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In debt we trust

Freewheeling indebtness now societal norm

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Free money. That's how some of Kay Shirley's clients describe their view of low interest rates. They buy expensive new cars because of it. And they refinance their mortgages and cash out to buy consumer goods because of it too. Some use those cash-outs to pay down credit-card debt, a choice that Shirley, an Atlanta-based financial planner, encourages. Unless, she said, they then use that freed-up capacity to run up more debt. "The problem that a consumer has to worry about is whether or not spending habits have changed," Shirley said. "It is not advisable to pay off consumer debt with equity in the home, unless you are truly paying off that debt once and for all." Consumers' attitudes about debt have shifted. The change is mirrored in everything from credit-card spending habits to views about bankruptcy, and even extends to home ownership. The boom in housing has been credited to low interest rates, but new attitudes toward debt are a factor as well. Easier financing and less stigma o...