Prime Interest/Mortgage rates through the decades.....(1981-05-22 prime 20.50%)

[SoCalDem]

http://mortgage-x.com/general/indexes/prime.asp

It first hit 20% in 1980 (in April)

First hit double digits.. 1974 (April)

Inflation rate indexed by year..

http://inflationdata.com/inflation/Inflation_Rate/HistoricalInflation.aspx?dsInflation_currentPage=0


We lived through 1970-current, as self-supporting adults, and having done so, I will say this:

Even at the height of wage-freezes, high interest rates, tight money and rampant inflation, it was never like THIS...today..

Why?

People griped and complained about high mortgage rates, high prices in stores, no raises at work (stagnant wages for YEARS). What was different?

People not making a LOT of money did NOT have credit cards, charge accounts, and were USED to paying cash for EVERYTHING (except for a car), and what interest payments you DID have, were DEDUCTIBLE at tax time.

1970-1977
We rented back then, and paid $175.00 a month (1977) for a two bedroom brick house with a garage..on a wooded lot.. We had a used station wagon and a new car, on which the 3 yr loan cost us $83.00 a month. We lived an "affordable" life with NO revolving debt.

It's the crushing debt that most people have, that's doing everyone in, and making people desperate.

People can handle most curves that life throws them, IF they are not crushed by debt.

If, before you even get your paycheck, you owe $300-400 for a car payment, $500-800 for medical insurance premiums, $1000-$1500 for a house payment/rent, AND all the other recurring bills....like electricity, water, gas, phone, that does not leave much left over to actually live on..especiallt if Visa & Mastercard are right their with their hands out to claim $300-400 or more of your money, before you even get it...and the kicker? Even if you lose your job/paycheck, they still need to be paid
..

Sure .. we all "make more" now, but that $9 a month phone bill from Ma Bell, has morphed into $100 or more a month, those $83 car payments are now HUNDREDS more..and for FIVE or SIX..not 3 years..Medical care is no longer even affordable without insurance..(even WITH it sometimes)..

Most people "kiss away" most of the actual income they earn BEFORE they even see it, so when the day to day living stuff "happens", they are flat-broke.

At some point, the psychology of futility kicks in, and many people who already owe more than they can ever afford to pay, just keep adding to it until they can no longer do it because they lose access to credit....but they still "owe it"..

It's the OWING that's different now, and the only entities that can "write down", "write off", "unload" debt, are the super-rich, and the banks. Everyone else keeps wearing their albatross of debt..

[Phoenix-Risen]

1. Why can't they be like we were,

Perfect in every way
What's the matter with kids today?

h/t Bye Bye Birdie

[SoCalDem]

2. not perfect..just different

maybe more careful too :hi:

[fasttense]

3. Actually a study published in Harvard says it is NOT debt that is hurting

the middle class. It is common expenses like Health Care, Education, Housing and car costs that have the middle class struggling to make ends meet despite their two incomes.

http://harvardmagazine.com/2006/01/the-middle-class-on-the.html

Did you know that the average middle class family spends less on food and clothing than they did in the 1970s? But they spend more on the basics such as housing, transportation and education. Education does NOT mean college tuition. It means costs to send little Johnny to public elementary, middle and high school. And you thought it was free. I spent over $2,000 a year to send my 2 kids to a decent public school because we lived outside the school district. The local school was absolutely horrible. And we lived in a fairly good neighborhood.

But I guess if you go into debt to pay for these then debt could be a problem.

[SoCalDem]

4. Here's a very interesting piece from the NY Fed (household debt)

It's from 1979...so they knew even then, that this was going to be a problem

http://www.newyorkfed.org/research/quarterly_review/1979v4/v4n2article3.pdf