Many find themselves swamped in debt, and question being able to retire comfortably.
An online survey of 1,000 American adults conducted by CreditCards.com has shown that 78% of people are living paycheck to paycheck. 41% of those surveyed said that they don’t know when they will pay off their credit card debt, and 65% don’t know when they will get out of it.
Financial expert Chris Hogan describes the responses as “a depressing statistic and one that we can hopefully avoid. But we need a wake-up call all around, and people need to engage in this and get more serious.”
Hogan adds that “people need to understand how important it is to make sure we’re putting money away and saving because if we don’t save, we won’t have any to spend or to build a foundation for retirement.
Avoid the Debt Trap
According to another survey conducted by Freedom Debt Relief, 41% of Americans have set aside little or no money at all for retirement. The overwhelming reason for this is the cost of everyday expenses.
79% of those surveyed said that they have debt: credit card debt 53%, mortgage debt 54%, auto loan 47%, student loans 21%, medical debt 13%, and personal loans 11%.
The overall debt held by households stands at $13.67 trillion in the first quarter this year and is steadily climbing. That figure is $993 billion higher than the peak of $12.68 trillion in the third quarter of 2008 before the Great Recession.
Credit delinquencies are also on the rise, driven at the forefront by credit card and student loan debt. Financial analyst Ted Rossman is optimistic that most people are responsible with their finances. “Most people who have credit card debt didn’t get there because of a vacation or a shopping spree,” Rossman explains, “they got there because something happened with their health, their car, their home, or they’re just having trouble making ends meet.”
This highlights the importance of personal finance and doing what you can to budget and live within your means. Any kind of debt can be a threat to your future. Whenever we borrow someone else’s money, we are charged a penalty called interest. Helping young people understand how money works will educate them to avoid this debt trap down the road.
If you’re not budgeting, then you will end up losing control over your money. You can either tell money where to go or wonder where it went. For any other financial advice, you can reach out to the Financial Helpers.
