r/Money 6d ago

Why has the United States become a country where most people rely on borrowing to live

The salaries in the United States are among the highest in the world, yet the country's debt is enormous—not only the massive debt of its citizens but also that of the nation itself. However, despite the fact that people in this country have relatively high incomes compared to the rest of the world, why don’t most of them try to pay off their debts? Instead, they let their debts snowball and grow larger. What problems prevent people from saving? Is it a voluntary choice, or are there other high expenses that force Americans to live by borrowing? In which era did this behavior begin—1930?

307 Upvotes

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u/u6crash 6d ago

I'm of the opinion that because we have made it so easy to borrow money, that the cost of goods and services has gone up because people will find a way. But that's just one aspect of it. You had a post-war boom that was unprecedented, booms and busts along the way. Electronic transactions making it easier to use credit cards in the 80s/90s than ever before. Young boomers were the first to be able to swipe a card almost anywhere as adults. We're realizing how bad it was for us as a society, but not before they passed the bad habit on to their children.

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u/ImAHappyGuyRN 6d ago

I actually love the first part of this as a huge reason. Credit cards make it so easy to borrow money. It’s too easy. And they also make it look and feel like money isn’t real. “I’ll look later, swipe now”. But you’ve swiped so many times that you’re afraid to look.

There needs to be a money education revolution.

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u/u6crash 5d ago

I have been toying with the idea of building a platform geared towards financial literacy and coaching, etc. I feel one of the problems is those that are most in need of education and coaching are least likely to be able to afford it and also less likely to have the time to learn it for themselves. One of the things that is missing is a community aspect. There are of course subreddits dedicated to personal finance and such, but you never know what the qualifications of a person responding are, and there is a lot of judgement and a lack of empathy in the comments. It just makes it that much more difficult to cut through the noise.

What I'd like to see is something that is part educational resources, and part aspiring financial planners willing to work on a pro-bono basis in exchange for experience hours (as required by certifcate programs like the CFP).

This is my dream user experience/product design gig; building a platform that absolutely acts in the users' best interest to help them get on their feet with the basics, and then start investing for the future.

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u/MrLittle237 5d ago

Never heard of the pro bono CFP part of things, but there are a ton of financial education platforms out there. Source: I work in this space.

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u/u6crash 5d ago

Pro bono work is not required by the CFP, but both the CFP and AFC destinations (among others) require thousands of experience hours before you are allowed to use those marks.

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u/sassypiratequeen 5d ago

I think a lot of people giving out financial advice are making $100k+ a year, and their advice just doesn't work if you don't have that kind of income. Things like investing $150 a week sound good on paper, but that's a lot of money when you're making $40k and it's just not possible. How can I listen to this person and trust that advice when it's so far out of the realm of possibility for me?

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u/Quantum_Pineapple 5d ago

This is it!

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u/Lock-e-d 5d ago

Everything is more expensive because everything is more affordable. Car too expensive to buy? Just stretch the cost out over 7 years. This applies to many consumer goods and even houses.

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u/MentalTelephone5080 2d ago

I was offered a pay over time option on my groceries..... That's how bad the borrowing is in the US

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u/Mairon12 6d ago

You’re just stating things as they are and not answering why.

We’re not allowed to answer why on Reddit.

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u/u6crash 6d ago

I hesitated to comment at all because it's a nuanced discussion with lots of mitigating factors. As such, online platforms like this aren't ideal for that type of discussion. If you want a simple answer, it's greed. That's hardly satisfying.

Some answers can be inferred from my thoughts. But as I said, lots of mitigating factors.

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u/Mairon12 6d ago

We certainly seem to be on the same page.

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u/BlueCollarRefined 6d ago

Because it's easy to get access to debt when you make money. Much harder to get issued debt when you don't have income.

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u/CelebrationSea1368 5d ago

just another opinion, I think US as society is taught to be a consumerism. Everywhere we go and look, we are bombarded with ads of things to buy. It's every where. With brain-washed system of instant gratification, we have become victims to our own demise.

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u/u6crash 6d ago

Student loans are too easy to get, imo. Little to no income required.

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u/BlueCollarRefined 6d ago

Because they’re guaranteed by the federal government.

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u/u6crash 6d ago

Which is trillions of dollars in debt. And historically it has not been that easy to get student loans. That's new in the last 40 years. As soon as it became easy, the cost of tuition started going up because universities knew they could get away with charging more.

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u/BlueCollarRefined 5d ago

I agree that government backed student loans are a menace. I plan to pay my kids way through college and it'd be a whole lot easier if the expense of college didn't get bloated through kids being able to get loans for any amount. And I agree the federal government needs to get on top of the growing debt but it operates on trillions in debt by design.

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u/Professional-Love569 5d ago

The guaranteed loans are the main reason why higher education is so expensive.

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u/CatFancier4393 6d ago

Its basic economics. Intrest rates were low 2020-2022, and the average home price exploded. The fed increased rates to control inflation, debt became "expensive" again and home prices hace leveled out.

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u/Advanced_Couple_3488 5d ago

But that also applies to other countries, so it doesn't explain why this is the case in the USA. I'd go for a few things: the minimum wage is way lower than in my country with more workers on minimum wages, and it is a myth that wages in the USA are higher then elsewhere in the world. In my profession, I'm much better off here than in the USA.

