Is having debts a casualised experience for the average American?
Posted by miIk-skin@reddit | AskAnAmerican | View on Reddit | 144 comments
I like to read subs like BestofRedditorUpdates, amItheasshole etc. Main contributors filling the pages are overwhelmingly people from the US, and a common thread I've noticed is how often the subject of debt and being in debt is mentioned:
- we moved back into his mom's so I could pay off my debt
- I couldn't make the payments on my car so it got repossessed
- I couldn't make my credit card repayments and now I can't afford the interest
It seems that in the US, having debt is an most a casualised experience—something to be expected to be in and managed haphazardly.
Are the aforementioned examples outliers, or is having debt/s really that normalised for the average American citizen?
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re7swerb@reddit
Debt is very, very normal here. I’m one of the only people at my job without a car loan.
miIk-skin@reddit (OP)
Do you know why? Is it a lack of fiscal education in youth, or is it motivated by consumer culture? Do you know if there's a reason behind why you've made better financial decisions with your car, e.g. your parents educated you better on financial management?
I never buy anything that I couldn't technically afford to pay for outright, but even having those little pay-in-3 plans feels awful. I couldn't imagine having a credit card with a negative balance in the thousands, the stress would be unassailable.
abaacus@reddit
Debt is just seen as a financial tool, likely informed by US business and entrepreneurial culture. Debt isn't bad; bad debt is bad, as they say. The ability to take on and manage debt is actually seen as indicative of good financial management, discipline, and education; never taking on debt is seen as amateurish (for lack of a better word) or shortsighted at the very least. Even the very wealthy utilize debt in situations they don't strictly have to.
It's also worth noting two things. First, part of the way early America split from the UK culturally was by banish things like debtors prison and adopting a less punitive approach to financial mismanagement. Second, probably as an outgrowth of that, US bankruptcy is less punishing than British bankruptcy. In most cases, bankrupt Americans get to keep their house, cars, and retirement. In short, the British system favors creditors, while the US system favors debtors. As such, debt is much less risky for private citizens in the US.
JW1958@reddit
Interesting historical background. UK generally has moved closer to US in some ways. Personal bankruptcy protections are now similar to the US e.g. a car won't be taken if it's needed for work. Business failures are more of an issue - it's harder in the UK to start up again. When the firm my Dad worked for went bust 50 years ago, the owner had to put the new one in his wife's name. Their son now runs it. People find ways around the restrictions.
I have seen a much greater acceptance of debt in the UK over my lifetime. Young people take it as a fact of life. Student loans were introduced around 35 years ago; though they are no longer low-interest, they can be forgiven after a period for those on lower incomes. My generation inherited a greater fear of debt, going back to earlier times when unsecured loans were unavailable and the pawnbroker was the only lender for the poor. Many my age make a point of paying off their credit card balance in full every month. This is not good for the economy, though!
HowsMyBuddy@reddit
Millions of people in the US have no way to buy a $5k car outright. And most of those people live in cities that were purposely designed for cars, with substandard (or nonexistent) public transportation. They simply have no choice, and that’s by design.
megamanx4321@reddit
Good luck finding any car for $5k.
Ordinary-Exam4114@reddit
I LOVE my 2005 Honda Civic without frills. I think my husband paid $3500 for it 2 years ago.
megamanx4321@reddit
Good deal
ThePoWhiteTrash@reddit
Ok, I’m genuinely asking: why do you believe that you can’t buy a car for less than $5k?
https://www.autotrader.com/cars-for-sale/all-cars/cars-under-5000/atlanta-ga?zip=30303
OpeningChipmunk1700@reddit
Mine is worth $2.5k per Kelley Blue Book.
HowsMyBuddy@reddit
Aye.
miIk-skin@reddit (OP)
I guess that's a consideration I didn't give thought to.
I live in the UK and because the country is small and largely designed and built in a time where cars didn't exist, it's extremely walkable. Public transport is also, whilst extremely shit, expensive, and unreliable, prevelant in pretty much all areas.
ObjectiveElefant@reddit
There’s public transportation all over the US. Busses. The country is so huge though, it is a pain to get around. Of course cities have subways. There are trains, but they’re not taken regularly. Everything is spread out, so you’re gonna be on the bus for a long time trying to get to your destination. There are single states in this country that are larger than the entire UK.
JW1958@reddit
Around 90% of new car sales in the UK are on a form of leasing where the purchaser pays an upfront deposit, followed by monthly payments, typically for three years, then has the option to complete the purchase with a cash payment or hand the car back (to the finance company). Many choose to take out a new agreement, rolling over any equity, so they get a new car every few years. So there's both a loan and a cash element.
Most new-car sales outlets discourage cash buyers because they get finance incentives. Also, I suspect, they don't need to discount so much with finance.
Used car sales can use similar finance arrangements but are more likely to be cash. I don't know the proportions.
Mad-Hettie@reddit
One thing you might not realize is that in America we don't have bailiffs coming to our homes and taking our stuff to pay unpaid debt.
Your car can get repossessed but for most people that's a lengthy proces;, same for having your home foreclosed on. You can be sent to collections (a firm that buys the debt on a discount and tries to get payment)for unpaid debts, and they can take you to court, but usually it's just a hit to your credit report.
Also if you get in way over your head you can file bankruptcy in a couple different ways.
Upside down isn't an optimal way to live your life, but it doesn't carry the same negative consequences here as in the UK.
Also, sometimes it just makes good sense. I have a mortgage but my monthly mortgage payment is significantly less that I would pay for rent in my city.
I put most of my monthly expenses on a credit card, but I pay it off every payday and get points I can spend on other things and leverage for perks, plus it provides extra purchase security.
