probably more important than the total. A single debt amount can be “OK” for one person but practically sink another person.

The rate of bank-related expenditures should be measured instead. Add up all the ridiculous overdraft fees, the interest payments, changes in rates due to an ARM, etc. and one person’s financial picture could look quite a bit different than another for “the same debt” amount.

Re: Americans Hold Over $4.1T in Consumer Debt

#68

Post by heisenbit » Sun, Feb 26, 2017, 5:52 PM UTC

NumberSix wrote: post #30

The United States has a total resident population (as of January 23, 2017) of 324,420,000 people (about 324 million). Source: https://en.wikipedia.org/wiki/Demographics_of_the_United_Sta... Thus, $4.1 trillion in consumer debt works out to $12,638 per person. The Gross Domestic Product (GDP) in the United States was worth 18036.65 billion (about $18 trillion) US dollars in 2015. That is about $55,424 per person. Note…

> Student loans represent a long term investment and may be reasonably paid off over decades.

There are a number of indication that calls this into question.

- Size of loans vs. prospective or actual salaries after study.

- Age of debtors (some surprisingly old)

- Number of loans becoming delinquent

- Student loans taking off while other forms of consumer credit are stagnant or declining indicating that student loans are filling gaps elsewhere

- Unprecedented volume of student loans

Re: Americans Hold Over $4.1T in Consumer Debt

#69

Post by heisenbit » Sun, Feb 26, 2017, 5:52 PM UTC

NumberSix wrote: post #30

The United States has a total resident population (as of January 23, 2017) of 324,420,000 people (about 324 million). Source: https://en.wikipedia.org/wiki/Demographics_of_the_United_Sta... Thus, $4.1 trillion in consumer debt works out to $12,638 per person. The Gross Domestic Product (GDP) in the United States was worth 18036.65 billion (about $18 trillion) US dollars in 2015. That is about $55,424 per person. Note…

> Student loans represent a long term investment and may be reasonably paid off over decades.

There are a number of indication that calls this into question.

- Size of loans vs. prospective or actual salaries after study.

- Age of debtors (some surprisingly old)

- Number of loans becoming delinquent

- Student loans taking off while other forms of consumer credit are stagnant or declining indicating that student loans are filling gaps elsewhere

Re: Americans Hold Over $4.1T in Consumer Debt

#70

Post by ZoeZoeBee » Sun, Feb 26, 2017, 5:54 PM UTC

NumberSix wrote: post #30

The United States has a total resident population (as of January 23, 2017) of 324,420,000 people (about 324 million). Source: https://en.wikipedia.org/wiki/Demographics_of_the_United_Sta... Thus, $4.1 trillion in consumer debt works out to $12,638 per person. The Gross Domestic Product (GDP) in the United States was worth 18036.65 billion (about $18 trillion) US dollars in 2015. That is about $55,424 per person. Note…

The issue is the trend of many of the categories you listed. Your student loan assumptions are proving to be incorrect and your stats for cars appear to be from previous decades.

>Consumers are stretching out auto loans farther than ever to a new record of 68 months. The longer the term, the lower the monthly payment. In the first quarter, almost a third of all auto loans came with repayment terms of 73-84 months, which was the most popular term among new vehicle buyers.

http://www.cnbc.com/2016/06/02/us-borrowers-are-paying-more-...