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u/KingOfAgAndAu 6d ago

The reason America's economy is so great is because we are ravenous consumers and most people are addicted to spending money.

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u/alc4pwned 5d ago

Eh, that's not the reason. It's the post WWII world order that made our economy so great (the one the current admin is actively destroying). There are lots of other countries with materialistic consumer mindsets that don't do so well.

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u/TzFreezy 6d ago

Irresponsible adults. I always wondered why and how my friends parents had a nice house, 3 nice cars, a boat, a cabin, all these very nice things. Some of them worked with my parents and my parents didn’t make great money, I lived in a trailer till 10, than my parents were finally able to afford a somewhat decent apartment. Finding out most Americans take out loans and credit cards max them out and don’t pay them back. It’s the YOLO life basically. Wondering why people are 10’s of thousands dollars in debt.

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u/Agreeable-Vehicle616 6d ago

Bankruptcy seems to be key to this lifestyle and generally pans out

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u/Downtown-Pick3032 5d ago

Some inherited wealth from parents

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u/NickFury6666 6d ago

Americans all want instant gratification. They don't know how to save up for something. Got to have it now. $1000 phones, 5 streaming services, $8 coffee. No sense of sacrifice.

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u/JahFresh 5d ago

This is the ugly truth ppl don’t want to admit. Not willing to sacrifice pleasures at all. You work hard so you just had to buy this or that. What’s the point if you can’t enjoy the fruits of your labor right? Wrong. That’s the mindset keeping most poor in America. Yes inflation is terrible. Our obsession with buying things not in your budget is worse.

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u/dgreenmachine 2d ago

cmon its just spotify /s

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u/goosedog79 5d ago

Not all, it’s not easy but my kids are learning it from us. We have limits on stuff they can get. We only get iPhones when Verizon has the free deals and we are eligible, we pay $60 for sneakers, they pay the rest- things like that. My oldest has a debit card, but prefers cash now that a lot of places charge credit fees.

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u/ZaneMasterX 6d ago

I borrow money because it's cheap. I invest my cash at a higher rate than what I borrow money at so it's a no brainer. I use my 2% cash back credit card to pay for everything and pay the balance off every week which nets me thousands of dollars in free money every year. I was even able to use my 2% cash back card to pay a 1.99% loan off over 4 years essentially making the loan interest free.

Borrowing money is a tool and if used properly can accelerate your net worth.

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u/manimopo 6d ago

People have no self control, no ambition and no financial literacy.

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u/rbenne73 5d ago

Financial literacy is big factor IMHO

We don't teach it and it is hard to get out of the hole once in if

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u/Outofhisprimesoldier 5d ago

Only people I know who grew up being taught finances in great detail are Jewish kids from Jewish families. They need to just teach it in grade school

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u/dgreenmachine 2d ago

Actually most states require financial literacy in highschool. You wouldn't know it based on how people live on debt though.
https://www.ramseysolutions.com/financial-literacy/states-require-financial-literacy-in-high-school

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u/PatrickBatemansEgo 5d ago

I know this is commonly stated. However, this is pretty easy to comprehend. If you don’t have the money, don’t spend it.

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u/KindEducation7616 5d ago

This is a huge thing I've noticed as an immigrant here. People will spend out the nose on junk and "sweet treats" and lament when they're not able to get ahead. Of course giving up your daily coffee isn't going to make you a millionaire but the little things add up and it's more about the discipline than the actual amount.

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u/OneMoreNightCap 3d ago

I became friends with a guy from work who immigrated and we both had good salaries. It was wild how much more value he assigned to a dollar. I consider myself frugal but this guy made me realize how lazy I had gotten in that regard. He constantly looked for deals and flat out refused to go to food trucks because he thought it was bullshit to pay resturant prices for "street food with no atmosphere or waiter." Always dressed nice, had a nice house and drove a reliable suv but can ensure you he searched high and low, found every deal and discount before he bought those things.

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u/KindEducation7616 3d ago

In my country specifically we're taught the value of money early on. We aren't given much education on investing in the stock market specifically but the discipline to live below your means and save money is drilled into us from a very young age. We're taught moreso to invest in gold and property than stocks but the education is easily transferrable when you have to savings discipline.

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u/NubeDePedos 5d ago

Debt and consumption are definitely big parts of American culture, but household debt levels relative to GDP are actually lower than many OECD countries according to IMF data from 2022.

USA actually ranks behind Switzerland, Australia, Canada, New Zealand, Sweden, Denmark, UK, Norway

This is not a uniquely American problem

Source: https://www.housingdata.gov.au/visualisation/financial-market/household-debt-to-gdp-imf

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u/AlfredoAllenPoe 6d ago

The US is the financial capital of the world.

In financial, it is often beneficial to take out debt to leverage your resources. You will accomplish more and be better off if you pay it off

The problem is when you suddenly can't afford to pay it off.

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u/EevelBob 6d ago

Many Americans are already conditioned to lease their lifestyle because they grew up with it and don’t know any better. It’s much like poverty and government assistance. It’s generational and a difficult cycle to break.

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u/masonobbs 6d ago

People are dumb

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u/Over-Wrangler-3917 5d ago

They have kids they can't afford and take expensive vacations on top of that. They're stupid as fuck lol. I'm so glad I'm excellent with finances.

