The Credit Card Debt Dilemma

(CBS)  Alison Guage is the chief financial officer of a four-kid household.

On the spreadsheet: one income from her husband, Joe, to cover two cars, her student loans and a five-bedroom house.

"[The house] is almost double the size of our other house," Alison tells CBS News correspondent Trish Regan, adding that the mortgage about double the size of the old mortgage.

With a bigger mortgage, this CFO had some cash flow problems, so she did what a lot of people do — started using credit cards for everyday purchases.

Asked how they would describe their spending habits, Joe responds by saying, "Carefree."

"We could be more careful," Alison says. "You know, go to Target, while we're there get some throw pillows for the couch."

Her husband adds, that "I'd rather live more in the future than not give my kids a vacation each year or not give them the Christmas present that they want."

And their credit card's outstanding balance?

"It was just getting bigger and bigger and bigger," Alison says.

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Debt Trap Series Part Two l Part Three

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The Guages are certainly not alone.

The nation's overall credit card debt was $273 billion in 1992. It's more than $800 billion today. Just call us, the credit card nation. Our motto used to be "Save for a rainy day." Now it's "Borrow today...pay back, whenever."

"I like to call it, the 'just do it' culture of people that have to have it now, they worry about the cost of paying for it later," economist Robert Manning says.

Manning, a professor of finance at the Rochester Institute of Technology, has new research on how Americans live with debt. The most surprising thing: people really aren't that bothered by it.

"We tend to plan financially for how much better things will be five or 10 years later," Manning says. More succinctly, Manning says Americans exercise, "Pure optimism."

But some analysts worry that optimism may be misplaced. Interest rates are rising, putting consumers in a credit crunch.

"Americans are going to find themselves unable to pay their bills in a year or two even though they haven't taken on any new loans. It's simply the added costs of the interest rates on the borrowings," Manning explains.

That's not just a problem for the consumer. Economists worry it could put a strain on spending nationwide.

"Americans are going to have to reduce their standard of living which is really bad news for the economy," Manning says.