Reply #22: Debts-R-Us Report: Steeply higher mortgages and school loans squeeze U.S.

[UpInArms]

Debts-R-Us
Report: Steeply higher mortgages and school loans squeeze U.S. households

http://www.marketwatch.com/News/Story/L5b2XhRC8KWLg4K9SZn46g?siteid=mktw&dist=TNMostMailed

SAN FRANCISCO (MarketWatch) -- Americans' debt levels are rising, but not because we can't resist charging the latest plasma television to our credit card, according to a new report.

Instead, consumers' debt burden jumped higher in recent years because wages grew slowly even as costs increased on items that most of us don't consider frivolous, such as mortgages, health insurance and college tuition, according to a study by the Center for American Progress, a liberal think-tank, in Washington, D.C.

Middle-income families felt squeezed more than most, devoting a median 20% of their income to debt payments in 2004 - even at a time of low interest rates -- up from 18% in 2001. U.S. households overall spent a median 18.3% of income on debt payments in 2004, up from 16.9% in 2001, according to the report, which is based largely on data from the Federal Reserve Board's Survey of Consumer Finances.

And more families entered the group of seriously indebted: 13.7% of households faced debt payments greater than 40% percent of their income in 2004, up from 12.8% in 2001.
Looking at households' overall debt load, Americans' debt rose to a median 108% of income in 2004, up from 78% of income in 2001, with middle-income people facing the steepest rise, to a median 114% of income from 80% in 2001, according to the report.

"The middle-class squeeze stagnant income growth in the face of very sharp price increases for big-ticket items such as homes and education," said Christian Weller, author of the report and a senior economist with the Center for American Progress.

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