"In the midst of life we are in debt."
-Ethel Watts Mumford

You are not alone. Over the last few decades individual Americans have moved further and further into debt, shifting away from the debt free life. Today, it is estimated that Americans owe over $10 trillion in mortgages, car loans, credit cards, and other personal debt.† Although it is true that household assets have increased as well, the rate of increase of mortgage and consumer debt has outpaced assets by a significant amount.

For example, the most expensive of all consumer debt, credit card debt, has more than doubled in the last 10 years, to over $735 billion, with the average family now owing more than $8,000. In 2001, the average consumer paid over $1,000 in interest charges, and today, as average interest rates are over 14%, nearly half of all American households have difficulty meeting even their minimum monthly payments on their credit cards.

Robert Manning, the author of "Credit Card Nation: The Consequences of America's Addiction to Credit", believes the problem dates back to the 1980's, when financial institutions began issuing credit cards and loans to individuals who wouldn't have qualified in the past. In Manning's own words, "people had this sense of entitlement based on the idea that this generation was expected to outperform the earlier generation. it was OK to buy yourself a better standard of living than your parents, and the banks would help you do it."

Lately, the irrational exuberance of 1990's and this decade's housing price run-ups, Americans have become champion shoppers and phenomenal consumers. The debt free life is an ideal, not reality. As individuals' equity in their major assets (stocks in 1990's and now more than ever personal real estate) continues to rise, they feel more and more comfortable with spending beyond their means. As a result, U.S. personal debt is higher than ever before in history.

Granted, it is not as bad as some of the media make it out to be. America's strong growth in GDP and increasing inflation create less of a burden on the average American. Furthermore, much of America's personal debt is revolving and is paid off in full every month. However, there is a large segment of the population that, unless prompted to change, will live their entire lives under the burden of debt. The solution is not easy, but there is a choice to make. Click below to make the choice to become debt free.

Free Debt Analysis

† Lord Abbet's Economic Insights - Household Debt and Financial Health 1/20/2006