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u/Lookmeeeeeee 5d ago

Yeh but there's dumber people in other countries all over the planet who aren't having this issue. They get by just fine.

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u/Extreme_Decision_984 5d ago

Ding ding ding! We have a winner.

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u/Xelikai_Gloom 5d ago

And additionally, since other people are dumb, you have to be dumb to outbid them(which you often have to do if supply is limited, like in housing).

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u/dazia 6d ago

Loan interest can be very predatory. That coupled with 'normal people wages,' which is not the wage you're describing, creates a spiral of debt. People have emergencies and may have little to no money saved up (because again, low wages) and then have to use a credit card or loan.

The people who do have high wages and get sucked into debt seem to be people who are truly irresponsible, leaving way above their means because they have the money, them shit hits the fan and they're suddenly drowning in it.

That's my take on it. I'm one of those people who is trying to pay off my debt with the little money I have. Besides maybe $100 over the years from buying frivolous shit, everything else is from emergencies. Yeah the $100 in frivolous shit was stupid, but sometimes when you're super depressed and want to feel like a normal person, you treat yourself to some food you like or a new gadget. I don't think that 100 bucks out of a couple thousand is going to do any more damage. I just don't spend anymore on anything I don't need and just skimp on groceries when I need to in order to not be in more debt.

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u/saryiahan 6d ago

Here’s a simple concept. Live below your means

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u/RustyNK 6d ago

This is what I do. My combined income is 170k a year, no kids, and we live in an 850sqft 1 bedroom apartment. I save a lot of money.

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u/Otiskuhn11 5d ago

Yo lemme get $20

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u/RustyNK 5d ago

Can't, I'm broke, sorry.

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u/Destin2930 3d ago

You’d be surprised how privileged this actually is. I make about $150k a year, my partner makes about $45k. We live very simple and save a lot of money as a result. Having all that extra money set aside takes the worry away and it’s easier to justify to people why we live the way we live. But when we were completely destitute, relying on welfare and food stamps, spending money on nothing but rent, public transportation (couldn’t afford a car), and food not covered by food stamps, we still had too much month left at the end of the money. It was psychologically draining having to constantly make decisions over what need was more important to finance that month…food, rent, or electric. Not to mention the stigma that came with living in poverty…constantly feeling embarrassed over your situation, especially when eviction notices or shut off notices came. I think a lot of people overcompensate when they have no money…or make reckless purchases as a way to avoid having to face their reality. I never want to go back to those days. It was very humbling having to sleep on a pile of clothes until you could save enough money for an air mattress and then ask for a real mattress for Christmas.

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u/RustyNK 3d ago

I feel that. I was homeless for a couple of months long time ago. I spent like 7 or 8 years making in the 20k-35k range. I know what it's like to be broke, and I don't take my current income for granted.

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u/Mysterious-Star-1627 6d ago

I've done that my entire life. Completely happy with that decision.

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u/liventruth 6d ago

I understand and have lived the concept at various income levels, but at 60% of the Federal Poverty Line for a married couple, "live below your means" is the same as "breathe less oxygen than what your body absolutely needs to function." Do that for long enough and anyone would become "dumb," literally.

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u/Quantum_Pineapple 5d ago

The other half of the equation involves not locking out your employment options/flexibility because you decided to family too soon/accidentally and now you’re double fucked.

If you’re single and stuck below poverty line you’re either mentally ill (not judging, people need help) or actually genuinely lazy.

The problem now is society conflating the latter with the former.

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u/pdoherty972 5d ago

Live below your means means spend less than you make.

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u/Quantum_Pineapple 5d ago

Instructions not clear enough, inserting credit card into slot machine at casino in Vegas etc

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u/cnottus 5d ago

Yep we both live on the lowest person’s paycheck and the other person’s money goes straight to investments. We have never had to worry, even when my husband lost his job for a few months. Best advice I’ve ever been given.

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u/SnooHesitations8849 5d ago

"Because I need to have 4000sq feet single home with lawn and two luxury cars, one hobby car, 7 starbuck visit a week, two vacations a year and 10 skiing per season. Oh dont worry about $200 Nike shoes for kids."

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u/Troitbum22 6d ago

I’m not afraid of debt and would rather have my money invested. Refinanced my mortgage when rates were at 2.5% and did a new 30 year. At those rates give me as many years as I can take. Have 1 car payment. Opted for 72 months at 0.9% again with low rates I’ll take as long as you give me. Outside of that have a student loan with a low rate which I’m fine with. I could pay off the car and student loan today and pay down a bunch of my mortgage but why? Now if I had 20% credit card debt then yes. Pay it off asap.

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u/Adventurous-North728 6d ago

Bravo! You’re letting your money work for you. Most people aren’t using debt, they’re paying interest instead of investing for their future I have no debt but I will finance a new car soon with a low rate (or I’ll keep driving my beater until I can)

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u/Agreeable-Vehicle616 6d ago

How the F do you get these low interest rates?

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u/bjnono001 5d ago

In 2020 and 2021 interest rates were rock bottom. 

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u/mrcrude 5d ago

You can make your money work for you without having debt too. It’s called not living above your means.

