Part of the reson why the debt service ratio has fallen may be because interest rates were at record lows for many years which allowed people to refinance and borrow more for the same monthly payments.
Many of the people I know that refinanced to reduce monthly payments spent the savings they could have put away or increased the amount borrowed until their payments were equivalent to what it was before refinancing.
I work at a car dealership (not in sales) and with the low interest rates being offered (even as low as 0%) most customers are buying "more car" instead of not spending the money they could have saved by buying a vehicle more in line with their income. Many consumers live right at the edge (or over it) of their income instead of saving for the future.
edit: As a sidebar, I wonder if the amount of money people placed into long term investments/savings coresponds with the reduction in debt maintenance. Or did they just spend more?
Many of the people I know that refinanced to reduce monthly payments spent the savings they could have put away or increased the amount borrowed until their payments were equivalent to what it was before refinancing.
I work at a car dealership (not in sales) and with the low interest rates being offered (even as low as 0%) most customers are buying "more car" instead of not spending the money they could have saved by buying a vehicle more in line with their income. Many consumers live right at the edge (or over it) of their income instead of saving for the future.
edit: As a sidebar, I wonder if the amount of money people placed into long term investments/savings coresponds with the reduction in debt maintenance. Or did they just spend more?
The Bill of No Rights
The United States has become a place where entertainers and professional athletes are mistaken for people of importance. Robert A. Heinlein
The United States has become a place where entertainers and professional athletes are mistaken for people of importance. Robert A. Heinlein