patrick.net

Last debt was 14 years ago (mortgage) and I only ever had one car loan when I HAD to have a car in L.A. in the day. Paid that off in six months. If I couldn't easily pay cash for a car with spare change, it didn't get bought.

HEYYOU says

I very interested to see how much debt an economic system can handle.

Just like with evaluating a stock, you want to look at household debt as a proportion of that houeshold's income, cash reserves, and future income prospects.

if a household has $50k in credit card debt and has a total annual income of $150k, that's much scarier than $50k debt on an annual combined household income of $300k.

Also, if the household is getting something useful for the leverage, it might make the debt service cost worthwhile. Paying debt service costs on a family cottage to reduce lifetime vacation costs might actually be smart. Paying debt service overhead for TV sets, jewelry, or sending the kiddos to uni for worthless degrees is just spinning your wheels.

I know some folks who smartly work the opposite side of this equation: buying low risk consumer loans. Be the recipient of interest rather than having it drained. It did mean they had to live frugally for a decade to build up the capital. But I guess... you get what you save for.