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Author: blackmare Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308470  
Subject: Re: CRIME and Punishment Date: 9/23/2003 9:37 PM
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My thoughts, through the day, on the high-income/low-income statistics.

First of all, I haven't looked them up myself, so I'm just assuming for the moment that statistically I'm a higher default risk than I would be if I earned, say, three times what I currently do.

I've seen lots of people pointing out that high income is absolutely not an indicator of financial smarts. I agree with this, as well. The difference, I think, has little to do with the number of overspenders or irresponsible people in either category. My bet is that the percentage of the financially clueless is about the same in either category.

But a high income earner has a lot more "stupid margin" than I do. They can overspend a lot more before being unable to keep up with the monthly payments; and also they are more likely to work in jobs offering good insurance and benefits. So there's more of a safety net against uncontrolled large expenses like medical bills. Whereas I don't earn enough to afford health insurance, so if I carried cc debt and suddenly had a big hospital stay, I'd likely wind up in default.

It's not personal, it's reality...and one more reason for me to stay out of consumer debt.


Mare
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