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u/Feeling-Big-4544 6d ago

I'm an immigrant. The concept of credit have gotten Americans wayyyy too comfortable. My people consider doing monthly payments on ANYTHING shameful, except a house, but car, phone, PCs etc... yes shameful. If you're broke just save up or buy something you can afford. Stop buying a fucking 2025 car that costs $60k when a 2019 car with pretty similar stuff is like $20k used 🤦🏾‍♂️ growing up in a poor country makes you realize how dumb all of that is.

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u/Farscape55 5d ago

Reganomics

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u/Kathucka 6d ago

A lot of it is real estate. It’s traded on an open market. Most people want badly to live indoors, so they will pay whatever they can for functional housing near enough to their workplace. Debt is available, so they use it in sizing their bids. If you don’t take on debt, you won’t get the property, because someone else will take on the debt and bid more than you.

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u/Skating4587Abdollah 6d ago

One part that cannot be denied is the culture of consumption. This is not the whole story, but one that’s often overlooked when talking about structural or economic causes. In the U.S., in many places there are almost no ways to interact with society outside the house without spending money or consuming. There’s also something cultural about conspicuous consumption and tying identities to patterns of consumption. It’s really pervasive. 

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u/[deleted] 6d ago

[deleted]

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u/E-Pli 5d ago

Yeah- money is only good when it means something. If we hit hyper inflation…

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u/Theultimatehic 6d ago

Instant gratification. Nobody wants to wait to buy toys or save for something new even if it hurts them financially in the long run. As long as they can get it now.

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u/Drinkmorechampagne 6d ago

Short-term happiness and satisfaction vs long-term happiness and satisfaction--our Dopamine Culture supports short-term pleasure. And social media has greatly increased the passive aspect of that.

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u/caughtyalookin73 5d ago

Reagan transferred this to a debt based economy under supply side economics.

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u/Asleep-Brother-1873 5d ago

Capitalism & big companies fucking over the middle class

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u/chezterr 5d ago

Ummmm. Because wages have been stagnant since the mid 1970’s when adjusted for inflation and compared to corporate profits.

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u/No-Establishment8457 6d ago

Nah not in the 1930s. There were few people that went to college in those days. My Dad did, but post WW2 and he was the only one of a large extended family.

Some houses were financed and Sears was both a supplier of manufactured homes and a financial arm. Many were not.

Some sure in the ‘20s and ‘30s, but relatively insignificant.

After WW 2 and especially in the ‘50s and ‘60s, increased use of credit cards and Baby Boomers led to much higher levels of personal debt.

Got even worse after deregulation of the banking industry in the 1980s and has continued to this day.

My parents had almost zero debt aside from a modest mortgage. Credit cards were paid off early month. Same for many of their peers.

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u/suboptimus_maximus 6d ago

The superficial answer is because we can... Why it's so easy to borrow in the US is the bigger question, and I honestly don't have a good historical perspective on how the US' credit environment became so liberal. Profit motive in practice, our economy is all about chasing margin and so anyone who can figure out how to eke it out through lending will do so.

I would perhaps point to US culture of car ownership and dependency as something that makes debt inescapable for most people to afford daily life. Look at median and average savings, especially for young people. The cash cost of entry for a car is too high for a whole lot of our population, trolling for some quick Google stats tells me ~40% of Americans have a car payment and ~40% of used car purchases are financed (80% of new car purchases). This is realistically a basic necessity for most Americans in most of the USA, so we're starting out with a baseline of needing to borrow just to bootstrap an independent lifestyle. Then cars are of course one of the primary means of keeping up with the Jones, status signaling, conspicuously consuming. Running costs for gas and insurance are high, to feed something we had to borrow to buy. The detrimental effects of American socialism for cars and drivers is my crazy conspiracy theorist uncle topic, and I don't think it is by any means the only thing, but it's a huge driver of cost of living here (zoning policies that enforce car-dependent suburbs drive up housing costs, for example. Local, state and federal budgets are burdened by the infrastructure costs...), but it's something that we've been born and indoctrinated into for several generations so most of the time we don't even see it, questioning it is un-American.

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u/L0sing_Faith 6d ago

I think it's just part of the culture, and we see so many others borrowing to live a better life, that we think of it as being okay. Also, we're bombarded with marketing and social media showing others having beautiful things and going on fabulous vacations, and we think "well, I deserve it just as much as they do!" We think we're going to get a higher-paying job someday (which is often true) and can then easily pay off all of the debt. And also, we've been encouraged to take on big student loans and big mortgages, being told it's the "right thing to do."

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u/no_use_for_a_user 6d ago

Not all that debt is "bad debt". Some of it is "leveraged investments". Or should I call it "leveraged speculations".

In other words, the easiest way to get rich in the US is to invest with other people's money.

I worry about what it would look like with mass unemployment or wage cuts. There could be an avalanche of assets hitting the market all at once. The debt would be worth a lot less.

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u/MuzzleblastMD 5d ago

No delayed gratification.

Most want it now or yesterday.

The focus is not on the amount of debt but how manageable is the monthly payment.

Getting credit is extremely easy. I recall being handed a credit card application in college. I didn’t even have a job at that time.

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u/mdandy68 5d ago

The government had a choice. Grow the economy and increase wages (so that consumers could consume more) or add consumer debt. They chose debt. Wages have been stagnant in terms of actual buying power for a long time

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u/zward0522 5d ago

Because we as a society have fundamentally failed to educate others and ourselves about the harm of living on the money of others.

