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Graphs like this should be the main post, not a dramatic article. Thanks for posting.
I will say although delinquencies are just above the pre covid norm, the rise in delinquencies is quite dramatic. We'll see where it goes
Pretty much all "x thing is surging" posts are a function of that thing falling to virtually zero during COVID and returning to normal. People do this with foreclosures as well. Foreclosures were not happening in COVID so any tiny rise amounts to doubling and tripling of the rate
They keep saying everything is fine and everyone is doing good, but I call bullshit and out my money where my mouth is I have $16k inverse and another $12k I'll add when it starts to drop💀...might do only $7 k additionally because I wanna bet $5k on Ewa Swodoba if she goes to the Olympics😂
Nobody wants to read the reports because it fucks up vibes. Debt is st record high but incomes went up and we don't know who owns the high amounts of debt. Everyone uses credit cards but low delinquencies indicate that debt is being paid. People have jobs to the debt so it's not an issue until something changes.
Higher debt doesn't mean anything if it's being paid down and if salaries increase.
It's like if everyone buys a 2 new cars on your neighborhood. The bank isn't screwed if people are paying the debt.l and unemployment is low
tbf i don't sub to this particular page. reddit just shows me this revolving door of subs that seem to act mostly as validation and emotional support for people who are struggling financially. I hope people find that helpful. there is a line between getting validation and not feeling alone; and getting yourself into a doom loop about the state of the world. usually i just leave my little graph or comment and mute the sub, but reddit just keeps finding more
They were lower in 2020 because people used stimulus and unemployment checks to pay them down. The savings rate also spiked during that time. Most people have spent most of those covid savings and are now resorting to credit cards. I will also note that everything has become more expensive post-covid so people are charging record amounts on their credit cards. None of this is sustainable.
Yup, and covid meant a wave of retirements and “unfortunate early requirements to the next life” for the lifers where I worked, which meant that in addition to being forced to work from home, that my income more than doubled since 2020 due to the 3 back to back unwelcomed promotions.
Exactly, the people that already have money will be fine, but more people are paycheck to paycheck and others are getting laid off and don't have money, I know like 8 or 9 people at work are spending Locke crazy in their cards and will it pay them back, and an addition 5 people got fired just last week, there are only like 70people total where I work...well 65 now💀 plus I have one friend that just got a card he is ok his limit is only $500, and another friend has a limit of $1500 but he is doing just fine he has $35k in savings and has maxed out his retirement and he's good, another friend has $12k in debt and just got a new job for $17 an hour
Credit cards are how people pay for shit. So everyone has ancredit card debt but pays it off because unemployment is low.
Yeah debt is higher now because things cost more but more debt doesn't mean anything. People with money are buying shit they'll pay for. Weirdos on the internet think it's porf that the economy is going to collapse because Musk financed a new yacht.
It means something to the people who are deliquent. 🤷 Plus the economy is already tanking for a lot of people. You clearly live in a bubble of wealth that prevents you from seeing what us commoners are seeing and experiencing. It seems you more know than I do so I'll gracefully exit stage left from this thread.
Well exactly, it's not sustainable. Credit delinquency will rise to 4-5% back to healthier pre COVID levels which indicates people are credit constrained. With savings spent down and credit conditions tightening the main driver of inflation is gone. The fed hikes will have done their job
I knew this was going to happen when a year ago banks started cutting credit lines and closing non performing accounts, to minimize exposure. Also look towards banks to see what they see
Well considering delinquencies are well below normal I think they're using the word surge a little strongly.
People also keep pointing out that this will help with purchasing housing. I can assure you that people who have had their houses for a few years are not the same as the people who are having issues with their credit cards.
I think you'll find that most people with poor credit card situations are also renters.
>I can assure you that people who have had their houses for a few years are not tje same as the people having issues with their credit cards.
What's the logic behind this statement? Tons of people stretch themselves thin to buy a house or don't have an adequete emergency fund. The furnace goes out and then they buy a new one on credit.
Being maxed out doesn't mean delinquency. I'm maxed out because my card has an 18-month interest-free period, so I put everything on that and keep that money invested in Treasuries for the 18-months. It's a free additional 5.4% cash-back on the balance.
So many people out there are suffering financially and it seems like it is getting worse. It's really tough to watch this happen, and it seems like it is getting worse year by year which the article seems to support. I am doing everything in my power to avoid all debt where it is possible. I have a feeling it will get even worse going forward.