Not sure why I wouldn't want to do those things.
OpeningChipmunk1700@reddit
Are you aware that a higher percentage of people in the UK have debt than in the US?
miIk-skin@reddit (OP)
I wasn't aware of that, no.
OpeningChipmunk1700@reddit
UK is a poorer country in general, so it is not surprising the consumer debt is lower (median of \~USD 85,000 compared to \~USD 105,000 for the US).
miIk-skin@reddit (OP)
I need to ask, why are you going out of your way to downvote all my comments? I genuinely came in here with a query asked in good faith, and it's like you're pissed off that I'm even asking it. I'm not downvoting any of yours because I thought we were having a polite dialogue.
OpeningChipmunk1700@reddit
I have not downvoted a single one of your comments.
Your question is in good faith, but the judgmentalism underpinning it is rather evident and also not appreciated by many, evidently.
I have no objection to continuing the dialog. Again, I am not downvoting your comments.
Celestialfox1425@reddit
The cities may be walkable but not all the suburbs. Without my car it takes me 20 minutes to the nearest grocery store and there is no way I’m carrying groceries on a 20 minute walk back. No direct bus route either, I’d have to take 2 buses and it would take me 30 minutes with the stops and transfers. When I’ve had car problems then it’s a 40 min walk to my kids nursery, with 2 kids. Again would be an hour with 2 bus transfers. And I don’t live in a small town.
HowsMyBuddy@reddit
That’s why a lot of us like to visit. It’s cool to see how some of our cities could be. I recently read about a scenic ski town that redesigned its downtown to be all walk/bike, no cars. All the people who work in that town live like an hour away. Local housing is insanely expensive. It’s really just for the rich to go there and stroll around.
coronarybee@reddit
Unfortunately you need at least some level of debt to have a good credit score, which impacts lots of things like being able to rent an apartment. It’s actually very dumb.
Khpatton@reddit
This is a myth. You need to have open credit accounts that you use and make payments on regularly, and a low (but nonzero) credit utilization rate, but you can pay it off in full every month and maintain a great credit score.
Ordinary-Exam4114@reddit
Probably a combo. Also, I don't know anyone who buys a house outright. Everybody has a mortgage that is paid over years
Jswazy@reddit
You sort of have to have a car loan a lot of the time. Having a car is not optional for most people and most people even if they are responsible don't have 10k minimum to just drop on something at a moments notice.
OpeningChipmunk1700@reddit
That is fine but financially suboptimal.
Most people cannot afford to buy $700,000 homes with cash. They can, however, afford it through a mortgage/loan/financing. Depending on the terms of the loan and the local market, it can be very smart to buy a home using a loan.
Why would the stress be unassailable if you have autopayments set up to pay it off every month? My credit card balance varies between \~$2,000 and $20,000 per month depending on how much I am paying for work travel (which gets reimbursed), and I feel no stress because there is never any doubt I can pay it off.
lazysundae99@reddit
Yes, it relates heavily to consumer culture and feeling like you have to "keep up" with people who you see as being in the same situation as you are. It is common to think "how does Coworker have a new car and a bigger house when we do the same job?" And then "why don't I have a new car and bigger house? If he can, I probably could too."
The more mindful people stick with "how can he afford it?" and then a couple years later or comes out that he couldn't afford it.
Kamwind@reddit
People want luxury and expensive life styles.
From college those things you see on movies and tv shows that have a huge campus with sport arenas larger than most cities, the huge amounts of rooms mostly empty, those are all true and you will find multiple campuses like that in the same city.
People complain about how older people could afford houses but then ignore that they purchased houses that had a single bathroom, small bedrooms, and were out of town. They want a huge place with multiple bathrooms, large bedrooms and they will do a large loan to have it.
for car the average price of a new vehicle is around US $50000. Again luxury vehicles.
VeronaMoreau@reddit
Depending on the kind of debt, some of it's really hard to avoid. There are a tonThere are a ton of places in the US where it's nearly impossible to function without a car, so you need something reliable. I'm lucky that I live in an area where it's not hard to find a relatively cheap car that you can just pay off in cash (spent like 4600 on mine), but that's not the case everywhere.
Student debt is a big factor for a ton of people who have degrees, especially if you got yours in the last 15 or 20 years. There are ways to cut costs, like going to community college for the prereqs or going to a state school and commuting from home to avoid having to pay for dorms and a meal plan, but it still depends on what program you're pursuing and if you have a support system willing to help you through that. Outside scholarships obviously exist, but there are a time, there's a ton of competition for them, and finding and applying can be a really intense process.
Medical debt is a big one. Insurance it's often tied to your job, so if it changes or you need treatment that your employer plan doesn't cover, then you're on the hook for it. There can also be situations where portions of your treatment aren't covered and you art notified about that until after everything is done.
I'd say those three types are the most responsible but tend to also come with the biggest tickets. I will say that, aside from putting certain payments on credit cards, I don't understand how people get into tens of thousands of dollars of credit card debt. I don't even think I have tens of thousands of dollars of credit to begin with.
OpeningChipmunk1700@reddit
Interesting--no one I know has car debt except my parents, who are multimillionaires (and so the debt is not a huge concern and also will be paid off soon).
JakeScythe@reddit
How? I barely know anyone who’s bought a car paid in full. It’s the overwhelming majority of car purchases that have 2-6 year loans
Healthy-Attitude-743@reddit
80% of people I know well bought there cars (2k-10k used) without car loans. Paying interest on a depreciating asset feels crazy to me.
masedizzle@reddit
I bought mine used years ago at a price I could afford all cash, that's how. Before that I didn't own a car for years, took public transit or biked.
