When did things go bad?

The blue line on the graph shows household debt service since 1980. The red line is my estimate of household debt service going back to 1946:

Graph #1: Household Debt Service since 1980 (blue)
and my estimate back to 1946 (red)

My estimate is based on 4.6% of outstanding household debt being repaid each year. Less than 5%. Evidently the actual (blue) percentage varies some from year to year: When the blue line is higher than the red, we are repaying more than 4.6% of our outstanding debt; when the blue line is lower than the red, we are repaying less than 4.6%.

The red line starts in 1946 at almost exactly two percent. So, in 1946, my parents probably used about 2% of their disposable (after-tax) income to pay down their outstanding debt. The red line shows that by 1956 they were probably using more than 5% of their income each year to pay down less than 5% of their debt. And by 1965, when I turned 16, my folks may have been using almost 7.5% of their income for the debt service payment -- while still repaying less than 5% of their debt.

On average, by my estimate, each year people were paying down less than 5% of their existing debt. But by 1956, on average, people were using more than 5% of their disposable income to make the payment. Perhaps we should say that by 1956 people were already "under water" on their financial obligations. By 1956.