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25% of Americans Going Broke Trying to Pay for Necessities.

Written by adminMay 31, 2019

What are the major contributors to your credit card debt?

According to a new Experian report, Americans have an average of $6,500 in credit card debt. Which expenses are the major contributors to that balance though, you may ask?

23% of Americans surveyed in that study say that purchasing basic necessities is the largest contributor to their credit card debt. That includes rent, utilities, and groceries. Another 12% say that medical bills constitute the majority of their debt.

Call Now 844-332-2079

Cost of Living Going Up

This increasing debt can be attributed to the rise of living costs. A couple of decades ago, middle class life was 30% less expensive than it is today. The cost of college has skyrocketed, in addition to housing and child care.

The cost of tuition at public universities more than doubled in the last 20 years. In some cities, housing prices even quadrupled, turning most millennials away from home ownership.

It’s now more common for millennials to be scraping by, living from paycheck to paycheck. 57% of Americans have less than $1,000 in savings and more than 70% say they will encounter financial difficulty if their paycheck was put off by a week.

Spend Responsibly

For some, it may come down to spending on non-essential items such as entertainment and luxury items. According to Schwab’s Modern Wealth report, Americans were found to spend an average of $480 a month on non-essentials. This included dining out, entertainment and nightlife, luxury items and vacations.

It is always prudent to keep your balance low, as it can get expensive to let it roll over. The average credit card APR starts at 17.73%, and with such high rates monthly balances can quickly add up.

Take for example that you have a credit card balance of $6300. If you’re charged the average APR and you make minimum payments (3% or $190), you would stay in debt for over 17 years and pay more than $5,800 in interest.

Reducing Your Debt

If you’re looking to pay down your balance quicker, you could open another credit card that allows you to transfer over your balance while offering an extended 0% APR period.

Some of these cards do charge a 3%-5% fee to transfer your balance so watch out for that. An ideal option can be the Amex Everyday, which offers a 0% APR on balance transfers for 15 months and no transfer fees.

Saundra Davis, a financial coach and adjunct professor, has this to day about reducing personal debt. “There are only three things you can do if you are not happy with your financial situation: make more, spend less or a combination of the two. there is no other magic.”

The first step towards doing this is to be responsible and accountable for your purchases. Set an achievable goal that is realistic. It’s not feasible to go from not saving anything to suddenly saving $500 a month, says Davis.

The trick is to start small. It’s easy to start saving $5 a week, or cooking homemade meals more often and depositing that money you otherwise would’ve spent on going out.

You can transfer this practice into your other purchases as well, such as going out with friends, travel and buying luxury items. It really is about cultivating that shift in mindset and developing new habits.

As always, if you need to talk to an advisor about creating a savings plan, the Financial Helpers are only a call away.

Call Now 844-332-2079

Written by adminMay 31, 2019

Student Loan Consolidation

If you owe any type of student loan debt, there may come a time when you need a little help. That loan will stay with you until it’s 100% paid off, which often takes anywhere between 5 and 20 years. What are you supposed to do during a financial emergency? Maybe you lose your job or can’t find the extra money to pay your monthly bill.

In a lot of cases, in that situation, a borrower can get a deferment. It allows them to kick the can down the road a bit. It gives you the option of pausing your loan for a bit until you’re back on your feet. It sounds like a great option, but there are several things to consider before taking this route. It’s certainly not the choice for everyone and it comes with consequences.

Because it’s not a simple solution to your problem, it pays to know what type of loan you hold. Some loans will allow you to also put a pause on the interest you owe. Those loans are subsidized Stafford Loans, Direct, FFEL Consolidation Loans, and others. Yet, there are other types that do require the interest to keep flowing. These types are:

· Direct PLUS Loans

· FFEL PLUS Loans

· Direct Unsubsidized Loans

· Unsubsidized Direct Consolidation Loans

· Unsubsidized Federal Stafford Loans

· Unsubsidized FFEL Consolidation Loans

Paying Back Interest

Taking a month off isn’t a big deal, but if you anticipate a long break, you’ll have to determine what will happen with your interest. The government may continue to let the clock run. That means you will either have to make the monthly interest payment or it will continue to add up the full principal of the loan. You get a break, but you’ll still end up paying more down the line.

If you’re going back to school and need a deferment, be sure you take the time to sit down with financial aid counselor. They can help you get your public and private loans approved for deferment while continuing your education. Being proactive and contacting your servicer is also a great idea. Keep in touch with them over every change in your life that impacts your loans.

Pros and Cons of Deferment

If you’re in an emergency situation, deferring your student loans may seem like a great idea. It will free up money to pay on the more important things, like food, rent, and electricity. While it might be the best idea at the time, be sure to check out these pros and cons before making that decision. There are plenty of drawbacks and might complicate your situation further.

Depending on your interest rate, a $20,000 PLUS loan, which takes 10-years to pay off, can incur an additional $500 in interest towards the principal. That’s a lot of money. Still, it might be worth it at the time, but you should still consider whether you want to extend your loan out another several months.