King_Shugglerm@reddit
Because their parents are multimillionaires lmao
PhabBookworm@reddit
How do they have any kind of debt having that amount of money????
rambolonewolf@reddit
Because when you're that rich sometimes it makes sense to have debt. They often get rates that normal people could never dream of. We'd love to get 6% or under and they get closer to 3% or less.
Dry-Huckleberry-1984@reddit
Sometimes you can get a 0% car loan and if your credit is good it will probably be no more than 1-2%. The 100 year average on the S&P 500 is supposedly 10%, but the past 20 years it has averaged higher than that. So you’re better off borrowing for the car and investing your cash. My parents have also used a credit card to buy a car before that had cash back and then just paid it off that month, so they didn’t pay interest but got a ton of cash back.
Klutzy-Comment6897@reddit
This. Clearly that guy is hanging in different, not normal / average crowds. Pretty much everyone I know personally and at work have car loans. They all once freaked out in shock when I told them I paid cash for my car and couldn’t comprehend it.
Texan_Greyback@reddit
I always buy used for cash and just repair the things until I can't or I want to move on. I've got a truck now I want to keep forever. Takes some work sometimes. Got to get another transmission (because it failed after 27 years) and change some bearings in the engine right now. I've never in my life had a car payment. Once, I needed a newer car and bought one from a dealership with a credit card. Paid it off before the interest-free term ended.
wawa2022@reddit
You can also keep your car longer than the length of the car loan.
thegreenlorac@reddit
I did, but I don't buy new cars, or even relatively new cars. My last car was already eight years old when I got it five years ago. It still runs just fine for me. I also bought it straight from the previous owner, which made the biggest difference. You do have to do more legwork to find a reasonable seller, and be very diligent checking its condition that way. Still, for 6k paid in cash, it was worth it to me. The same vehicle type and age from a dealer was closer to 14k at the time. I saved for a few years and also sold my previous car at the same time. It's doable, but is defintely riskier and requires more planning.
OpeningChipmunk1700@reddit
I bought my car for $10k cash in 2013. I still drive it. It's a shitty car. Most people I know are cheap or do not need cars.
r/King_Shugglerm sadly no, that is not the reason. They are, but I have only ever owned one car, which I bought used in 2013.
IconoclastExplosive@reddit
You had ten large in cash, my dude, that's abberant
schmatteganai@reddit
most people in the US would have taken a car loan out to buy a car over $1k. Many people don't have a lot of cash on hand, and even people with poor credit can usually get approved for loans and credit cards (to the point where some people will take on loans they can't afford to pay off; people with poor credit often end up paying much more than items they borrowed to buy are worth). There are laws limiting how much interest can be charged, and legal ways to discharge debt, but many people end up underwater.
On the other hand, people with good credit can often get favorable terms, so taking out a loan or a credit card for large purchases can be a good idea for people who can easily pay it off.
Predatory lenders, who convince people in the former category that they're in the latter category, are a real problem in the US.
ThePoWhiteTrash@reddit
There are these things called used cars. There are these things called savings accounts. When you combine the two, crazy things happen, car-buying-wise.
Duck_Diddler@reddit
You answered your own questions. You are and were most likely sheltered.
FreeKevinBrown@reddit
Are you 12? Because literally everyone I know has car debt.. except Joe, but that's because he buys hoopties every other year.
Itchy-Grapefruit2756@reddit
I haven’t had debt in 27 years but i own nothing new. Most Americans wont accept that kind of life.
JimBones31@reddit
I was too late to see the actual comments that you've deleted. Assuming your tone is the same as this post, the downvotes are not for the question and make total sense.
AlmightySpoonman@reddit
"Massive amounts of downvotes"
0 post karma = net total of 1 down vote...
"Americans suck!"
Aggravating_Anybody@reddit
Yes 100% normal.
If you have made it to 40 years old and are debt free you are literally doing better financially than 99% of the US population regardless of how much money you make.
I’m personally pretty lucky to ONLY have about $15k student loan debt. I own my car outright (thanks to my parents transferring the title of their 20 year old, paid off car, to me) and I rent at an older apartment building in a very desirable neighborhood at a well below market value.
GlassCommercial7105@reddit
To be fair, while being in debt is super rare where I live, owning a house and/or a car is also not common.
People often rent or take public transport in Europe.
Student debts on the other hand are more typical for anglophone countries and especially the US. That’s not something we have.
Dry-Huckleberry-1984@reddit
Depends on where in Europe. Home ownership (and mortgage debt) are so common in Belgium that there is a saying about being born with a brick in your stomach. Cars are also very common, but partly because here they are a fringe benefit in white collar jobs. But financing a car is still also common.
Celestialfox1425@reddit
Well this certainly made my day. I’m a year shy of 40 and currently unemployed but have 0 debt to my name. I own everything I have and have a safety net. My parents are to thank for starting me off debt free though as they paid for my college and first car. My mom always told me, never buy anything you can’t afford to buy in cash and that’s pretty much how I’ve lived my whole life.
Playful_Letter_2632@reddit
Buddy, you’re getting downvoted because you don’t seem to have an understanding of how debt can be beneficial
miIk-skin@reddit (OP)
I actually never once phrased it as a negative so I really don't know where you're getting that interpretation from.
I had a Google though and it does seem that this sub specifically has a bad reputation for downvoting good-faith enquiries, so it's obviously not just me:
https://www.reddit.com/r/AskAnAmerican/comments/10z1u3r/why_is_there_so_much_downvoting_of_foreigners_who/
https://www.reddit.com/r/AskAnAmerican/comments/cmef5i/for_christs_sake_can_we_stop_downvoting_genuine/
https://www.reddit.com/r/AskAnAmerican/comments/f1o8ef/what_are_some_questions_that_foreigners_ask_that/
bearsnchairs@reddit
This sub has an extremely low tolerance of people who are obviously here in bad faith.
