After the recession, many Americans began cutting back and slowly chipping away at their household debt. Unfortunately, this noble effort seems to have tapered off, according to a new University of Michigan study. In fact, according to the study, one in every five households now owes more in credit cards, medical bills, student loans and other debt than they have in savings and liquid assets. The proportion of families without any savings at all rose last year to 23.4%. In 2009, it was at 18.5%.
Despite signs that some housing markets are improving, the overall trend is for home prices (and values) to keep dropping—and dropping. As values shrink, more and more homeowners find themselves underwater, the unfortunate scenario in which one owes more on the mortgage than the home is worth.
One of the leading proponents of strategic default—a.k.a. walking away, even when you have the money to keep up with mortgage payments—says there are three situations in which it’s actually a good idea to keep paying the mortgage.
Strategic mortgage default has “really been a blessing,” says one Florida man, who stopped making payments last summer. His mother, who lives a few blocks away, has been in default since the spring of 2008, and says, “the longer I’m in foreclosure, the better.” They both pay a lawyer not to actually help them keep [...]
For quite some time, there was no shortage of indicators pointing to the fact that the economy wasn’t doing so hot—including some odd data about a falloff in men’s underwear sales, a rise in animals being abandoned at pet shelters, and the impressively overqualified status of this year’s census workers. Now, at long last, we’ve [...]
