Aack!

I read something on Thursday that I forgot to post about and now I can’t find the source. It was a blogger that stated that the richest people in the US (the top 1%) have accumulated 7% of all the debt. He was saying that getting into debt to keep up with the Joneses is a never ending, viscous cycle. I’ll have to figure out how to find it – it was a GREAT read!

EDIT: Found it. It’s not a blog, and Google is my friend. The Robert Frank at Yahoo comes to some surprising conclusions about the spending habits of wealthy people:

“So the haves are borrowing more to keep up with the have-mores. Those in the 95th percentile to 99th percentile of wealth have almost twice as much debt as the top 1%, as measured against assets. Economists and wealth managers say it’s the single-digit millionaires who are becoming the most stretched, as they borrow to match the lifestyle of even-wealthier people.

The result, says Dalton Conley, a sociologist at New York University who studies status, is even more debt. “What we’re seeing is the top 1% struggling to keep up with the top 1/10th of 1%,” he adds. “And those people trying to keep up with the top 1/100th of 1%. There is a drive by the merely rich to keep up with the obscenely rich.”

Of course, a lot of debt accumulated by the wealthy is strategic in nature, and the Mr. Frank acknowledges this. But if you can’t break out of the “keeping up with the Joneses” cycle while you’re middle class, guess what: you’re not going to break out of it when you’re in the upper class either.

ANOTHER EDIT: Looks like I came up with the same conclusion as the Motley Fool:

“If the multimillionaires still feel they have to overspend to keep up with the ultramillionaires, then this debt trap knows no income bounds. Forget the Joneses. Resist the impulse to buy more than you can afford. Reinforce the lesson that it’s futile to try to keep up with the neighbors by calculating what your extra consumer debt costs you. What happens when you catch up? You’ll just be striving to keep up with the Rockefellers. “