Household debt
Encyclopedia
Household debt is the debt owed by persons living in households, as opposed to business debts. It includes consumer debt
and mortgage loan
s held by members of households for the homes they live in.
Household debt is the sum of debt that adults in a household owe to financial institutions. This assortment of debt includes “multiple types of debt” mortgage, home equity loans, revolving credit debt, auto loans, fixed loans, asset based loans, and even student debt. From Buy Now Pay Later it is understood that, in the twentieth century, spending on consumer durables rose exponentially. Household debt evolved because of wanting an array of durable goods (commodities) by any means necessary as time progressed. This included many luxury substances that were major durables like high-end electronics, vehicles, and appliances, that were purchased with credit. The difference was that in the 1920’s American households lived within their means and only owned the minor durable goods that were truly deemed a necessity. Olney from Buy Now Pay Later stated, “That household debt was brought to economics because of a consumer durables revolution that was in the 1920s .” With families focusing on their wants household debt climbed. This was in reference to the allocations of the breadwinners’ income as well. Therefore, households had Irresponsible consumption behavior by purchasing short term… instead of long term conservative action like saving and safer investments. This contributed to the fact that 42 percent of income savings dropped. In addition, the amount of money it took to own goods increased after World War I and income was not directly proportional so once again household debt was incurred. In the 1920s and 1930s companies adapted to finance charges as an extent of credit financing. From Buy Now Pay Later Olney expresses, “That sources of constant price expenditures that purchases were more expense between 1919-28 than 1909-18 and continued to grow through post World War II years .” In respect to the 1920s, the consumer revolution involved spending hence household debt and credit availability, which added uncontrollable consumer spending and financial hardships.
Haliassos, Michael. Household Portfolios. Second Edition Ed. Steven Durlauf and Lawrence Blume. Palgrave Macmillan,2008 The New Palgrave Dictionary of EconomicsOnline..Palgrave Macmillan. 9 Sept. 2011..
Bertola, Guiseppe, Richard Disney, and Charles Grant. The Economics of Consumer Credit. Cambridge: The MIT Press, 2006. N. pag. Print.
Agarwal, Sumit, and Brent W. Ambrose. Household Credit Usage. New York: Palgrave Macmillan, 2007. N. pag. Print.
Olney, Martha L. Buy Now Pay Later. Chapel Hill Ans London: The North Carolina Press, 1991. Print.
Schutz, Howard G., Pamela C. Baird, and Glenn R. Hawkes. Lifestyles and Consumer Behavior of Older Americans. New York: Praeger Publishing, 1979. Print.
Kasser, Tim, and Allen D. Kanner. Psychology and Consumer Culture. Washington, DC: American Psychological Association, 2004. Print.
Consumer debt
In economics, consumer debt is outstanding debt of consumers, as opposed to businesses or governments. In macroeconomic terms, it is debt which is used to fund consumption rather than investment...
and mortgage loan
Mortgage loan
A mortgage loan is a loan secured by real property through the use of a mortgage note which evidences the existence of the loan and the encumbrance of that realty through the granting of a mortgage which secures the loan...
s held by members of households for the homes they live in.
Household debt is the sum of debt that adults in a household owe to financial institutions. This assortment of debt includes “multiple types of debt” mortgage, home equity loans, revolving credit debt, auto loans, fixed loans, asset based loans, and even student debt. From Buy Now Pay Later it is understood that, in the twentieth century, spending on consumer durables rose exponentially. Household debt evolved because of wanting an array of durable goods (commodities) by any means necessary as time progressed. This included many luxury substances that were major durables like high-end electronics, vehicles, and appliances, that were purchased with credit. The difference was that in the 1920’s American households lived within their means and only owned the minor durable goods that were truly deemed a necessity. Olney from Buy Now Pay Later stated, “That household debt was brought to economics because of a consumer durables revolution that was in the 1920s .” With families focusing on their wants household debt climbed. This was in reference to the allocations of the breadwinners’ income as well. Therefore, households had Irresponsible consumption behavior by purchasing short term… instead of long term conservative action like saving and safer investments. This contributed to the fact that 42 percent of income savings dropped. In addition, the amount of money it took to own goods increased after World War I and income was not directly proportional so once again household debt was incurred. In the 1920s and 1930s companies adapted to finance charges as an extent of credit financing. From Buy Now Pay Later Olney expresses, “That sources of constant price expenditures that purchases were more expense between 1919-28 than 1909-18 and continued to grow through post World War II years .” In respect to the 1920s, the consumer revolution involved spending hence household debt and credit availability, which added uncontrollable consumer spending and financial hardships.
Haliassos, Michael. Household Portfolios. Second Edition Ed. Steven Durlauf and Lawrence Blume. Palgrave Macmillan,2008 The New Palgrave Dictionary of EconomicsOnline..Palgrave Macmillan. 9 Sept. 2011.
Bertola, Guiseppe, Richard Disney, and Charles Grant. The Economics of Consumer Credit. Cambridge: The MIT Press, 2006. N. pag. Print.
Agarwal, Sumit, and Brent W. Ambrose. Household Credit Usage. New York: Palgrave Macmillan, 2007. N. pag. Print.
Olney, Martha L. Buy Now Pay Later. Chapel Hill Ans London: The North Carolina Press, 1991. Print.
Schutz, Howard G., Pamela C. Baird, and Glenn R. Hawkes. Lifestyles and Consumer Behavior of Older Americans. New York: Praeger Publishing, 1979. Print.
Kasser, Tim, and Allen D. Kanner. Psychology and Consumer Culture. Washington, DC: American Psychological Association, 2004. Print.