`Maxed' Charge Cards and Other Red Flags
Rosen, Jan M., THE JOURNAL RECORD
By Jan M. Rosen
N.Y. Times News Service
"Do you know what the No. 1 sport in America is?" Jerry Mason, a professor of consumer economics at Texas Tech University in Lubbock, likes to ask.
"Football," says one student. "Baseball," says another.
"No, it's going to the mall," Mason replies. "People want that lift they get from buying something."
He has another question.
"How many people do you know who have a two-car garage who actually have both cars in the garage?" His point: Americans are acquisitive; closets and garages are full of impulse purchases, many unused. For many "credit cards are maxed out," and creditors are demanding payment _ particularly during the holidays.
Scott Simpson, a financial consultant for Minneapolis-based Employee Advisory Resources, which serves 550 corporate clients with 950,000 employees, confirmed the trend.
"Bankruptcies are up, and the size of credit-card debt has gone up," he said. "It used to be $30,000 or $40,000 was high. Now we are seeing people with $60,000 _ even $100,000 on 10, 20 even 30 credit cards from all levels of employment _ managers and vice presidents of companies down through the rank and file."
They and other experts interviewed cited a number of reasons for consumers' growing debt. Layoffs and salary freezes have left many short of cash, worsened in many cases by big home mortgages taken out in better times. But fundamentally, they said, people simply lack the knowledge for handling ready credit and get overextended, often to salve emotional needs.
"Financial literacy is very low," said Professor Tahira K. Hira of Iowa State University in Ames. "The point is not how much money you have; it is how you manage it. I have seen highly educated people _ lawyers, doctors, top executives _ and they are spending more than they earn. …