Too Buried to Buy

(article courtesy of Realtor Magazine)

In a warning that has implications for home sales, a coalition of public advocacy groups says widespread "anti-thrift" institutions are eating away Americans' ability to manage their financial destiny.

Payday lenders, rent-to-own merchants, and check-cashing outlets, among other businesses that once operated only on the margins of society by catering to cash-strapped households, have gone mainstream and today have tens of millions of Americans locked into spiraling debt at extremely high interest rates, the coalition says.

Revenue growth at payday lenders that charge interest rates equalling annual percentage rates of more than 300 percent has exploded, reaching $28 billion in 2006 from less than $1 billion in 1998.

Lotteries, which are hugely popular with states as a way to generate revenue without raising taxes, are adding to the woes with games targeted at the heaviest users ___ disproportionately those with the lowest incomes.

The result includes more than a fifth of households saddled with consumer debt exceeding 40% of income, a quarter of college graduates owing more than $20,000 in high-interest private debt, and one in seven households either filing for bankruptcy or seeking help from a credit consolidator this year.

"Millions of Americans who might join the class of savers and investors are not being recruited into a burgeoning classs of debtors and bettors," says the report.

Copies of "For a New Thrift: Confronting the Debt Culture" are available from the Institute for American Values at www.americanvalues.org.

(Editor's Note); Let's add gambling casinos to this mix, too. I have long felt that this industry preys on the down-and-out, the type of person looking for that one lucky roll of the dice.