Just Keep Spending
It's not the best idea to borrow against my home anymore, eh? Alright, I'll have to get 7 new credit cards… Seriously, how long can we keep spending like this?
Daniel Gross shares some interesting statistics in his Moneybox column:
"Americans spend everything they earn and then some. During the housing boom, people used home-equity loans to pay off or replace credit-card debts. The Federal Reserve's most recent consumer credit survey shows that between 2002 and 2005, revolving credit—i.e., credit cards—grew at only 2.6 percent per year. But now that it makes less sense to borrow against their homes, Americans are funding their consumption the old-fashioned way: with revolving credit. In the second quarter of 2006, revolving credit rose at a robust 8.3 percent annual rate."