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Subscribe to RSSMany U.S. consumers are so deep in a financial hole that even as the economy begins to turn around they can’t quite dig themselves out.
A survey by Bankrate.com released Tuesday found that 25 percent of Americans have more credit card debt than they have in emergency savings, and that spells trouble if an emergency situation actually hits.
Consumers are doing better when it comes to living within their means, said Greg McBride, Bankrate.com’s senior financial analyst. But, he added, years of stagnant wage growth, high unemployment, declining home values and escalating household expenses have strained wallets. “Even though there’s been progress things are still out of whack,” he said.
And the economic pictures may get even gloomier for consumers if gas prices continue to escalate, he pointed out. Last year, he said, “60 percent of Americans said they cut back on discretionary spending because of gasoline prices.”
Those hit hardest when it comes to debt versus savings, are individuals on the low end of the economic ladder and those with less education, according to the study that polled more than 1000 adults earlier this month.
Here are some of the findings:
- 70 percent of those earning $75,000-plus have more in savings than credit card debt vs. 40 percent of those earning less than $30,000 per year.
- 64 percent of college grads have more in savings than in credit card debt vs. 46 percent with a high school education or less.
- 27 percent of Americans report a lower level of financial security now versus one year ago and 24 percent report a higher level.
- 38 percent of Americans are less comfortable with their savings now compared with one year ago; only 14 percent are more comfortable.
The overall percentage of consumers who have more emergency savings than credit card debt actually inched up to 54 percent of those polled, compared to 52 percent in the same month last year. But that doesn’t mean people are necessarily more debt adverse.
“They can’t go spend money they don’t have,” McBride explained, because credit is so tight today, particularly when it comes to consumers who don’t have the best credit ratings.
A bad credit rating can also create a double whammy for those people looking for jobs because some employers now use credit reports when evaluating job candidates. That’s even worse news for individuals trying to pay off debt.
High amounts of debt and thin savings have become a fixture in U.S. society. “Over the years, the savings’ needle hasn’t moved,” he said. “From 2007 and 2011, the percentage of Americans with three months worth of expenses in savings, which is not adequate, is unchanged.”
It’s something we may be used to, he maintained, but “it’s not a recipe for people having a warm and fuzzy feeling about their financial situation.”
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I would have thought it would be one out of two!
Don't understand why people go into debt. Okay, you get into a car accident with an uninsured driver and are in debt for the extensive medical care that saved your life, that is one thing. But why people just buy things when they don't have the money to repay - that is worse than irresponsibility, that is nothing but theft!!
Maybe we should go back to having debtor's prisons, that might make people think twice before pulling out the plastic!
I own a coop fully paid off. I have a nice chunk in my 401. No kids. No pets. No car. Still have 25 years of work ahead. Not too worried about all of these scare stories.
Its a good point that everyone is making: F-ck this country! Our leaders and these corporate bastards will keep sucking money until there is nothing left to suck. F'ing idiots
My parents drank and smoked the money that could have been used to send me to college. My sister didn't want to go. Took me THIRTY YEARS to get close to finishing college, at a third-tier school. I was very smart in high school but due to my family's social status, I once overheard one of my history teachers tell another teacher that she didn't see any need to help me, I couldn't afford to go to college anyway!! Now, I'm working as a TEMP, mind you, with a chronic disease that is untreatable as I have NO HEALTH INSURANCE, no benefits or any rights of any sort. I get sick, I die, period. Medical care costs a Trump fortune these days and we all know doctors these days practice what is know as "checkbook medicine.' My hours have been cut and now, the basic things I had planned to do for myself, will not happen. I have wore the exact same clothes to work, week after week, for well over a year, just like in high school. I work myself to death, have no medication for my illness, that my parents caused, by being chain-smokers. Savings? That's not a term I know or have ever known. I'll be dead before I'm 60 and will be at work, if there is such a thing. I have no family, am too ugly to be married and hate my life. I was a double major in school, honor society, All that but because I don't have money, am not a trust fund kid, will never work in the field of which I EXCELLED in school. Don't get me wrong, I am very lucky to even have a job in this economy when some don't but dying young is not what I planned on for my life.
Oh, BOO HOO! My parents didn't put me through college (whine!).... Guess what lady? Neither did my parents. I put myself through school, and I did it without taking a student loan. Show me where it says in the parenting handbook that parents are obligated to fund their offsprings' higher education.
My parents smoked too. So did my sister; I was the only non-smoker in my family. Yeah, I suffered some damage as a result of being exposed to secondhand smoke, and I suppose I'm lucky that I did not get cancer. But I don't dwell on the cards I've been dealt.
I too don't have medical insurance. If something major happens, I guess I'll just take a lead pill. But I'm not gonna worry about that. I will simply make the most of what I've got.
I'm a Democrat, but I must say, what a bunch of entitlement-minded whiners there are here. You don't "deserve" vacations and TVs. Get a job! Oh, you can't find one? I've never seen a McDonald's that wasn't hiring. McDonald's doesn't pay enough? Then get a second job at Burger King. Unless you are legitimately physically or mentally disabled, you have no excuse not to do at least reasonably well financially in this country!
For those of you who are all ready to reply that I'm some elitist who doesn't understand... I've never had a job that pays more than $45k. I have, however, spend most of the last 20 years with 2 jobs- sometimes two full-time jobs. I bought my condo in cash and, at 39 years old, I have a net worth in excess of $1 million. STOP BEING LAZY PEOPLE! YOU CAN BLAME OTHER PEOPLE FOR YOUR SITUATION IN LIFE, OR YOU CAN ACTUALLY DO SOMETHING TO IMPROVE IT!
I bet the number would be 3/4 if debt included mortgage, car loans, student loans, etc...
If only 50% of the American adult population works and pays taxes, and 25% of all Americans owe more than they save, I would say that the 50% who does not work but lives is better off than the ones struggling for nothing. If the government provides your income or part of it and you do not own you rent...who cares how much you owe or save you are still better off than the fools working and trying as you set home and do nothing. The people who do not work ( 50% of all Americans ), will outlive the ones who work, struggle, go to college and incurr student loan debt. The government provides at least a portion of at least 50% of the populations household income so why do we care how little people save or are in debt? At least they are trying.
This is by far, the dumbest article I have seen from MSNBC in a long time. So, in essence, this article is saying 75% of Americans have more savings than debt? I'm going to call shenanigans on that. Given the past decade of poor economic growth in conjunction with the dot com bubble bust, 9/11, financial and housing market collapses, and unemployment at 8-20% (depending on what sources one trusts), there is absolutely no way this article is factually correct.
I have no credit card debt and only have been falling behind because after my prostate cancer my uretha keeps pluging up and I have to have it opened so I can pee. My insurance does not cover office visits and each year I am falling a little farther behind as my medical debit grows.