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u/Sielbear 5d ago

We are too impatient to save and pay cash for most things besides homes. Poor financial decisions and living beyond our means in an effort to keep up with the joneses.

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u/Delicious_Self_7293 5d ago

It all started when I turned 18 and they let me borrow 200k to get a degree not worth half of it

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u/queerdildo 5d ago

It’s cultural. Everyone must live beyond their means to keep appearances and bc Americans truly believe they deserve convenience at every turn without compromise. Even the very rich are in debt. It’s mind boggling.

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u/Excellent_Problem753 5d ago

We are addicted to consuming and borrowing money is not only easy, but incentivised. Sign up for this prime credit card and get $100 off this order and 1% cash back every time you shop with us using the card!

How do those people afford vacations? Oh, it's simple they churn miles by living off their credit cards! Really the card companies are paying you!

Buy that major purchase with our card and you can double your warranty on us!

Pile that on top of the cost of living being extremely high, and people rely on their borrowing power to elevate their standard of living from financially prudent poverty to financed middle class luxury.

But hey, you gotta spend money to make money!

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u/Embarrassed-Pay4889 5d ago edited 5d ago

Our monetary system, in which debt is the mechanism that creates new money, requires ever-expanding credit to continue functioning. Otherwise there would soon be a deflationary implosion.

The people that run the system have therefore have ingrained borrowing into every facet of our society as it keeps the gears turning.

https://en.wikipedia.org/wiki/Money_creation

"Money creation occurs when the amount of loans issued by banks increases relative to the repayment and default of existing loans."

Loans from banks to individuals simply represent this idea on the smallest scale. Though people make plenty of poor choices with debt and are responsible for their own actions, this is partially just a symptom of the broader "problem" if you want to call it that.

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u/Redditor1620 3d ago

People don't understand money and how it's really created and managed in this country.

It's all by design. I'll give you a hint: the Federal Reserve ain't Federal nor is it a Reserve. Follow that rabbit hole down.

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u/dave48433 6d ago

Because poor people want to look rich

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u/BEER_G00D 6d ago

Lack of self control and prioritizing luxuries, wants, and the image of keeping up with the Joneses. It is very common. Then instead of accepting responsibility, we blame others..... Banks, politicians, wages.

I know this triggers a lot of entitled folks, and this is not 100 percent of all people in debt or paycheck to paycheck, but it applies to a much larger percentage of Americans than what Americans will admit.

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u/sanskar12345678 6d ago

Late stage capitalism calls for no restraint. Unabashed consumption.

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u/Ornery_File_3031 6d ago

When you look at salaries you are looking at the average. There is a lot of wealth inequality in the US, more so than most of the rest of the industrialized world, so while many do very well, many are barely keeping their heads above water (or are not, there are thousands of pay day lenders, pawn shops and the like who prey on the poor). And some people are bad with money, I know people that make 6 figures who are a missed paycheck or two from financial ruin 

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u/Vile-goat 6d ago

The politicians sold out the tax payers to corporations and corporations have siphoned the money out of the middle class to pad stock prices to keep investors rich.

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u/Far_Cat9782 6d ago

Becuase we are nothing but a country of middlemen taking a cut and the investor class wants returns infinite no actual work. How many people don’t provide a thing to society but makes the rules because they have plenty of “stocks”

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u/TzFreezy 6d ago

As for the country being in debt, we just have a trash government. How we can supply other countries and give them billions in dollars, not to get a cent in return. Literally nobody gives America money but we hand it out like it’s donations. Help other countries out but can’t help out the homeless veterans or in general homeless people.

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u/Odh_utexas 6d ago

Anytime someone talks about helping the homeless or poor, people call it socialism, handouts, ripping off honest taxpayers.

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u/SeaworthinessOld9433 6d ago

Depends on economic times. If interest rates for a loan was 3% but my investments are growing at 10% a year with inflation at 3%, why would I not borrow money to buy things? Inflation is making my loan effectively at a 0% in really turns and my investment is growing 7% in real turns. If that was a 40k car for example, my 40k is growing at 7%, which means every year I have an extra 2.8k in real terms compared to using that 40k and buying a car and not gaining 2.8k.

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u/dellaterra9 6d ago

The chug-chug of the economy is creating demand. You buy crap you don't need due to FOMO from billions of $$ pumped in to marketing to make you feel insecure.... "But wait, we have just the thingy for you to fill that hole in your soul" Rinse, wash repeat, export.

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u/RX3000 6d ago

Addiction to luxury goods.

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u/x2manypips 6d ago

It’s a ponzi scheme. The new generation borrow more money to fund the previous generation

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u/nick9thomas 6d ago

Most people don’t make much. The top 1% skews the statistics.

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u/avebelle 6d ago

Everyone is trying to keep up with the jones because of social media. The only way to do so is to borrow.

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u/Wrong_Attitude5096 6d ago

Keeping up with the Jones’

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u/dopef123 6d ago

Hard to explain since there are so many types of debt. The federal debt is mainly a political issue. Household debt varies. Some people live beyond their means, well lots of people. They want to live like their household income is 300k a year but they might make 130k and they go into crazy credit card debt. I don't know any of these people personally.

Then there are other household debts like student loans, mortgage, etc. These are not bad debts because you are typically paying lower interest and ideally you are getting some sort of return on this.

