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King Kong debt meets middle-class life

In a generational shift, Americans have come to accept big credit-card balances as inevitable. First of two parts.

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Ask most people if they should save more, and the likely response would be "yes." But with so many opportunities to spend, sometimes we just can't help ourselves. Shopping is even seen as an expression of patriotism: Go ahead, buy the latest gadgets, a bigger car, or another pair of spike-heeled shoes, it will be good for the economy.

The only drawback: that stubborn monthly balance on the credit-card bill. For the average American family, it's been growing steadily over the past few decades, lurking like a visitor who's overstayed his welcome - and no one knows quite how to get rid of him. Somehow, people have drifted away from the thriftiness that emerged from the Great Depression and embraced life on borrowed time.

"Americans really appear to have accepted debt almost as a way of life - they assume that's just the way it goes," says John Putnam of the Million Dollar Round Table, an association of financial planners in Park Ridge, Ill. The group found in a recent survey that 30 percent of Americans believe they probably will always have debt.

Statistics confirm the change:

• In 2003, the average credit-card debt of US households with at least one card was $9,205, up from $2,966 in 1990, according to the research firm CardWeb.com. (See chart, page 17.)

• In 1970, 44 percent of families with credit cards reported having a balance after their most recent payment, the Federal Reserve Board reports. Since the 1980s, not only have more people used credit cards, but about 60 percent have carried a balance.

• The personal savings rate in the United States averaged about 8 percent from just after World War II through the 1980s. But since 2000, it has averaged just under 2 percent, according to the Bureau of Economic Analysis.

• Personal bankruptcy filings hit a record 1.6 million in 2003, compared with 300,000 a year in the early 1980s.

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