Good Debt Bad Debt

Total US consumer household debt is $13.3 trillion in 2018.

Good Debt - US consumers owe $8.8 trillion in mortgage loans. This is good debt, especially if it’s a 15 year loan or can be prepaid. This debt turns into an asset, because home values appreciate.

OK Debt - US consumers also owe $1.38 trillion in auto loans. This is not good debt, because vehicles depreciate in value over time. But if you buy a Toyota Prius and get 50 miles to the gallon, the Prius pays for itself in 10 years in gasoline savings. Vehicle loans are often “necessary” expenses for commuting to work and personal use. There are no good alternatives and vehicle ownership is a necessity. Many new cars are exceeding 300,000 miles

Bad Debt - Student loans total $1.5 trillion. This is the worst debt you can have. The average student loan debt is $37,000. The average undergraduate loan interest rate is 4.45%. Universities are toxic liberal propaganda factories.

Bad Debt - US consumer Credit card interest costs totaled $104 billion in 2018. This is uncalled for and is absolutely avoidable. Consumers need to pay their credit card balances off completely every month.

US consumer “non-mortgage debt” is expected to reach $4 trillion by the end of 2018.  This includes car loans, student loans, personal loans and credit card interest.

The media reports news on the economy, but it is geared to encourage big spending. It’s a scam. US consumers need to use more of their money to pay down their personal debts. I would consider “non-mortgage” debt reduction as the primary measure for our recovering economy.

Norb Leahy, Dunwoody GA Tea Party Leader