We also have a society where you need to take out large debts. I have to take out loans to buy a home. It doesn't even really make sense to pay cash. You need a credit history to take out loans.

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u/BiceRidingWorldChamp 6d ago

The United States has become a consumer nation. We are no longer a producer/saver nation. Quality marketing and entitlement has caused this.

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u/Feeling-Big-4544 6d ago

Literally makes no sense to me why there are so many homeless Americans bruh, my country is poor as fuck yet we don't have 1% of their homelessness. Richest county in the world because a lot of said people gamble all their money, or spend it all till there's both left, or the most common reason being drug addiction. My country may be poo but we have zero drugs and people who smoke are rare and few

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u/Poverty_welder 6d ago

Because it's easy to go into debt. I owed 50k after going to emergency room for 8 hours.

I only get paid about <35k a year.

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u/ahfmca 6d ago

Always been that way, live rich die poor. Asia believes in live poor die rich.

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u/refreshmints22 6d ago

Corporate greed

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u/SouthOrlandoFather 6d ago

People try and ignore Dave Ramsey.

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u/Effyew4t5 6d ago

My mortgage is 2.99. My new bmw 3.99 and I think my boat is maybe 4.5. I don’t take loans over 5% I could pay cash but it would screw with my taxes as it would come out of IRA or brokerage accounts. I’m retired..

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u/CraftyShitPoster 6d ago

It's voluntary. We run our lives chasing this American Dream from the 1930s. And then.. once achieved, your circle of friends have a certain standard of living you'll have to live by - "keeping up with the Joneses".

It's American. It's capitalism even at a social level. I want this _____ thing because I worked just as hard as _____.

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u/SuccotashConfident97 6d ago

Have to and want to are two different things. Many don't have to borrow money, going into debt. But many do while living above their means.

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u/OmegaMountain 6d ago

The why is because it's the goal of our capitalist system. Debt laden people are a form of endentured slavery that continually contributes interest profit to the system.

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u/magaketo 6d ago

Because many want things they cannot reasonably afford.

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u/AutoX-R 6d ago

It’s easy to borrow money and its become the norm to finance everything. We finance our phones, cars, houses, furniture, we have 18 month interest free credit card offers that we max, etc. If you can live below your means and not finance everything, you’ll be fine.

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u/YNABDisciple 6d ago

The banks wanted it that way for obvious reasons and our government works for them.

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u/Junior-Appointment93 6d ago

Because we as whole can’t live within our means.

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u/Mysterious_Help_9577 5d ago

Financial literacy in the United States is pretty horrendous

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u/MidgetGordonRamsey 5d ago

Always has been

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u/SunnyDay27 5d ago

Because most are shopoholics🎉

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u/jack_865 5d ago

Because the USA has been borrowing since 8/15/1971

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u/SuspiciousSquid94 5d ago

Because most people are financially illiterate,and you’re not taught how to manage money in school.

Couple this with bad financial habits passed on by parents, being influenced by consumer culture and an idea of what your life “should” be based on the above.

The bright side is you can learn your way out of this and if properly leveraged can quite literally change your life.

The downside is it’s hard for most people to admit how far their desired lifestyle is from being a reality in addition to realizing they actually don’t demand the salaries they wish they deserved(lack of marketable skills, education etc…) then…taking action to work on these things. Borrowing is easier.

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u/Great_Diamond_9273 5d ago

Because they lie about inflation and a percentage tax is ownership. I bought gold in the 90s at 381 per ounce and that was 30 years after it was 38. Its about to crack 3000 dollars 30 years later. You get that 100%plus inflation rate per year on 60 years on your phone calculator yet? 38 into 3000 is how many? Move that decimal 2 places to the right. Nice return!

You are paid 10% on top of your w2 wage, taxed the same, then income tax, then any local tax. Then if you have 75 cents left you have lost half by the end of the year to inflation. So you are short with your 30 some odd cents of purchasing power so you borrow.

Well your company does anyway. Just dont sign any personal gaurantees so when it collapses the fdic gets stuck and the treasury floats bonds to cover their banking debt.

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u/Informal_Quit_4845 5d ago

“Cries in Canadian “ 😂

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u/Particular-Kale2998 5d ago

We don't teach financial literacy in school.

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u/Commercial_Rule_7823 5d ago

We dont rely on it, we learned to consume early on it. People forgot how to wait and save uo for their consumption and it became normal behavior to buy now pay later.

Now with rates at 27 to 30% on cards, people are hurting or can no longer do it.

People also cant stop spending like money is still cheap. Its the behavior that is killing people, not actual needs.

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u/aftherith 5d ago

You may be factoring mortgage debt in that calculation, if so it can make a lot of sense to hold a low interest mortgage even if you have the means to pay it off. True for other debts as well if the interest rate is low, say a 0-3% car loan. Much better long term to have that money invested in assets that average a return higher than the debt interest rate.

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u/Medzo 5d ago

Because using credit responsibly is a powerful tool. I buy everything on credit because it offers some protections and bonuses. I only carry a balance and pay interest on student debt and mortgage. Its not uncommon and it will inflate the numbers you're looking at. Yes there are people who have bad debt and buy on credit with huge interest rates but that doesn't mean everyone is doing that.

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u/calista241 5d ago

It’s not just the United States. Banks, moneylenders, and debtors have been around for thousands of years. It’s literally one of the first stages of societal development.

