Dear MEL Topic Readers,
Affordability is in crisis. The solution: You’ll never own anything
again
Unless you can afford to buy anything you need with cash, you ought to
borrow money, including mortgages, auto loans, student loans, and credit cards.
Because of the continuing inflation pressure, the American people owe more money
for longer. For example, the auto industry now offers seven-year car loans, in
addition to typical three-year or five-year loans. Also, the Trump
administration recently proposed a 50-year mortgage to lower the
monthly payment. Indeed, the longer you borrow money, the lower the amount you
pay monthly will be. However, you’ll bear greater interest payments in total. For
example, if you buy a $400,000 house at an annual interest rate of 5%, your
monthly mortgage payment would be $2,147 with a typical 30-year term, but it’ll
be $1,749 if you pay in 50 years. It looks rosy up front, but the borrower will
pay $650,000 just for the interest, $276,000 more than a 30-year mortgage. Also,
you are likely to keep paying the mortgage after retirement.
Recently, credit card debt rose nearly 6% from last year, and the rate
of those who entered serious delinquency exceeded 3% in the US. Those who
cannot bear any higher monthly payment tend to choose longer-term loans or use “Buy
Now, Pay Later” (BNPL), which simply increases their debts. Why do you buy
things or services you cannot afford?
Read the article and learn how consumer debts are increasing in the
USA.
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