ObjectiveElefant@reddit
No buddy, you asked, trying to act like only “stupid Americans” get themselves into debt, when it’s statistically universal, and you got told that. It was a ridiculous question and people called you out on how you framed it. Again now, “Americans don’t like to be asked questions”. You got your answer. The answer is Americans have debt and so do people in your country and everywhere else. You also focused on the dumbest things that likely weren’t true like Americans are in debt from fast food, Amazon and pickup trucks. You were trying to point a finger and laugh at the citizens of a country, based on something that the entire world experiences, and you’re mad they didn’t let you do that. So now you’re finding another way to generalize. Look in the mirror.
bearsnchairs@reddit
OP your own country has a higher household debt to GDP than the U.S. Debt is normal in your country too.
OpeningChipmunk1700@reddit
What do you mean by debt?
Some debt is good and viewed as good. For example, mortgages. Americans generally do not buy their homes.
Similarly, having credit card debt that you pay off every month is good. A lot of Americans use credit cards.
Some debt is generally worse--not paying off your credit card every month, car loans, etc.
kepenine@reddit
Credit score is american thing
bearsnchairs@reddit
Pretty much every western country has a sort or credit score or central credit registry that performs that role.
miIk-skin@reddit (OP)
I probably should have included this in the original post. I wasn't including mortgages in the original question because I consider a mortgage an essential and necessary debt to participate in society.
The kind of debt I'm referencing is debts on enormous, superfluous cars, debts to Amazon, putting fast food purchases, furniture, electrical purchases on credit cards—basically unnecessary frivolities.
PutridBetch@reddit
Well yeah of course people put purchases on credit cards. I, and everyone I know, pay everything in life with credit cards. This doesn’t mean we have longstanding credit card debt though. I pay it off every month and have never paid a cent in interest.
It just makes more sense to do it this way. I’ve paid for multiple flights entirely with miles earned by using my credit cards. I’ve paid for entire grocery trips with points as well. We get a lot of cash back and I know European cards don’t have the same type of incentives.
kit-kat315@reddit
People have loans for moderately sized, necessary cars too...
Buying things on credit cards is better than cash if you're smart about it. Using cards is convenient, offers consumer protections, builds credit score, and earns rewards- for 0% interest, done right.
OpeningChipmunk1700@reddit
It is absolutely not essential. You can rent for your entire life with no issue.
It seems like you are trying to stipulate good debt out of your OP. That is neither appropriate nor fair if you want actaul responses.
Again, you do not seem to understand how credit cards work.
Basically all purchases should be on credit cards, which have a 0% interest rate if used correctly. Cars should be bought cash. Homes should be financed.
Fast food, furniture, and electrical (?) purchases should all indeed be on credit cards. Everything--necessity or frivolity--should be on credit cards that you pay off monthly except cars (cash) and homes (mortgage).
If your question is whether Americans have debt, and some have too much debt, the answer is yes. But I would not say it is "casualized," and Americans still have far more disposable income (controlling even for health care stuff etc.) than pretty much any other country in the world.
toomuchpercyjackson@reddit
Yes. 95% of people will never be able to afford a house without taking on some debt. Same is true to a lesser degree for getting a college education and buying cars. Most everyday purchases are made with Credit Cards, which usually also cause some debt. It's just how our economy works.
miIk-skin@reddit (OP)
I wouldn't include a mortgage a part of the average experience as I would consider it an essential debt to participate in society.
I guess I mean debt for all the unessentials, like buying massive fuck-off pickup trucks with the intention of driving them around urban centres.
ObjectiveElefant@reddit
Massive pickup trucks aren’t common in big cities. They’re common for blue collar workers or those with hobbies that require them. They’re not often purchased just to have a truck. They serve a purpose. I’m on a loop here but again this is a giant country. It’s not the same as having a pickup in London. The streets are huge, the land is huge, trucks are a necessity for many, many people.
Khpatton@reddit
OP’s comment was clearly made in bad faith, but tons of people do buy pickups just to have them. I live in a major city and see massive, pristine trucks with empty beds all the time, and the stats back up my experience: the overwhelming majority of pickup drivers don’t use them for towing, and a solid third (just over, actually) don’t even use the bed to haul things.
HowsMyBuddy@reddit
You clearly have some bias here. Are you asking your question in good faith?
miIk-skin@reddit (OP)
I mean, I thought I was. Is there a bad faith element to asking this kind of question?
HowsMyBuddy@reddit
Your description of pickup trucks makes it sound like you’re looking for validation for a preconceived notion.
miIk-skin@reddit (OP)
Well, it wasn't. Sorry that you're unhappy that you thought I was, I guess?
OpeningChipmunk1700@reddit
Would you agree that your earlier comment reflects a bias or prejudice on how people spend their money? Anything more than subsistence living is technically "unessential."
Can you understand that your comment was judgmental toward pickup truck owners?
miIk-skin@reddit (OP)
Oh yeah, of course there's a bias. Here in the UK buying massive pickup trucks for urban living is something that's actively mocked, to the extent that we even have a nickname for them—Chelsea Tractors.
Klutzy-Comment6897@reddit
Don’t worry I’m from the US and mock those people too.
OpeningChipmunk1700@reddit
Urban living in the UK and urban living in the US are not the same. I too would agree that a pickup truck would probably be ridiculous if I lived in Alfama.