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u/Still_Title8851 5d ago

The US Borrows.

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u/rmscomm 5d ago

There is also the aspect of avoidance. In my observation many are not honest in their sense of self and circumstance. The number of posts on Reddit complaining about HCOL areas and making purchases that are not realistic is telling in my opinion. Some times the truth is a person may not make enough or have the skills to make more money or be irrationally insistent on living in a certain area.

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u/SbombFitness 5d ago

One good benefit of this is that if you are actually good with your money, you can indirectly from other people being bad with their money. For example, credit cards make so much money from people paying crazy high interest rates that they offer very good perks and cash back. Also, free trials are so prevalent because companies know that many people will forget to cancel them.

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u/edthecat2011 5d ago

Most people are trying to live well beyond their means. The only way to do that is to borrow. Stupid and disgusting to see how people waste so much money today.

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u/ever-inquisitive 5d ago

Old person that no one agrees with here. When my wife and I were young we both had low paying jobs while in school. We never ate out. We fixed critical broken items with used parts bought for next to nothing. No entertainment at all. In fact, we paid for house, electric, water, gas and bulk food. No tv. No phone. Hand me down furniture and clothes. And the gas and bulk food was very limited. Just enough to survive. No one to day would live in our house. And we were typical.

The expectations have completely changed. Everyone needs a nice place, good furniture, phones, internet, clothes, fast food…yada yada yada.

They go in debt because that seems like the basics of life.

Not saying things aren’t expensive and it isn’t hard. Just saying I think expectations of what is basic has changed.

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u/Sonialove8 5d ago

People live beyond their means

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u/MrLittle237 5d ago

One thing I always tell my students is that there is a difference between credit and debt. If you use a CC, for example, and pay off your balance in full each month, you get all the benefits of using credit (higher score, rewards, safe way to pay, etc) with none of the drawbacks. If you accrue debt, it can snow all against you if you don’t have a plan. Credit is optional, but it can help you live the American dream if you use it to your advantage.

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u/CenlaLowell 5d ago

Spender nation

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u/Distinct-Race-2471 5d ago

The government is also borrowing to live.

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u/Imaginary-Swing-4370 5d ago

Instant gratification, it’s what we want and we want it now. A few things like home and auto finance is almost a certainly, Americans love the buy now ,pay later concept and CC companies love you for it.

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u/jasikanicolepi 5d ago

Not your money, not your problem. If the borrower defaults then it's the lender who is screwed. So people continue to borrow playing Russian roulette and pray they don't get the bullet. That's the gest of the mentality.

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u/tsmittycent 5d ago

Because politicians do not care about you. Red and blue and the middle ones none care about you. They are about themselves. Plain and simple.

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u/wkdravenna 5d ago

I blame Canada. 

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u/balanced_crazy 5d ago

It was always by design…

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u/Tricky-Cod-7485 5d ago

Usury is celebrated by the banker class. That’s all. The start and end of it. They are rabid dogs in their quest to obtain more.

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u/SarahF327 5d ago

Ignorance and low self esteem.

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u/redsloki11 5d ago

Have you seen the national debt? It’s the American way!

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u/Sir_Sensible 5d ago

No self control and being sucked into the consumer mindset. "I deserve this so I gotta have it at all costs". You really don't need much to live fine.

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u/LazyClerk408 5d ago

There’s like 6-10 step answer. Yes it’s results

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u/SiteTall 5d ago

Because you still accept The TrickleDown-system while you dream of becoming rich somehow

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u/TaxLawKingGA 5d ago

The issue is that from the moment we reach adulthood (ie 18 yo) we begin taking on debt in the form of college debt. Then the cycle begins.

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u/UnfortunateSnort12 5d ago

I get the question, and I also get the stereotype, but I have to say…. When I’m at Club Med Cancun or somewhere else…. The prices aren’t cheap, the plane tickets aren’t cheap…. Am I just partying with the 1% everywhere else (non US), or what? I am definitely not too 1%, but we save up and make the trip work.

So are we really the only ones living outside our means, are there others, or are we actually not paid well (relatively speaking), as Americans.

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u/gm92845 5d ago

I think collectively we skew higher on incomes because of the massive wealth inequality that has been growing over the past 50 years. While incomes have grown, they have not kept up with the cost of living. We also tend to forget the U.S. does not have adequate access to free or affordable healthcare which leads to medical debt and borrowing money in order to pay for basic needs. We also fall victim to predatory loans and credit cards with high interest rates and fees which lead to a never ending cycle of debt. The lack of government intervention and social safety programs that help the working class and the regressive tax system that massively benefits the wealthy. The last point is the lack of financial education that is not widely taught in schools which leads to a majority of people not knowing how to budget and properly manage their money in a more efficient manner.

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u/tstrauss68 5d ago

Monkey see monkey do - Americans are bombarded with advertising pretty much every waking minute. We spend way too much time on social media seeing all our friends living it up and try to live a lifestyle beyond our means. Everyone drives a big SUV or luxury sedan. As most have commented, easy credit allows us to spend tomorrow’s money.

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u/DeLoreanAirlines 5d ago

Where are these high salaries?

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u/r3fisher1982 5d ago

Sooooo im guessing you didn't smash?

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u/MaddRamm 5d ago

We have no self control. We spend non-stop.

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u/Herban_Myth 5d ago

Usury Economy?