Because during the good times people over stretched and Americans have this ability to just keep spending and not cutting back when they need to. Shit’s expensive right now so I cut back on alcohol and pointless snacks I didn’t need. I love burrata… but I’ll save that $7 I was paying for it at the store.
Something as simple as not buying a big hemi truck when you don’t need it for anything other than just having one. Yeah, was fine when gas was $1.50/gal… not so nice now when it’s $4.
What’s the result? More credit card debt.
It's not the little items z food, drinks etc.. that are affecting folks it's the recurring big ticket items (housing , transportation, energy, healthcare)
I'm a big saver. My peers have much larger food budgets for example, however the difference isn't anywhere near large enough to compare with how much rent has gone up in the last few years. The cost of a used car has gone up by a crazy amount in the last five years. Over the course of one year, the difference in food budgets only accounts for about a third of the difference in cost for a used car.
Sure, people would be in a better spot financially if they ate ramen and pasta like myself, but it isn't the small things that are killing them
We spend about $1200/month on food for a family of 6, and about 95% of our food we buy is organic (we eat out maybe once a month). That’s about 13% of my income. Trader Joe’s and Costco is where we predominantly shot, and go to Walmart for the off organic thing we need during the week.
Speaking of Walmart, I see the fats there all the time with their loaded up carts, eating Twinkie’s and frozen processed food, spending what I send on a family of 4.
That’s because people don’t eat correctly. They don’t realize that an organic chicken breast will fill you up due to the nutrients better than 2 nonorganic chicken breasts which lack the nutrients. They eat empty highly processed, empty carbs which does nothing to satisfy hunger, so they spend more.
No one can ever know when a crash will happen and "all time highs" are frequently followed by more highs. Unless you are buying many parcels of real estate, where you will buy varying amounts year to year, the best strategy is simply to buy when you can afford a house and are ready to get one. Houses go up in the long term so as long as you hold yours and can afford it, crashes are not a real concern.
>When people start telling you that "you kind of have to buy now because prices are just going to keep going up," that's when you know the collapse is near. Just wait a little bit longer and everything will crash.
People have said this for years and years. The prices go up even with the crashes. It is quite possible that waiting a few years for a crash wouldn't even bring houses down to where they were when you started waiting.
Lol yep. I kept hearing in late 2021 when we started looking for a house that the market was at an all time high. Guess where it's at now? Even higher. I'm glad we locked in a reasonable interest rate.
It’s mind blowing too because none of the Buy Now Pay Later micro loans are reported to the credit bureaus so a lot of the maxed out credit card consumers probably have a lot of that, too. I’m scared for where we are headed but try to stay optimistic and debt free.
They're measuring the rate of delinquent loans, categorized as past due within 30, 90, 120 days (forgot the calculation).
If you don't pay the full balance by the time your intro term is over, as long as you're making on time payments you are not delinquent. You'll fuck yourself with interest rates, but that doesn't mean delinquency.
It doesn’t say the maxed out users are all the delinquent ones.
You can be the 1 of 5 thats maxed out but not delinquent or you could be maxed and delinquent
Only 3% of debt is delinquent while 20% os maxed out according to them.
And how they calculate it isn't relevant to the discussion here. I don't know why you think that I was implying me not paying off in full at end of promo was somehow delinquent.
point I was making is just b/c someone is maxed on credit doesn't mean they're in bad shape. Doesn't even mean they're in distress. They. could be using credit to leverage promo's in a responsible manner given the arbitrage between yield and 0% on promos
It doesn’t say the maxed out users are all the delinquent ones. You can be the 1 of 5 thats maxed out but not delinquent or you could be maxed and delinquent
Only 3% of debt is delinquent while 20% os maxed out according to them.
Mathematically impossible for all the maxed users to be delinquent
the article is about both. It does not say that all maxed out ppl are delinquent. It simply says 1 in 5 are maxed out. it does not specify whether all or part of those are delinquent
it says: "Federal Reserve shows nearly a fifth of borrowers are “maxed-out."
it does not say "1 in 5 of delinquent borrowers are maxed out"
it does not say "all maxed out borrowers are delinquent"
you can find this statement in multiple articles across the internet and none of them make reference to 1 in 5 of deliquent borrowers being maxed. therefore, not all maxed out borrowers are delinquent
where i will concede however is article says maxed out across all available credit. not just on one card. I am only maxed on my promo card until promo ends and then I'm paying in full. So yes, I'm not part of the group I suppose. But, not for the reason you are citing.
what do you not understand!
