Update to the Tightwad Post

I did not catch this on the first read - but you know HELOC is the blame when a statistic like this pops up in the budgeting article -

Merrill Lynch's Rosenberg said that in the fourth quarter of 2007, Americans' household debt almost equaled 140 percent of their after-tax income and that they were spending 14.3 percent of their after-tax income paying down that debt.

"Simply put, that means Americans are spending more on servicing their debt than they do on food," Rosenberg said. "This is not just affecting stressed-out or soon-to-be-foreclosed home owners. This hurts everybody."

It would be very hard to have the average spending done on credit cards alone - they are very expensive and it is much easier and cheaper to HELOC it. To many people it seemed like easy money, just refi and you suddenly have more money and none of those credit cards bills. People are spending more on debt fees than on food. How long can that last, especially with the good times ending? Like I said before, with the HELOC and refi house money drying up, it is like millions of Americans have lost a high paying second income. Remember, people were using their HELOCs to pay their mortgages!?! Crazy as it sounds it become rationalized during the bubble.