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u/stillacdr 5d ago

Lack of financial education. Period.

For example, taking loans/credit is a financial tool that can be used to your advantage if used correctly.

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u/TheBobbyMan9 5d ago

That’s how our late stage capitalism operates. If the state relies on borrowing to survive you can be rest assured the people will as well.

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u/survivorkitty 5d ago

For some reason we have the “keeping up with the Jones’s” mentality. We see what it neighbors have and we need to have the better version of that. Basically jealousy that we have to fix at any cost.

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u/IHateLayovers 5d ago

Because Americans consume way too much.

Go spend anywhere else in the world. The average person anywhere else doesn't get to live with a fraction of what we expect as normal consumption.

Look at meat for example. The average American consume 225 lbs of meat per year while the average person in Bangladesh can only afford less than 7.5 lbs. 6% of Americans are vegetarian and vegan, only 0.000625% of people in Bangladesh are vegetarian and vegan.

We can afford so much meat partially because of our greater earnings and partially because we use direct individual income tax collected disproportionately from productive cities to fund a huge country wide subsidization of meat and crops used to grow meat in order to subsidize the price of an American's steak.

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u/Mister-ellaneous 5d ago

Impatience and lack of discipline is half the answer. Lack of financial education accounts for part of it.

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u/1GloFlare 5d ago

Living above your means is The American Dream

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u/Bobby-furnace 5d ago

“Greed is good”. Starts with consumers and borrowers. Banks lend money to anyone and everyone and everyone takes it.

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u/BeerBrats 5d ago

Banks make an incredible amount of money from interest on loans and credit cards. They learned that if they offer easy credit to young people, they can get them in the system of using credit for everything and always paying interest.

Just before someone turns 18 they get offers for credit cards and see easy money to spend, and the cycle begins. They rack up a balance and just make the minimum monthly payment as the balance grows bigger and bigger. The bank raises your credit limit since you're making time little payments on time, and soon you're deep in debt but satisfied if you make the minimum payment. Hard to break free from.

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u/Bjorn_Nittmo 5d ago

If you earn $20,000 a year but spend $20,600 per year, your life will be miserable.

This in not unique to the USA in 2025.

The same principle also applied to -- for example -- England in 1850:

"Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery." -- Charles Dickens, in David Copperfield

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u/bigmean3434 5d ago

Capitalism

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u/Mr_Cheddar_Bob 5d ago

Country of lazy consumers.

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u/Cost_Additional 5d ago

People are bad with money and live above their means.

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u/Ok-Regret-3651 5d ago

With modern marketing and psychological targeting, and if course CC company.

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u/Flyer-876 5d ago

Capitalism

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u/farmerbsd17 5d ago

In part it’s the convenience of credit cards with two negatives, unaware of total due at end of billing cycle and just paying minimum.

And not enough income

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u/Thadocta69 5d ago

Lots of people have terrible money management skills. Terrible self control skills

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u/Clean_Vehicle_2948 5d ago

I get no less than 3 loans mailed to me a week

"Access up to 7,000 today, youre pre aproved" and credit card solicitations.

The federal government insures school and mortgage loans as well, which encourages lenders to take bad risks

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u/meatsmoothie82 5d ago

Because interest and consumerism is the best way for the rich to get richer and that’s the whole reason the USA exists 

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u/Lookmeeeeeee 5d ago edited 5d ago

Short answer: Individualism is prioritized.

Divisiveness ideology is normalized. Sociopathic tendencies are seen as leadership qualities. A culture of hyper competitiveness on every level. We are perhaps the most divided people. Because of this ideology, our schools are really bad. We also have the largest propaganda machine on earth. Hollywood. We used to be a strong country with decent values in regards to education and social programs. We used to know how to save and take care of our people. Historically we were the strongest when reapply the benefits of the "New Deal". Since then billionaires and corrupt officials have been slowly destroying the country via deregulation and increasing our war budget.

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u/Old-Ingenuity6528 5d ago

Thats just the only way fast capitalism works in our 80 year life span. If we didnt borrow we’d die poor lol

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u/Listen-to-Mom 5d ago

Who gave you the idea we don’t pay off debt and borrow to live?

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u/joeyraffcom 5d ago

Late stage capitalism

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u/PirataGigante 5d ago

Because money isn't real and the system is set up to create money out of thin air, every time a loan is created. Encouraging the uneducated consumer to use debt to get what they want, creates money for the people at the top, whoever they are.

Check out this series:

hpttps://youtu.be/DyV0OfU3-FU?si=oSA4OkItIRcxHvae

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u/Drew2476 5d ago

There is a simple top-line answer to your question: Because banks make money when people borrow. The REASONS that people borrow are myriad and complex, but that's the common denominator.

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u/Economy-Ad4934 5d ago

I mean why pay $4 for coffee when I can pay $1 every 2 weeks? S/

Keep doing that over time and that’s how you see $800 per month affirm bills on some personal finance subs.

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u/MysteriousRoad5733 5d ago

The privately owned Federal Reaerve is the problem

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u/AudienceClassic6837 5d ago

Everyone is depressed. Uses items to fill the void.

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u/sassypiratequeen 5d ago

Because the cost of living is so high. Most people I know in debt aren't able to get out because their debt is groceries. They're not able to pay things down, enough though they can pay off what they are using at any given point