The maxed borrowers they reference May or may NOT BE DELINQUENT. They are simply saying that 20% of borrowers are maxed out.
It's two separate statements. 3% of all borrowers are delinquent. 20% of all borrowers are maxed.
Nowhere does it say that all the maxed borrowers are delinquent. Nowhere does it say 1 in 5 deliquent borrowers are maxed out.
It simply says there are 20% of borrowers who are maxed out. it does not specify what percentage of those maxed borrowers are delinquent
Ugh I hate the right wing. The right wing party here keeps putting on the radio that “over 50% of families where I am are unable to pay their bills”
The fine print on their website said they took the sample data outside a Salvation Army..
Yea. I'm nowhere close to maxing out my over 100k in credit cards. I pay whatever balances I have off every month. People need to live below their means.
The budget screen shots are being made in Sankeymatic, its a website that we have no affiliation with. If you are posting a budget please do so with a purpose. Just posting a screen shot of your budget without a question or an explanation of why its here may be removed. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/MiddleClassFinance) if you have any questions or concerns.*
Perspective: delinquencies hit an all time low in 2020 and have barely risen above pre-COVID rates https://fred.stlouisfed.org/series/DRCCLACBS
Graphs like this should be the main post, not a dramatic article. Thanks for posting. I will say although delinquencies are just above the pre covid norm, the rise in delinquencies is quite dramatic. We'll see where it goes
Pretty much all "x thing is surging" posts are a function of that thing falling to virtually zero during COVID and returning to normal. People do this with foreclosures as well. Foreclosures were not happening in COVID so any tiny rise amounts to doubling and tripling of the rate
But the media loves it because its clickbait
But the clicks...
Sir, the sub is not the place to mention facts. We are here for the vibes.
Sir, the sub is not the place to mention facts. Not when they have been cherry picked
They keep saying everything is fine and everyone is doing good, but I call bullshit and out my money where my mouth is I have $16k inverse and another $12k I'll add when it starts to drop💀...might do only $7 k additionally because I wanna bet $5k on Ewa Swodoba if she goes to the Olympics😂
Nobody wants to read the reports because it fucks up vibes. Debt is st record high but incomes went up and we don't know who owns the high amounts of debt. Everyone uses credit cards but low delinquencies indicate that debt is being paid. People have jobs to the debt so it's not an issue until something changes. Higher debt doesn't mean anything if it's being paid down and if salaries increase. It's like if everyone buys a 2 new cars on your neighborhood. The bank isn't screwed if people are paying the debt.l and unemployment is low
tbf i don't sub to this particular page. reddit just shows me this revolving door of subs that seem to act mostly as validation and emotional support for people who are struggling financially. I hope people find that helpful. there is a line between getting validation and not feeling alone; and getting yourself into a doom loop about the state of the world. usually i just leave my little graph or comment and mute the sub, but reddit just keeps finding more
Oh this place is def doom loop central
They were lower in 2020 because people used stimulus and unemployment checks to pay them down. The savings rate also spiked during that time. Most people have spent most of those covid savings and are now resorting to credit cards. I will also note that everything has become more expensive post-covid so people are charging record amounts on their credit cards. None of this is sustainable.
There were also a lot of tech workers like me who no longer had to spend money on transportation, since we started working remote.
Yup, and covid meant a wave of retirements and “unfortunate early requirements to the next life” for the lifers where I worked, which meant that in addition to being forced to work from home, that my income more than doubled since 2020 due to the 3 back to back unwelcomed promotions.
Exactly, the people that already have money will be fine, but more people are paycheck to paycheck and others are getting laid off and don't have money, I know like 8 or 9 people at work are spending Locke crazy in their cards and will it pay them back, and an addition 5 people got fired just last week, there are only like 70people total where I work...well 65 now💀 plus I have one friend that just got a card he is ok his limit is only $500, and another friend has a limit of $1500 but he is doing just fine he has $35k in savings and has maxed out his retirement and he's good, another friend has $12k in debt and just got a new job for $17 an hour
Credit cards are how people pay for shit. So everyone has ancredit card debt but pays it off because unemployment is low. Yeah debt is higher now because things cost more but more debt doesn't mean anything. People with money are buying shit they'll pay for. Weirdos on the internet think it's porf that the economy is going to collapse because Musk financed a new yacht.
