Monday, August 11, 2014

Forever Debt.

What is Forever Debt?

Forever Debt is the monthly non-mortgage household debt that is downplayed by economists as "serviceable". What economists fail to mention is that the percentage of monthly serviceable household debt number (Forever Debt) then needs to be multiplied by 2.5 (aka 25%) to determine what it would actually cost just to begin paying down Forever Debt on a monthly basis.

So when economists state that a household is "only" spending 10 percent of their monthly household income to "service their non mortgage debt", what they aren't saying is that it would take 25% of a household's monthly income, and a few years time to actually pay off that "10% serviceable debt".