It's easy for us armchair financial quarterbacks to criticize consumers today. Back after 2009 when I retired at the height of the economic downturn I was reading an article that stated that the fastest growing segment of society who were filing bankruptcy were seniors. They were caught between rising health care costs, homes losing value and horrendous value drops in their 401K's and nest eggs. There wasn't funds available to better position themselves financially. Pensions were canceled or cannibalized by their unions, cities or states. Living expenses were rising at alarming rates and jobs became non-existent for the senior who wanted and needed to work to supplement their retirement.
Younger seniors were shown the door and found that when they were making 90K plus and then needing to rely on subsistence from unemployment things only got worse. They started racking up credit card debt to meet their obligations and payments that were still coming without the relief of the larger paycheck. Homes were in jeopardy of foreclosure and the chance that they may sell them to get out from under the burden was almost nil. Factories were closing in the 'Rust' belt. City payrolls were not being met and taxes that used to be a solid source of local municipalities income were now drying up. They were cashing in their savings/retirement accounts to try and maintain some degree of normalcy.
It's business as usual for big businesses to use bankruptcy as part of their business plan. The government was bailing them out through TARP funds, banks were no longer amassing record income so they turned on the customers at alarming rates. At first they offered plans to restructure your loans or mortgages then reneged on the promises. The government bailed out them out and the consumer didn't reap any relief. Homes that were once a slush fund were lost after years of paying the high interest, refinancing and taking out 125% mortgages. Madison Avenue was telling the average wage earner they could live large chasing the American dream. It was a trap and few were prepared for the disaster when it happened especially the government or the bankers.
I'm not condoning what the consumer did with their debt, we had become complacent and unrealistic that something that happened, did. Brokerage firms were closing as fast as the news could report them. People who should have gone to jail are now in positions of power and once again are telling/asking us to spend, spend, spend. Countries are not paying their bills, Greece, Germany, Russia, China and many more have massive debt that they can't pay so the answer seems to be print more it will all even out in the end. When it again fails and it will, the ones who will suffer the most are us.
More and more consumers have learned the lessons and are paying off their credit cards monthly (53%) but there is still a large portion who are not (47%). The recent figures show the average balance owed by card holders has gone up. The jobs market has shown improvement but those are questionable numbers they are using. The jobs that are being created are the lower income service jobs for every manufacturing job created there are 23 waitresses' or waiter's jobs created. Manufacturing jobs are scarce and more and more eligible workers are giving up the quest, the numbers are skewed and misleading.
Credit reports are riddled with errors and anything that can be done to create a more meaningful and accurate report should be implemented. The information is incomplete but a bad debt can stay on your report for 7 1/2 years while you can get a mortgage if you have been diligent to pay your bills for 2 years after a bankruptcy. If you've taken the steps to change your financial habits then there should be an attitude of forgiveness for your past problems. You as an individual are at the mercy of big business, your health, national disasters and the government and if you have an unavoidable and/or temporary setback is it fair to punish you for 7 1/2 years after you throw in the towel?
