Monday, August 13, 2012

Which bills do you pay first?

What should we make of the lasted information released by TransUnion on consumer debt? Some of the highlights, detailed in a story by the Associated Press indicates that Americans are charging more on their credit cards than we were a year ago.

The story reports that the percentage of accounts 90 days overdue is low and that "Many borrowers have taken steps to save money and whittle down their debt."

That sounds good.

But it also says that of people who have a mortgage, "many have made credit card bills a priority over their home loans and other financial obligations."

What?

So, people would rather risk losing their home than let an unsecured credit card go unpaid.

How did we as a culture let our priorities get so out of whack?

Banks issue mortgages. Banks issue credit cards. I wonder what advice banks would offer, if they offered financial advice. Would they tell their customers to pay their credit card first or their mortgage payment? Perhaps they would rather have the house back than little to no hope of collecting the unsecured debt. But do banks really want to own more foreclosed homes?

But what do I know. My debt situation wasn't and isn't normal, according to TransUnion, which says the average credit card debt per borrower, while up 6 percent from a year ago, is only $4,971. That's down 13 percent from the $5,719 average in the second quarter of 2009. That $5,700 figure is about what I owe on  three separate cards.

So, obviously I am not the brightest bulb in the box. But I have learned enough to pay for the roof over my head, utilities and food first and then allocate the money that's left to pay off my past stupid spending.

1 comment:

Gene Touchet said...

That means you're down to less than $20,000!
That's enough to celebrate in itself.
Bravo.

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