Book: Borrow, The American Way of Debt
Author: Louis Hyman
My Review:
This book does a fantastic job of explaining the evolution of consumer debt in America. It explains very well how the ability to borrow has been an essential key to the creation and continuance of the middle class in America. It also explains how consumer debt has nearly brought our country to its knees. Personally, I don’t think we’ve seen the bubble burst yet on this.
The author alludes to a potential future crash in our economy when he states, “The fragile recovery we now enjoy will wilt again as soon as interest rates rise. We are only in the eye of the storm. Though the Fed has promised to keep the prime interest rate near zero, in the long run the government must raise the interest rate, and when it does the true weakness of our economy will be revealed. At once, the adjustable-rate mortgages still extant will suddenly go up. Credit card rates, now adjustable, as well, will rise. Minimum monthly payments will add to higher mortgage payments, pushing people beyond the limits of their fragile budgets. Americans will default at rates that will make the current crisis look like a foothill to the Rockies.”
The author goes on to explain his idea for solving the credit problem our country, and especially small businesses and middle class people, will be facing. For me, my recommendation is to follow the Five Principles of Personal Finance (read Principles Based Decisions on the Unique Advantage website), and get out of debt. When this debt bubble bursts, which I believe will happen, you want to own everything you have, and have as low a “required income” (monthly expenses) as possible.
Live like no one else today, so that you can live like no one else tomorrow. Read this book. It gives great insight into the realm of debt, the role it plays in your life, and how it got there.