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9 out of ten times spending habits is the reason why people are broke. But in America everyone is entitled so they don’t see nothing wrong with having bad spending habits because they “deserve”. Instead we just blame the government, high cost of living and everything else.
Please don't downplay the fact that the cost of housing, education, medicine, etc. has skyrocketed in relation to salaries and benefits since the 1980s.
Our government has been ineptly run and our policies actively encourage reckless consumption over savings or production. America decided to make an economy based on consumption instead of production. You reap what you sow.
Actually, the reason why states such as Alabama, Louisiana and Mississippi have poor average credit ratings relative to states such as Iowa, Minnesota and New Hampshire is largely due to demographics. Of course, states in the South have much larger African-American populations than states in New England and the Midwest. In addition to having a lower average incomes than European-Americans and less access to family capital and wealth (e.g., assets, gifts, inheritance, trust funds, etc.), African-Americans are also much more likely to rely on credit cards to make ends meet, pay high interest rates and suffer more negative consequences of debt.
The states with the highest average credit scores seems to have the following characteristics: population growth is slow compared to the rest of the country. I also imagine that the population in most of the states is older than average as well. It would seem like that combination would result in higher credits scores.
A large percentage of people moving to higher growth states do so out of economic necessity which could correlate to lower credit scores.
Actually, the reason why states such as Alabama, Louisiana and Mississippi have poor average credit ratings relative to states such as Iowa, Minnesota and New Hampshire is largely due to demographics. Of course, states in the South have much larger African-American populations than states in New England and the Midwest. In addition to having a lower average incomes than European-Americans and less access to family capital and wealth (e.g., assets, gifts, inheritance, trust funds, etc.), African-Americans are also much more likely to rely on credit cards to make ends meet, pay high interest rates and suffer more negative consequences of debt.
Except, White Americans from the South similarly have low credit scores. States like West Virginia, Kentucky, and Tennessee are near the bottom as well, and they aren't heavily African American. Sure, there's also a correlation with race, but its not the only factor. Otherwise, states like New York, New Jersey, Illinois and California would be much lower than the national average.
The purpose of federal, state, and local housing policy and subsidy of homeownership was to (1) house Americans and (2) provide some form of stable savings mechanism. The housing market was never meant to be some high-risk/reward commodity and it really should never be that. When it comes to sheltering Americans (which many consider a basic human right), our housing policies should be solely focused on providing shelter to all people, not subsidizing profits. Unfortunately, greed supported by policy/subsidy has led our society to have an abundance of empty mansions and also an abundance of homeless people.
I wish I could rep this post more than once. The problem with the way the American system is set up is whenever there is a subsidy in _____, the market will factor the subsidy in and readjust the pricing based on the subsidy. You see this with higher minimum wage areas, where everything simply costs more.
Our financial education system needs to emphasize more, not only saving, but light investments to not only reinvest in the market, but as a mechanism for wealth preservation. I used to think you could save your way to wealth, but due to things like inflation, that's a folly. I know it sounds like I literally just read "Rich Dad Poor Dad", but the one takeaway that the author had really is acquiring assets. Real assets, things that make you money without you having to really do anything.
We sort of misconstrue that an asset is, and better financial education could help out with that. Homes being people's only """asset""" needs to really be reconceptualized, not only on a personal level, but on a governmental one too.
But I guess having wild boom and bust cycles due to a crazy credit market is cool too.
A few of the bottom states are known for having fine happy local governments. A surprising and harshly punitive fine could lead to credit problems.
Also, some states are better for payday loan companies that encourage cycles of debt.
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