House of cards

So much for the booming economy! Household debt hits record high of $13.5 trillion - $837 billion higher than its previous peak in 2008 before the recession

The debt increase driven by a $9.1 trillion in mortgages and student loans could signal slowing expansion.

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The 873 Billion is 6% increase over the 13.5 Trillion, considering inflation 2% YOY, 6% is low. Above all, now we do not have sub-prime issue. Mortgages are getting hardened. The real estate may be stagnant to the limits of mortgage rate raise, but we can not expect 2008-2011 sale time.

Debt is debt. Bills have to be paid. Here is non-mortgage up to last year

Debt has two types:

Debt on appreciating assets like Real estate or stocks or for company operations/financing.There is a risk associated with it. They are good debts as you will get better returns.

Debt on depreciating assets: Cars, credit cards…etc. They are bad debts.
Each and every debt, we need to look at case to case.
Entire US is credit based economy, domino effects are there during downturn.
Knowing issues of growing debt, FED increases interest rate so that correction gets into economy. As long as we are protecting our self safely,well within limits, we can proceed with limited good debts.

Fully cash based is ideally good, but too hard to attain that financial independence stage.

GDP was 14.7 trillion in 2008. Now it’s close to 20 trillion. So we can keep on splurging for a while. :smile:

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