But what if I told you that there are 6-line motorways all over many urban centers in America?
miIk-skin@reddit (OP)
Honestly the fact of your tone and that you're downvoting all my comments gives the impression that you're sour because you have silly amounts of debt on an unnecessarily sized vehicle lol
HowsMyBuddy@reddit
I bought my 1989 full size 4x4 pickup for $3400, 22 years ago. It is the same size as todays small trucks. I do not have a payment on it. I have used it to haul an awful lot of things, and of course, help lots of friends move. It got me to and from work in the snow when it was my daily driver, 52 miles a day. It has more purpose than you ever will, so knock it off.
Ms-Metal@reddit
Yes. All of your examples were negative. You clearly have a bias against it and think it's negative that we have it. Your bias is extremely obvious especially when you say things like you would never buy something you couldn't afford, etc.
Yes it is extremely normal to have debt here, in fact so normal that we have to have some in order to have a decent credit score. It's also normal to pay for everything with credit cards, another thing I know Europeans find weird but it's just how our society runs. What's not normal is for it to be a negative thing. So all your examples were negative, because mainly people who have difficulty are complaining about things on Reddit.
Most of us have had debt our entire lives and we're very used to managing it and most of us manage it just fine. For many people, it's not the negative that you imply it to be. We pay for everything with credit cards because we get various points and mileage on different airlines and hotels, but we pay our credit card bill off every month. We may pay for our cars with loans because many cars cost 30 to 50K and they're not necessarily luxury cars, definitely not a luxury in the US cuz you have to have one and then we keep our cars way past the payoff of the loan. Actually we bought our last two cars in cash and they're both 2007's. The ones before that were 1997, so many of us will keep our cars forever. Of course there are some people who like to keep up with the Joneses and get a new car every two years and that's how you get into debt that's not good, unless you can afford that. But many of us can afford our debt just fine and it's not a problem. Of course there are some people who are bad at managing money. There are also people who are excellent at managing money. Having debt is not seen as a negative in the US as you imply. Also, many people have become wise to credit card debt and tons of people, I remember reading so many I was surprised in a thread recently pay their credit cards off monthly so they never pay any interest charges, including ourselves. We haven't paid interest charges in decades. So on paper I guess we have that but since we pay it off monthly we don't feel like we have significant debt. I will grant you that most people don't pay for their cars in cash, I'm not even sure we will the next time because there's so many very low interest rate loans nowadays and it makes more sense to finance one because you get a better deal if you finance then if you pay in cash. The car dealers actually don't want you to pay in cash and they forgive you incentives to use their financing. So many people use their financing and pay the financing for a certain number of months and then pay off the loan.
HowsMyBuddy@reddit
You are the exception, not the rule.
huazzy@reddit
For every person that does this you probably have 10 that buy a Honda Civic.
With that said, I work with a lot of people in the UK (and travel there for work quite often) and it's odd that you think that people don't go into debt there as well.
I've met loads of people in the UK that take on debt to go on holidays.
OpeningChipmunk1700@reddit
Are you aware that a higher percentage of people in the UK have debt than in the US?
SugarRush212@reddit
F-150 been the best selling vehicle in the US for a long time.
huazzy@reddit
Not in Urban centers though.
Look up the data if you don't believe it.
Taanistat@reddit
Your attitude notwithstanding, buying an automobile of any sort is absolutely essential for a majority of the population.
Paying for secondary education out of pocket is a pipe dream for much of the population. We accrue our first debt at 18 years old when entering college, which, as you may know is not publicly subsidized. Unless you're lucky enough to have a university give you what is called a "full ride" scholarship, paying for your education in it's entirety (a rare thing), you will go into debt.
Many college students pay for their living expenses with part time jobs or continue to live with family if they're able, but a university education isn't cheap.
Then you graduate. Upon graduation you have a period of 6 months in which to decide to continue your education with a graduate degree (masters, PhD, etc) or beginners working full time. Continuing your education means more debt but also delaying repayment of that debt until you finish your graduate degree. If you begin working, your student debt repayment begins in 6 months. You begin paying on your $40k-$100k of student loans.
So now what? You're a young adult with an entry level job (hopefully in your field of study) who now must fully fund a life on whatever salary or wage you're being paid. Oh, but now your used jalopy of a car that you've been driving since your last year of high school is dieing...and you have no savings and if so it's almost certainly not enough to buy another used car. So you try to finance a used car but you have almost no credit history. They won't give you a loan for even a cheap used car. You don't have someone to cosign a loan. They (financial institutions) will however, let you finance a brand new car because its easier to recover money if you default on the loan. So, you buy a new car...your first car loan. The cheapest new cars you can currently buy will have you financing $24k.
And make no mistake, you absolutely need a car unless you're living in one of maybe 15 or 20 large cities because public transit is woefully lacking here.
So there you are, entering adult life with $60k - $125k in debt. This is not an outlier scenario. It's extremely common. And both student debt and auto loan debt are basically mandatory to participate in society...like the mortgage you mention.
Our entire economy is built on consumer debt.
Unable_Pumpkin987@reddit
Well then that changes the answer.
“Is it normal to have debt?” “Yes, houses cost much more than most people are able to save in cash.” “No, I didn’t mean debt I like, I meant debt I can feel morally superior to.”
You should have asked your question in r/ImBetterThanYouRightPleaseConfirmImBetter
toomuchpercyjackson@reddit
I guess that depends on what you mean by "casualized".
Most people do not make financially irresponsible decisions, but from my point of view, if you have a certain level of income, going into some debt to buy a massive fuck-you pickup truck doesn't make you financially responsible, unless you factor in the state of gas prices right now, but that's besides the point.
wawa2022@reddit
I think a lot of people in their 30s and younger think it’s totally normal to have revolving loans and subscriptions to license items rather than outright own them.
