Savings and Debt

When I first read the article I wasn't too surprised that the family had a lot of debt because many families today are in debt. However, I was very shocked when I saw how much debt they had accumulated in such a short period of time. For them to accumulate $50,000 worth of debt in only seven months didn't seem too smart on their part especially when they know they already knew they had over $5,000 in debt.

I think the main problem people have when it comes to managing their finances is how to shuffle between different bills and cards, as stated in the article. People easily get into debt when they begin to overestimate how much money they can afford to spend. They spend their money on miscellaneous items that are not necessary, especially in the case of the Moellerings. Spending $800 on a television was a very bad decision since they have children, bills and even a pet to take care of. If people would splurge a little less or a little more within their budget they wouldn't continue to add on to their already ridiculoulsy high debt.

Another contribution to a person's debt is finance charges. Finance charges can be very harmful to a person's finances. Usually people do underestimate or do not include their finance charges when they are determining their budget. Such is the case with the Moellering's. Their Sear's credit card had monthly finance charges of $155 and their CashBuilder Elite Visa had a $200 monthly service charge. These are all things that need to be factored into a person's budget in order to avoid more debt.

Below is a chart that shows the decline of the U.S. savings rate from 1950-2010. By observing the chart you can see how Americans are gradually starting to save less and less money. It is no secret as to why this change has occurred. DEBT! It's hard for people to save money when they are constantly trying to make and living and pay off all their debt. It's a shame how hard it is for people to just make a decent living without having to worry about making ends meet.

DECLINING SAVINGS RATE OF THE U.S.
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U.S. SAVINGS RATE COMPARED TO OTHER NATIONS
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