So, if low interest rates and tax cuts aren't getting the job done, what will? The article referenced in my previous post, "Could Private Debt Lead To Our Own 'Lost Decade'?", spells out the problem, despite being three years too late (I had at least one economic advisor warn me of the personal debt problem three years ago - it's why I began thinking about the problem and why I started this blog). In the last paragraph, however, the author gives up with "Because getting out of debt tends to be a gradual process, there's no obvious quick fix.". Yes, even with a very good paying job, it took my wife over two years to shed about $40,000- of credit card debt. And I can guarantee that most people don't have the income she has that will get them out of debt that quickly.
But there's another way to increase your disposable income other than a pay raise. If an expense goes away, suddenly you have more disposable income. Suppose that you financed a car over a five year period and the payments were $255-/month. Once that car is paid off, you suddenly have $255-/month more disposable income that could be used to reduce other debts. Not only that, but that $255-/month wouldn't be taxed like a $255-/month pay raise would - you'll benefit from the whole $255-.
Likewise, a significant lowering of house payments (say $600-) month after month would do a lot more to reduce personal debt than the tax cuts eneacted over the last two years. I contend that significantly lowering house payments would also lower rental costs too, as more people could afford to buy homes and take pressure off of the rental markets.
Unless they are living in a fully paid off home or out on the street, everyone's single biggest expense is what they pay month after month just for a place to live. The biggest expense provides the biggest savings potential. And as I will show in my next blog, bringing down that expense would be easy, and easily justified.