The American Debt Trap
Avoid temptation.
Photographer: Rogan macdonald/bloomberg“Just finance it!” This has been the advice that the U.S. has given to young people for decades now. We borrow money to go to college, to buy houses, to buy cars and even to make everyday purchases. We're bombarded by internet ads and junk mail offering new mortgages, auto loans, low-rate credit cards. Student loan sales agents meet freshmen in front of the student union on the first day of orientation. Public thinking seems to have shifted accordingly. Where someone from a bygone generation might judge their solvency by how much they have in the bank, we look at our monthly cash flow -- if more money comes in than goes out, we breathe a sigh of relief.
As a result, Generation X and older millennials are the most debt-laden people in U.S. history. Back in 2014, researchers at the Federal Reserve Bank of St. Louis looked at how debt levels varied by the age of the head of household. Their findings confirm that despite aggressive deleveraging since the financial crisis, the problem remains acute: