Americans spent 1 in 7 of their take-home dollars on debt payments last year, up from 1 in 9 in 1980. Experts say few consumers are able to calculate the true costs of such payments. Behind closed doors, the decisions that families like the Moellerings make about their debt – when to pay it off, when to shuffle it to lower-interest sources and when to let it revolve and build – can determine how much their salaries are worth. Like many others, the Moellerings have run up avoidable penalties and occasionally spent themselves into more debt or higher interest rates, even as they have tried to juggle other balances to bring down their monthly payments. This spring, they allowed a reporter to see how they struggled with these choices. Christine Moellering’s laundry basket recently included more unwelcome news: $2,693 due on a Visa card through her credit union, including finance charges of $25, and $13,680 on a CashBuilder Elite Visa, including a monthly finance charge of $200. Their credit card debt came to $22,228, including $380 in monthly finance charges. Interest varied from 12.1 percent to 32.24 percent. The Moellerings also have a mortgage of $93,000 and a home equity loan balance of $68,574, at 8 percent interest. “We have friends in the same position,” said Christine Moellering, who earns $30,000 a year as an administrative assistant. “One was off his insurance for a couple weeks and he broke his arm, and they’re out $25,000 or $30,000. We’ve talked to them about it. It doesn’t matter what you do, you always have that credit card debt.” YPSILANTI, Mich. – On a recent evening, Christine Moellering, 40, sorted through the plastic laundry basket where she keeps the family bills, statements and coupons. “The Sears one is 32.24 percent,” Moellering said, reading a credit card statement with a balance of $5,955, including $155 in monthly finance charges. The high interest rate took her by surprise. “That’s nice,” she said sarcastically. Shuffle credit cards Moellering and her husband, Mark, 39, earn average salaries for their age (together about $66,000 a year), live in an average-priced home and have an average cost of living. But like many other households these days, they have found that their day-to-day economic life has come to depend not just on how much they earn or spend, but also on how well they shuffle what they owe among a broad array of credit cards, home equity loans and other lines of credit. Credit widespread Just a generation ago, financial profiles like the Moellerings’ would have been unusual. But changes in federal regulations since the 1980s, along with consolidation in the banking industry and changed consumer attitudes toward borrowing and saving, have made credit more widespread, more heavily marketed and more confusing, with offers of more credit – at low rates – extending to even the least reliable risk. In 2006, the industry mailed out nearly 8 billion credit card offers, up from 3.5 billion in 2000. Credit card debt, less than $8 billion in 1968 (in current dollars), now exceeds $880 billion, more than tripling since 1988, adjusting for inflation, according to the Federal Reserve Bank. Penalty fees alone cost consumers $17.1 billion in 2006 – up from $12.8 billion in 2003, adjusted for inflation, according to R.K. Hammer, a bank card advisory firm. At the same time, as banks have moved from fixed interest rates to variable rates, the ability of borrowers like the Moellerings to move balances from one card to another, or from credit cards to lower-interest home equity loans, can have as much impact on their finances as whether they get a raise or trim household expenses, said Greg McBride, senior financial analyst at Bankrate.com. Especially since 2001, McBride said, as home values have increased and interest rates have dropped, home equity loans have enabled families to carry more debt – to buy more things – at lower cost. “It’s a whole change in what we consider normal now,” said Vanessa G. Perry, an assistant professor of marketing at the George Washington University School of Business. “Not only has the total amount people borrow increased, but the number of instruments we borrow on has increased. An average family has a mortgage, home equity loan, various credit cards, a car loan, maybe a student loan.”160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set!
1 Arsene Wenger believes it is Luis Suarez who is making Barcelona tick as he prepares his Arsenal team to face the reigning European champions on Tuesday night.The Uruguay forward scored his 41st goal of the season in Barcelona’s 2-1 win over Las Palmas on Saturday and is part of a formidable attacking trio at the Nou Camp, alongside Lionel Messi and Neymar.But, if things had worked out differently, the 29-year-old could have been running out for the Gunners on Tuesday after the club failed in a bid to sign Suarez from Premier League rivals Liverpool in 2013 before he moved to Spain 12 months later.While Messi, the world player of the year, and Neymar will again command attention at the Emirates Stadium – arguably more eyes will be on Suarez following his stint in England and the history of the failed £40million plus £1 bid lodged by Arsenal.And Wenger, too, feels Suarez has brought something new to Barcelona which has helped them to reach new heights under Luis Enrique.Asked if he ever thinks ‘what if’ he had signed Suarez, Wenger replied: “Not now. It happened to me before but not now.“He’s a player there and we have to keep him quiet on Tuesday night. We have to analyse what we do and do it well and together. Individually all their players are difficult to stop. We have to find a way to do it collectively.“Camaraderie. I believe Suarez gives that to a team. He did it at Liverpool, he did it playing with Edinson Cavani and Diego Forlan (for Uruguay) and did it well.“Suarez is the kind of guy who manages to create that spirit in teams. I believe that apart from the individual talent the three have, they have a good understanding and cohesion.“They have a great solidarity. I have seen that Messi gave the ball to Suarez (from a penalty) because he wanted him to be the best goalscorer.“When you see someone like Messi, who could score his 300th goal, give the ball to Suarez when he had the opportunity to score goal 300, that means there’s really something in there.”While Suarez slipped through Wenger’s grasp, the Arsenal boss did manage to get his man from Barcelona as he signed Alexis Sanchez in 2014.The Chile international has been one of Wenger’s key men since his arrival but has struggled to rediscover his form of late after missing the festive schedule with a hamstring injury.Wenger admits the 27-year-old is still feeling his way back but insists he will be ready to show his former club what they are missing over the upcoming tie after another lacklustre display off the bench in Saturday’s 0-0 FA Cup draw at home to Hull.“Don’t worry about Tuesday, he’ll be tuned in,” he said.“I think it’s more focus. Sanchez – I don’t think he was completely ready to come on. It looked like that but he grows with the game.“He has a game based on risk and so when he’s not completely, completely highly tuned in it becomes dangerous.”Sanchez is likely to start the game on Tuesday while the likes of Petr Cech, Aaron Ramsey and Mesut Ozil are also set to return having been rested completely at the weekend. Luis Suarez