New York Times Personal Debt Feature

The New York Times has a very interesting feature on personal debt from a little while back linked here

The piece draws attention in the US context to a number of problems arising due to personal finance decisions gone awry including;

- students in large amounts of debt

- negative equity among homeowners

- older individuals in high amounts of debt due to medical expenses

- older individuals currently broke due a combination of equity release, wealth reductions and home price reductions

Gerard O'Neill rightly points out that the actual number of homes with mortgages on them is smaller than many would think and that the majority of these homes are not in negative equity. I would add to this that most Irish students finance themselves through a combination of parental income and part-time jobs and that current levels of student debt are nowhere near those seen in the US. Furthermore, we do not seem to have a well developed market in Ireland where older people borrow money for very specialised medical treatment.

Yet, there is a concern that many people overstretched themselves strongly on credit cards and related financial innovations over the course of our economic boom and in serious financial dilemmas at present with consequent effects on psychological distress and health patterns. I am currently conducting some research attempting to put some figures on the extent of serious household level financial distress but its not an easy task in Ireland as foreclosures are a rare event meaning that many people may be effectively bankrupt without being officially bankrupt or even subject to foreclosure proceedings.