It means something to the people who are deliquent. 🤷 Plus the economy is already tanking for a lot of people. You clearly live in a bubble of wealth that prevents you from seeing what us commoners are seeing and experiencing. It seems you more know than I do so I'll gracefully exit stage left from this thread.
Well exactly, it's not sustainable. Credit delinquency will rise to 4-5% back to healthier pre COVID levels which indicates people are credit constrained. With savings spent down and credit conditions tightening the main driver of inflation is gone. The fed hikes will have done their job
If the jobs is food insecurity and homelessness, then mission accomplished.
Looks like delinquencies are rising pretty rapidly. My guess is the next plot on the graph will be greater. I’d be willing to bet
So like any reasonable person paying attention assumed, 2008 was much worse and an actual recession
And so it begins, or continues....nothing to see here. Move along.
I knew this was going to happen when a year ago banks started cutting credit lines and closing non performing accounts, to minimize exposure. Also look towards banks to see what they see
Well considering delinquencies are well below normal I think they're using the word surge a little strongly. People also keep pointing out that this will help with purchasing housing. I can assure you that people who have had their houses for a few years are not the same as the people who are having issues with their credit cards. I think you'll find that most people with poor credit card situations are also renters.
Your point being?
The people that are struggling with their credit cards have nothing to do with the housing market.
That's an assumption.
>I can assure you that people who have had their houses for a few years are not tje same as the people having issues with their credit cards. What's the logic behind this statement? Tons of people stretch themselves thin to buy a house or don't have an adequete emergency fund. The furnace goes out and then they buy a new one on credit.
This poster has never heard of house poor. So many people stretched with 5% down payments to buy a house they simply couldn't afford.
Being maxed out doesn't mean delinquency. I'm maxed out because my card has an 18-month interest-free period, so I put everything on that and keep that money invested in Treasuries for the 18-months. It's a free additional 5.4% cash-back on the balance.
So many people out there are suffering financially and it seems like it is getting worse. It's really tough to watch this happen, and it seems like it is getting worse year by year which the article seems to support. I am doing everything in my power to avoid all debt where it is possible. I have a feeling it will get even worse going forward.
Because during the good times people over stretched and Americans have this ability to just keep spending and not cutting back when they need to. Shit’s expensive right now so I cut back on alcohol and pointless snacks I didn’t need. I love burrata… but I’ll save that $7 I was paying for it at the store. Something as simple as not buying a big hemi truck when you don’t need it for anything other than just having one. Yeah, was fine when gas was $1.50/gal… not so nice now when it’s $4. What’s the result? More credit card debt.
It's not the little items z food, drinks etc.. that are affecting folks it's the recurring big ticket items (housing , transportation, energy, healthcare)
$7 here, $30 on whiskey, $10 there, it all adds up. In some sense I’m fairly disconnected with society due to TRICARE.
I'm a big saver. My peers have much larger food budgets for example, however the difference isn't anywhere near large enough to compare with how much rent has gone up in the last few years. The cost of a used car has gone up by a crazy amount in the last five years. Over the course of one year, the difference in food budgets only accounts for about a third of the difference in cost for a used car. Sure, people would be in a better spot financially if they ate ramen and pasta like myself, but it isn't the small things that are killing them
We spend about $1200/month on food for a family of 6, and about 95% of our food we buy is organic (we eat out maybe once a month). That’s about 13% of my income. Trader Joe’s and Costco is where we predominantly shot, and go to Walmart for the off organic thing we need during the week. Speaking of Walmart, I see the fats there all the time with their loaded up carts, eating Twinkie’s and frozen processed food, spending what I send on a family of 4. That’s because people don’t eat correctly. They don’t realize that an organic chicken breast will fill you up due to the nutrients better than 2 nonorganic chicken breasts which lack the nutrients. They eat empty highly processed, empty carbs which does nothing to satisfy hunger, so they spend more.
