Time to Rethink How Much We Can Afford?
You know, long before Donald Trump was president, as a business executive he used to say if you borrow $100, you have a problem. If you borrow $1,000,000,000, your bank has a problem. And I want to update that a little bit by saying this: if you owe money and you miss a payment or two, it's your problem. But if you miss payments for months, it's your lender's problem. You see, for a while over this past couple of years during the pandemic, people weren't missing payments.
Last year, banks wrote off only about 1% of their credit card debt. That was the lowest write off rate since the 1980s, and people weren't failing to make payments because of the pandemic. People were in lockdown, so people stopped spending and at the same time, everybody got all these massive stimulus checks from the government and that gave them plenty of money to pay their bills. So great, everybody was able to pay their bills and they weren't going into default on their credit cards. Well, now, though, the lockdowns are over and so are those stimulus checks. And you're out spending money again. And everything costs a lot more than it did before because of inflation.
So credit cards that are at least 30 days delinquent have doubled this year. And banks say it's going to get worse. By the way, which age group has increased their spending more than any other age group? Those over 65. The 65 plus population is now 17% of all Americans, and it's going to be 20% by the year 2030. Remember that those over 65 have most of the money in the United States.
So the question is, do they have enough money and are they going to spend enough of it to support our entire economy? So the good news is we're spending more. The bad news is some of us are spending more than we can afford. Think about your spending habits and make sure you don't get yourself into trouble. Because if you get yourself into too much trouble, you'll be getting the entire economy into trouble along with you.