It often doesn’t even make sense to buy a phone with cash anymore or keep it long enough to pay it off because the phone contracts are cheaper when you finance a phone. Then once you start thinking like that, it’s easy to just get into the mindset that financing anything is normal and people think about leasing instead of buying things.
A very smart friend traded his car for the exact same model just two years newer. No cash, payments stayed the same. Bragged about it. Could not see the downside until I explained that he would never own the car this way. Younger people just see financing/leasing/monthly subscriptions as totally normal and as long as you can cover the monthly but / cash flow, then you’re winning, right?
I keep my cars longer than 12 years and set aside what would be the payment to buy the next one. My current car I plan to keep 20+ and will probably only change for safety improvements. I’m the odd one for thinking like this.
As for credit card debt, once I got out of that I decided to never owe again. I just don’t buy anything anymore if I don’t already have the money for it. Of course, that became easier once I started making decent money.
Outlaw_Josie_Snails@reddit
According to an internet search, in the UK, unsecured consumer debt has reached record highs recently. The average UK adult now carries about £4,427 in debt. Credit cards personal loans, motor finance, PCP/HP, overdraft, etc.
Catalogue/Store Credit: Known as "Buy Now, Pay Later" (BNPL), this has surged in popularity, with about 27% of indebted individuals carrying balances from retailers.
Car financing is a massive driver of UK debt. Personal Contract Purchase (PCP) is particularly popular, essentially acting as a long-term loan for a vehicle.
About 30% of those with debt issues regularly use their bank overdraft, which in the UK can often carry interest rates as high as 35–40%
Those who live in glass houses shouldn't throw stones. Mind your country and business.
shessocold1969@reddit
A mortgage on a home is technically debt but at least for now, knock wood, if you sold your house it would pay off the debt.
I don’t mind going into debt for an experience, like a wonderful vacation, but I need to be able to pay it off within a few months. Medical debt is what’s harming the US. It shouldn’t be a thing.
Big-Profit-1612@reddit
In regards to using a credit card, I put all my purchases on my credit card. They are always paid in full, unless there is a 0% promo for like 12-18 months. My credit card purchases typically earn me 3-4X/3-4% on dining, 3-5X on travel, etc.. and I use them to redeem for free international business class flights. In fact, I try to put all my purchases on credit cards, even 50c purchases. I haven't paid for CC interest in over a decade.
Debt and leverage isn't a bad thing, as long as the terms aren't bad. I pulled a $80K loan for 1.69% for my Tesla Model S. I've been making 25-30% a year in the stock market. Why tie that money up by paying things in cash? That's leverage.
I've even put large furniture purchases on 0% loans. Why pay for it in cash when you can leverage it elsewhere?
And yes, I can pay all of this in cash, including my car. $4M-ish in net worth
Bear_necessities96@reddit
Yes get a debt is pretty easy in the USA, literally as soon you turn 18 you can get a credit card, student loan are common too, car loans and medical bills are other common type of debt
And the system is made in a way you can always have a debt under your name, you need to keep a credit score to get loan for basic stuff such as more credit card limits, appliances, upgrade your car or fix it, and buy a house if not you my get rejected or have to pay more on interest.
anonymousambassasor@reddit
My parents never had a mortgage or a car loan. In fact when I went to rent my first apartment my dad went with me to co-sign and I had more credit than he did.
I didn’t know what a mortgage was until my mom loaned my boyfriend the down payment for his house (he promptly paid her back) and he explained a mortgage and escrow to me.
That means I didn’t know how to use credit cards. So I got into debt in my early 20s but it was taken care of. Now I buy my cars in cash and keep one credit card that I pay off every month.
Antitenant@reddit
Yeah, it can be. From going to university at 18, many people will start their adulthood with student loan debt. Then you have other things like cars, homes, etc. But just because debt is common doesn't mean everybody is managing it haphazardly.
DieHardAmerican95@reddit
Our house, both of our cats, and my motorcycle are paid off. So is our camper and my atv. People are often surprised when they find out that we’re not making payments on any of those things.
RCM19@reddit
It isn't an outlier. Credit card debt is consistently hitting records and just about every major brand offers some kind of credit card or pay over time plan. Debt is not only encouraged but increasingly necessary for a lot of folks who watch their bills rise faster than their incomes.
miIk-skin@reddit (OP)
Seriously? Is there a Starbucks or Mcdonalds credit card? 👀
Klutzy-Caregiver4717@reddit
I can see you think this is shocking, but it's not uncommon for major brands offering credit cards to also offer a discount for using them, which is how a lot of us end up with so many different credit accounts.
A particular brand of gas station, for example, may offer gasoline at 10 cents cheaper for people who hold that brand credit card. If you don't shop around and always tend to get gas at the same station out of convenience, this is an example of how credit cards can save you money instead of being a bad thing as long as you pay the card off in full every month. Obviously it is cheaper to just go where the cheapest gas is, but you do have to factor in that it takes time to review the gas prices in the area and change your route to go by the cheapest one, and even with apps to tell us where the cheapest gas is, that still takes extra time and effort.
Zenthane@reddit
There used to be a Starbucks credit card. McD's doesn't have one.
NegotiationStatus727@reddit
The first thing half of americans do when they become adults is take out massive student loans. I think this makes it easier for them to accept debt in other forms, thus normalising it from the word go.
SkyLyssa@reddit
I don't think I know a single person that's debt-free. Between college, medical bills, credit cards, and loans, it's a part of adulthood in the U.S. A history of debt and repayment is nessasary to maintain a credit score. It's difficult to get a nice place to live without a good credit score
Better_Chicken_5184@reddit
The entire US economy is built on consumerism. Without debt the whole thing falls apart. The culture is also centered around having stuff; new stuff... The best stuff. It's not good enough that your stuff works, if something newer and "better".