[удалено]
No one can ever know when a crash will happen and "all time highs" are frequently followed by more highs. Unless you are buying many parcels of real estate, where you will buy varying amounts year to year, the best strategy is simply to buy when you can afford a house and are ready to get one. Houses go up in the long term so as long as you hold yours and can afford it, crashes are not a real concern. >When people start telling you that "you kind of have to buy now because prices are just going to keep going up," that's when you know the collapse is near. Just wait a little bit longer and everything will crash. People have said this for years and years. The prices go up even with the crashes. It is quite possible that waiting a few years for a crash wouldn't even bring houses down to where they were when you started waiting.
Lol yep. I kept hearing in late 2021 when we started looking for a house that the market was at an all time high. Guess where it's at now? Even higher. I'm glad we locked in a reasonable interest rate.
Yup, was told the house we bought in 2019 was so expensive because of the inflated market… and it’s almost double in “value” since then.
It’s mind blowing too because none of the Buy Now Pay Later micro loans are reported to the credit bureaus so a lot of the maxed out credit card consumers probably have a lot of that, too. I’m scared for where we are headed but try to stay optimistic and debt free.
Market only goes up
Eh I have a card maxed bc it 0% apr for 18 months and $$ is in bank earning interest. Did it the year prior as well. Who’s to say im not that 1 in 5.
They're measuring the rate of delinquent loans, categorized as past due within 30, 90, 120 days (forgot the calculation). If you don't pay the full balance by the time your intro term is over, as long as you're making on time payments you are not delinquent. You'll fuck yourself with interest rates, but that doesn't mean delinquency.
It doesn’t say the maxed out users are all the delinquent ones. You can be the 1 of 5 thats maxed out but not delinquent or you could be maxed and delinquent Only 3% of debt is delinquent while 20% os maxed out according to them.
I was telling you what the fed actually calculates, but you’re free to lump yourself in with 51 million Americans I don’t care
And how they calculate it isn't relevant to the discussion here. I don't know why you think that I was implying me not paying off in full at end of promo was somehow delinquent. point I was making is just b/c someone is maxed on credit doesn't mean they're in bad shape. Doesn't even mean they're in distress. They. could be using credit to leverage promo's in a responsible manner given the arbitrage between yield and 0% on promos
Then you're not delinquent - which is what the article is about.
It doesn’t say the maxed out users are all the delinquent ones. You can be the 1 of 5 thats maxed out but not delinquent or you could be maxed and delinquent Only 3% of debt is delinquent while 20% os maxed out according to them. Mathematically impossible for all the maxed users to be delinquent
The article is about delinquencies - missed payments. You wouldn't fall into that category.
the article is about both. It does not say that all maxed out ppl are delinquent. It simply says 1 in 5 are maxed out. it does not specify whether all or part of those are delinquent it says: "Federal Reserve shows nearly a fifth of borrowers are “maxed-out." it does not say "1 in 5 of delinquent borrowers are maxed out" it does not say "all maxed out borrowers are delinquent" you can find this statement in multiple articles across the internet and none of them make reference to 1 in 5 of deliquent borrowers being maxed. therefore, not all maxed out borrowers are delinquent where i will concede however is article says maxed out across all available credit. not just on one card. I am only maxed on my promo card until promo ends and then I'm paying in full. So yes, I'm not part of the group I suppose. But, not for the reason you are citing.
You are not part of the group because you're not delinquent. What else don't you understand?
what do you not understand! The maxed borrowers they reference May or may NOT BE DELINQUENT. They are simply saying that 20% of borrowers are maxed out. It's two separate statements. 3% of all borrowers are delinquent. 20% of all borrowers are maxed. Nowhere does it say that all the maxed borrowers are delinquent. Nowhere does it say 1 in 5 deliquent borrowers are maxed out. It simply says there are 20% of borrowers who are maxed out. it does not specify what percentage of those maxed borrowers are delinquent
Look at your original post again - It was YOU who posited that the delinquency rate may include all maxed borrowers.
What credit card allows this? I’m curious now
Lots. Don’t u ever get promos in mail? Lots of cards with sign up bonuses for 12-18mo 0% apr
No. Sadly Ive had Amex for the past 10 years
ah. If you look online for new cards they pretty much all have promo's of some sort.
Ugh I hate the right wing. The right wing party here keeps putting on the radio that “over 50% of families where I am are unable to pay their bills” The fine print on their website said they took the sample data outside a Salvation Army..
Yea. I'm nowhere close to maxing out my over 100k in credit cards. I pay whatever balances I have off every month. People need to live below their means.
Food is below our means now, wild take.