Why a Rise In the National Debt Is Good for You

By Gerald Morales | May 28, 2014 AAA

In the first quarter of the year, the household national debt for Americans was $129 billion. Yet contrary to popular belief, debt is not always a bad thing.

The New York Federal Reserve reports debt is up 1.1 percent, which means the total U.S. debt is at $11.65 trillion. As of the latest report, U.S. debt is still 8.1 percent lower than the all-time high of $12.6 trillion we saw in 2008. (These figures were retrieved from anonymous sources through Equifax.)

“We’ve observed household debt increase three quarters in a row and delinquency rates their lowest levels since 2008, the direction of future mortgage originations will have an important implication on the household financial outlook,” said Andy Haughwout, a New York Fed economist.

More debt is not bad as you may think

While Americans are getting deeper in debt, the lower amount of delinquencies provides confidence for economists that we’re headed in the right direction. The more debt and fewer delinquencies, the better. The act of accumulating debt and diligently paying it back means there is both lender and consumer confidence.

Financial institutions can now lend money with the confidence that people will pay back their debt — a positive sign for the economy.

The majority of debt in America is from home loans, so it is safe to say that Americans are putting their debt into the right place. Homes and real estate can provide a valuable asset for a family.

Student loan debt is the second highest debt in America. The total amount of student loan debt is $31 billion. This is a growing problem because student loan debt is literally keeping students from being able to purchase a home, according to the New York Federal Reserve. The Fed also reports home ownership rates for student debtors fell a total of two percent points lower than those without student loans. However, college graduates tend to make more money than those without a degree, setting up those with degrees with a more promising financial future.

If you must get into debt, do so wisely

Are you thinking about acquiring some type of debt soon? Whether you need a personal loan, auto loan, home loan or any other type of line of credit, look for the best interest rate to help you save money. Remember, we offer handy tools to assist you in finding the best mortgage rates, savings rates and more.

As long as you are making educated decisions for your financial future, there is nothing wrong with acquiring debt. Before you do commit to any type of debt, formulate a plan for how you will pay it off.

comments powered by Disqus
Related Articles
  1. Banquo’s Grain And U.S. Interest Rates
    Economics

    Banquo’s Grain And U.S. Interest Rates

  2. How The IRS Works: Functions & Audits
    Taxes

    How The IRS Works: Functions & Audits

  3. The Government And Risk: A Love-Hate ...
    Insurance

    The Government And Risk: A Love-Hate ...

  4. What You Need To Know About COBRA Health ...
    Insurance

    What You Need To Know About COBRA Health ...

  5. Changes In Tax Legislation And Regulation
    Taxes

    Changes In Tax Legislation And Regulation

Trading Center