This is a severe oversimplification, but you get the idea.
Comfortable_Break387@reddit
All of those are possible, but I'd say they're outliers. If someone was getting their car repossessed, I'd either think they had fallen on especially hard times or they were an idiot with money.
miIk-skin@reddit (OP)
I see people talking about it happening to them so much on this website!
Do you know whether these car loans come without interest if you're making regular payments within a set repayment period, or is there typically high monthly interest?
HowsMyBuddy@reddit
30 years ago, you could get a car with 0% interest if you had a very good credit score, and a 5-10% down payment. The last time I bought a new car was 2013. With an 815 credit score and 15% down I was able to get 2.99%. On a $22k brand new car. Cars are much more expensive now, and interest rates are higher. It’s very common now to have a $600/month payment for 60-84 months for the cheapest car on the lot.
Comfortable_Break387@reddit
Out here at least it's still possible to get low/no interest deals if you're buying new and have good credit. It's usually part of a holiday deal, and from my experience it'd have to be a shorter term loan (48 months or less), but they do exist.
HowsMyBuddy@reddit
Yep, but shorter term loans require a higher monthly payment and good credit and income. I live in a shithole area and you have to make $32/hr to qualify for a 1-bedroom apartment. We are heading back to the company towns of the 1920s. I think Amazon even suggested something like that a few years ago. Haven’t heard much about it since then, but it’s coming.
ObjectiveElefant@reddit
That’s because people don’t come online to talk about the fact that they’re not in debt. It’s just like any other subject. It’s a sort of false consensus effect. To add, you’re not gonna find a single section of the internet that represents the majority of this country. There are too many people for that.
Ms-Metal@reddit
It's a selection bias. The people you're looking at are only the people who post on Reddit. People posting on Reddit are not posting that they pay their bills off every month with no problem. Yet the majority of Americans pay their bills off every month with no problem! Not only have I never had anything repossessed, I've never known anybody who's had anything repossessed and I'm in my 60s. Average person will never have anything repossessed in their entire lives lol. It's a movie trope and of course it is real but only for people who are buying things they can afford or who have come across incredibly bad luck. Never in my life or the life of anybody I've ever known, would we have something repossessed, it's an incredibly foreign concept to us because we pay our bills, just like most Americans pay their bills. Reddit is mainly people who are extremely young and just starting out their careers or are still in school. Most business people who have quality lives are not posting on Reddit about paying their bills on time every month lol.
Comfortable_Break387@reddit
One thing to keep in mind is that it's such a big deal that, when it does happen, people are probably going to talk about it because it's a traumatic experience. Between that and the fact that there are millions of people on here, it probably seems like it's happening more often than it does.
That being said, anyone can get a car loan. You, me, anyone. If you have a pulse and an insurance policy you basically have an unlimited money loan from somewhere when it comes to cars here. They pretty much all have interest, though it can be very low (my last car loan was 0.9% and ended up being like $450 at the end of the loan). Unintuitively, used cars come with higher interest loans, so the people who can least afford high interest end up with the worst deal oftentimes.
Endy0816@reddit
Credit is generally easier to obtain here and can you save/make money with it depending on how you handle it.
There's also more financial protections if using credit cards, than with debit or cash here.
QuirkyCookie6@reddit
Its seen as good for certain things, like a house since you're able to build equity in property and you can get tax credits for it (sometimes). Other things like cars, can depend on the person but generally, be sensible about it and its considered a neutral thing.
kit-kat315@reddit
Yes, debt is expected. Most have a car loan, credit cards and student loans. Nearly everyone with a house has a mortgage.
My husband and I each have a car loan (his is almost paid off). We have a mortgage, and I had a student loan until it was forgiven by the govt a couple years ago.
We also use credit for almost all purchases. For convenience and rewards- they get paid off monthly. But it would be easy to overspend if you're not disiplined.
Patient_Duck123@reddit
Look at how the US government funds itself.
Responsible-Factor53@reddit
Yes. You need to have some form of debt to maintain a decent credit rating. These days so much is determined by it. Car insurance rates. I even had a credit pull as part of my background check at work. No credit means low score and that’s frowned on. I have my car paid off and have two credit cards. One for veterinary bills and the other has a low balance that I almost max out and then payoff after a couple months and then start again.
Fine_Refrigerator_95@reddit
Part of it is the social structure. The middle class works really hard and bears a lot of weight, rationally speaking. They’re the ones with the real debt. The hardest working ones. It isn’t easy to move from one social class to another bc the gaps are huge. The system is kind of structured to keep you where you are.
The other thing i personally think is that people are not educated on how to build wealth and handle funds. We are taught a lot of arbitrary things but not how to handle actual life beyond grade school in order to build generational wealth or better.
AKA-Pseudonym@reddit
If you manage it well it's a tool not a burden. And it's not unique to the US. Mortgages are extremely common throughout the world. Or at least the first world anyway.
MajesticBread9147@reddit
Many people do it wrecklessly but debt can also be a very useful tool.
The stock market appreciates 10% on average. Any loan you can get under 10% interest (and that you were going to buy regardless or is an appreciation asset itself) is a better idea than selling assets to pay for something.
In fact, many brokerages allow you to take out a low interest loan against your portfolio for a fraction of what a credit card would be, often like 6% much like how a HELOC works.
