A.I. Writes, The Story of Sarah a Working Mother & Housewife from 1980 to Present
A clear view of how things have gotten more expensive since the 1980s
Today we are going to explore the Household Debt Service and Financial Obligations Ratios found at https://www.federalreserve.gov/releases/housedebt/default.htm
I am going to tell a story and then we’ll take a harder look at the numbers and facts.
The Story of Sarah a Working Mother & Housewife
Sarah had always prided herself on being a good housewife. She kept her home immaculate, cooked delicious meals for her family every night, and took care of her two children. But despite her best efforts, she was feeling increasingly stressed about her family's finances. Sarah also worked as a project manager at a media company.
One day, while going through some old financial documents, Sarah stumbled upon an interesting piece of data. It was a chart that showed the trend of household debt service payments and financial obligations as a percentage of disposable personal income from 1980 to 2022. The figures were seasonally adjusted quarterly.
As she looked at the chart, Sarah felt a sinking feeling in her stomach. The numbers showed that in 1980, the total debt service ratio (DSR) was 15.42%, with mortgage debt service accounting for 10.62%, and consumer debt service accounting for 4.38% of disposable personal income. Over the next few quarters, these figures fluctuated slightly, with a peak total DSR of 17.60% in 1987:2, and a low of 15.09% in 1980:4.
Sarah's heart raced as she continued to read. In the mid to late 1980s, there was a general upward trend in the DSR, with a significant increase in the total DSR from 16.37% in 1985:1 to 17.54% in 1986:4. This trend continued into the late 1980s, with a peak in the total DSR of 17.60% in 1987:2.
Sarah couldn't believe what she was seeing. She had been a young mother in the late 1980s, and she remembered the stress that her family had gone through during those years. The high interest rates and the general economic instability had made it difficult for them to make ends meet.
As Sarah continued to read the chart, she saw that the DSR had fluctuated within a relatively narrow range of around 13% to 15% throughout the 1990s and 2000s, with a slight increase in the mid-2000s to around 14% to 15%. However, from the late 2000s, there was a significant increase in the DSR, with a peak of 18.21% in 2007:3, just before the financial crisis.
Sarah's heart sank as she realized the implications of this data. She had always assumed that as long as her family's income was steady, they would be able to manage their debt. But the numbers showed that the trend of household debt service payments had been increasing steadily over the years, with peaks and troughs reflecting economic cycles and financial crises.
As Sarah sat in her kitchen, looking at the chart, she realized that she needed to take action. She would need to talk to her husband and come up with a plan to pay off their debts as soon as possible. She couldn't bear the thought of her family going through the same stress that they had experienced in the late 1980s.
With renewed determination, Sarah set to work. She cut back on unnecessary expenses, worked on increasing their income, and made a budget that would help them pay off their debts quickly. And as the months went by, Sarah watched as their debt service ratio decreased steadily, bringing her family one step closer to financial freedom.
Assets & Services Get More Expensive in Waves
The trend of household debt service payments and financial obligations as a percentage of disposable personal income from 1980 to 2022. The figures are seasonally adjusted quarterly.
In 1980, the total debt service ratio (DSR) was 15.42%, with mortgage debt service accounting for 10.62%, and consumer debt service accounting for 4.38% of disposable personal income. Over the next few quarters, these figures fluctuated slightly, with a peak total DSR of 17.60% in 1987:2, and a low of 15.09% in 1980:4.
In the mid to late 1980s, there was a general upward trend in the DSR, with a significant increase in the total DSR from 16.37% in 1985:1 to 17.54% in 1986:4. This trend continued into the late 1980s, with a peak in the total DSR of 17.60% in 1987:2. However, in the following quarters, the DSR decreased slightly, and by 1992:4, it was 15.75%.
Throughout the 1990s and 2000s, the DSR fluctuated within a relatively narrow range of around 13% to 15%, with a slight increase in the mid-2000s to around 14% to 15%. However, from the late 2000s, there was a significant increase in the DSR, with a peak of 18.21% in 2007:3, just before the financial crisis. Since then, the DSR has decreased significantly, and by the last available quarter, it was 8.14%.
Overall, the data shows that there have been fluctuations in the DSR over the years, with peaks and troughs reflecting economic cycles and financial crises. While there was a general upward trend in the DSR in the 1980s and a significant increase in the mid-2000s, the trend has generally been downward since the financial crisis of 2008.
So What Does This All Mean?
The story and data reflect the new world we live in. Where mothers and fathers have to work to afford anything. The grandparents need to watch their grand children or parents are forced into expensive child care that cost as much as their own salary in some cases. It is a painted picture of Sarah and her realizations and a deeper look into the facts.
This article comes at a time where we are going through a DSR roll upwards again and many Americans are making money money than ever while at the same time living pay check to pay check even if they’re brining in $100,000 per year.
Pay off your debts if they are high interest. You do not get rich twice. It’s happening all over again.