I'd be better off taking that asset backed loan if I needed to replace my car or whatever.
car55tar5@reddit
I mean... You're talking about a country where you NEED to have debt in order to have a good credit score. Where higher education isn't free and most people have to take out loans. Where a minimum-wage earner needs to work approximately 2.5 full-time jobs (roughly 79 to 97 hours per week) to afford a modest one-bedroom apartment without spending more than 30% of their income on rent. Where accessing medical treatment of ANY KIND costs money, and people can often go into medical debt even with insurance! When I gave birth, my son had to stay in the NICU for 2 days--between that and the hospital stay for myself, my "bill" was close to $200,000. After insurance, still cost me $5,000.
Do you see how easy it is to go into debt here in the USA? It's not just "oh they're irresponsible"; things are fucked over here in a lot of ways.
ObjectiveElefant@reddit
Keep in mind Reddit doesn’t represent the majority of the United States when you read anything on any subject here. This is an enormous country of over 300 million and you’re going to find all different types of people and situations. The vast majority of the country does not live in poverty. Debt as in having a mortgage and a car payment is normal. Again, it’s a spacious country something near 90% have a car or at least have access to one. Having insane credit card debt is not a shoulder shrug. I imagine it makes most people who are in it, feel very concerned. There are irresponsible people who are shopaholics or live above their means. There are those who want to look a certain way and will go in debt to make that happen. However, doing this is not applauded.
pawsplay36@reddit
Yes. Credit card companies and banks are allowed to do basically whatever they want. Trump gutted the Consumer Financial Protection Bureau, which was itself little more than "managed opposition" to big finance.
plantsandpizza@reddit
Yes, especially if you went to college or drive a car. Credit card debt is also very common.
Zaidswith@reddit
You have to participate in debt to get a credit score. You need a credit score to do things like buy a house.
It is not financially risky to have student loans, a car loan, and a mortgage. Other debts are problematic.
stolensweetroll6@reddit
Yes of course. Where are you that debt is abnormal? And having low interest rate debt is often a good thing!
anti-pineapple@reddit
It's expected to have debt in the US. College is almost guaranteed to put you tens of thousands of dollars into debt, any kind of health issues will do the same, as well as buying a house obviously. Cars are also necessities in most of the country and are unobtainable without debt for most people. Essentially, living in the US requires going into debt. The economy is designed that way, to the point where we have the whole credit score system where you must have debt and manage it reasonably in order to qualify to rent an apartment, buy a house, etc.
DrBlankslate@reddit
Being in debt is completely normal here. You’re really weird if you don’t carry debt somewhere. And in fact, your ability to borrow any money is based on how much you’re borrowing now – it’s called a credit score. if you don’t borrow anything, you won’t be able to buy important things like a car, or a home. You have to have a credit score and a credit history.
Doogers7@reddit
It is how we all contribute to growing the economy.
Financial-Sweet-4648@reddit
Our superwealthy are doing great. We’re all doing our part to ensure their comfort.
megamanx4321@reddit
It's how we contribute to banks and credit bureaus.
WiseQuarter3250@reddit
it's a bunch of predatory lending practices and a system that is in the lenders favor.
plus to qualify for loans, car mortgages, etc. you have to prove you have debt and can manage it. that's your credit score. the better your score the better, lower interest rates you can be offered.
interest rates on some credit cards can be above 13%. a day late on a payment and the interest rate can jump over 20%.
And underpaid workers mean many live paycheck to paycheck, so when emergencies happen you get deeper in the hole. And the state of medical care being what it is, one bad turn of your health can put you over $100,000 in debt.
But yes, there's a lack of financial education for many.
Curvy_Raven@reddit
I live in Michigan, near the Great Lakes region, so it could be different elsewhere.
I would say most people are private about their debt in the every day, face to face world. It's certainly not shocking if someone says they have credit card debt, or student loan debt... but most people would not share with others that they are late on payments. That is more personal.
On Reddit, there is a bit of anonymity that allows for more personal and private details when posting. This is probably why the details of having debt might be discussed more freely and casually.
Zenthane@reddit
Oh yeah, most Americans have debt. Currently in between my wife and I we have a mortgage, 2 car loans, and a credit card balance around 5k. That's just life here. Feel free to ask any questions you'd like.
RaspberryLanky7905@reddit
having debt is normal, managing it haphazardly should not be, and that is why their on reddit looking for advice.
miIk-skin@reddit (OP)
The posts I'm referencing are usually not asking for financial advice, they're often a sidenote in a bigger story, which is what's giving the appearance of it being a common.
Like "my mil is planning on wearing white to my wedding—oh and I can't make my car repayments—so, how should I respond to my mil?".
Acceptable-Access948@reddit
Yes. It's extremely common to have debt, often greater than ones assets. I have about $100k just in student loans and that's average to low for someone with a masters degree. It's quite a bit more than I make in a year.
Even the well-off have debt, but it's different types of debt and they have the financial standing to get much better terms, so it can be used as an advantage.
The only people I know with no debt whatsoever are very poor, who were never able to get credit, so they never had the opportunity to go to school, invest in assets, own a car, or do the other things required to gain certain types of social advantage
Kind-Pop-7205@reddit
Not everyone manages it haphazardly. Nobody posts on reddit about paying back debts on time.
DontReportMe7565@reddit
People are fiscally irresponsible all around the world.
People are short-sighted and debt is readily available here in the US.
Minimalistmacrophage@reddit
Debt is very common. Excessive debt is more common than it should be.
Most people carry some kind of debt, even if it's just leveraged assets.
Student loans, car loans/leases, credit cards and of course mortgages are commonly held. Private loans were less common but the are more common now (there are a ridiculous number of types of debt instruments in the US)
Historical-Mention12@reddit
Debt makes the world go round.
Western-Finding-368@reddit
Yes. Basically everyone is who is part of society has some level of debt.