A deferment can also impact your qualifications towards participation in student loan forgiveness programs. For example, the Public Service Loan Forgiveness program requires 120 eligible payments to get full forgiveness. If you defer, those payments are being met and you will lose valuable time, even if you’re still paying something and working for a non-profit.

You’ll have to take a long look at your situation and see if deferment is right for you. It can be the very wrong move, but if you simply can’t afford it, then you have no other choice. Deferment can be a complete lifesaver, but it rarely comes without drawbacks. If you can still make your interest payments, that will help your situation dramatically.

Written by adminMay 30, 2019

Student Loan Consolidation

If you’re a student loan borrower in the State of California, you’re getting closer to have a bill of rights. This bill is called AB376, or “Student Borrower Bill of Rights” and was passed by the California assembly on Tuesday. This is really the first set of rules being passed through a state’s legislature protecting students who hold loan debt.

It was passed 59-15 and has to get through the Senate and a final floor vote before it’s officially law. According to the Policy Director of the Student Borrower Protection Center, Mike Pierce, the bill must be passed by September 13^th in order to reach Governor Newson’s desk to be signed into law.

While the bill is set to give students who borrow money for college some protection, it’s also a shot at President Trump. The vote “demonstrates California’s ongoing commitment to protecting student loan borrowers in the face of resistance from the Trump Administration… [which] has dismantled protections for student loan borrowers,” Seth Frotman, the former top student loan official at the federal Consumer Financial Protection Bureau.

“Student loan borrowers defaulting every 28 seconds, I urge the California State Senate to act quickly and advance this critical legislation,” continued Frotman. More states are looking to follow suit as Trump continues to dismantle any protections students have against fraud and this growing student loan debt crisis.

Rules of Bills

There are several ways this new bill hopes to help students. It will:

-Ban loan servicing practices it deems are ‘abusive’.

-Prevent loan servicers from taking advantage of borrowers by confusing them on purpose.

-Keep the repayment system fair.

-Improve record-keeping standards.

-Better staff training.

-Forces servicers to be honest about better and more affordably repayment options.

-Creates an advocate for the students where complaints can be lodged against lenders.

“Ultimately, (this bill) hopes to create the first comprehensive, industrywide ‘rules of the road’ for the student loan industry, offering student loan borrowers the same kinds of strong, enforceable protections available to consumers with mortgages and credit cards,” the SBPC explained.

“Unlike consumers with mortgages and credit cards, student loan borrowers currently have few protections when interacting with their loan servicers,” Consumer Reports, which also co-sponsored the bill, said in a press release. “Student loan servicers are generally prohibited from engaging in unfair or deceptive practices, like any other business in California, but they are not currently subject to industry-specific standards.”

In California alone, over 3.7 million people have student loan debt. They owe close to $125 billion. In the U.S. as a whole, 44 million students owe $1.53 trillion. This is a number that continues to grow and doesn’t look to be slowing down anytime soon. Look for more states to pass these types of rules to help students where the federal government fails to get involved.

Written by adminMay 30, 2019

Student Loan Consolidation

Last week, we saw the incredible story of Robert F. Smith, a billionaire technology investor who owns Vista Equity Partners. After being asked to make the commencement speech at Morehouse College in Atlanta, he gave them the best graduation gift anyone could ask for. He agreed to pay the entire class’s student loans.

“God has smiled on me,” said one Morehouse Student. He had over $100,000 in student loans just vanish into thin air. The student most likely would’ve spent the next 10-20 years paying that debt off if it wasn’t for Smith’s generous gift. But billionaires aren’t the only one stepping in to help.

Yesterday, we wrote a story about Burger King offering to help by creating their own giveaway program using the BK App. Not to mention, truTV’s game show “Paid Off”, hosted by Michael Torpey, has made its return for another season. “Paid Off” allows people with student debt to compete against other grads with trivia. The winner gets enough money to pay off their debt.

We can easily consider how generous and special it is to be able to pay off someone’s debt. Yet, while it’s special when billionaires or TV shows or companies do it, many just expect it. There’s a whole movement sparking where students demand we raise the taxes on billionaires just to make college free for everyone. While it’s a nice dream, it probably won’t happen.

Generosity and Student Loans

While any comprehensive student loan bill will probably never be enacted into law, we have to think of ways to help graduates who are drowning. When you leave school, you don’t have a job. You’re a low man or woman on the totem pole. Yet, your first student loan bill is due within a few months, whether you’re ready for it or not.

Having a lot of student debt is burdensome. It prevents students from making major life decisions once they graduate. In many ways, they become a slave to it for the next 10-20 years. One way companies are starting to help is by offering generous repayment options. Rather than a 401(k) for retirement, companies offer benefits where they’ll match contributions dollar-for-dollar.

One company that does is Carhartt. They’re based in Dearborn, Michigan and work to help their employees pay their student loans. Gifts from billionaires and company CEOs are a major investment in their lives and helps them out more than anything else. Even a small gift will bring down the principal payment and cut the amount of interest paid over time.

“Instead of devoting thousands of dollars a month to student loan payments or being in an income-driven repayment plan for decades, they will now be able to invest in themselves,” said Mark Kantrowitz, publisher and vice president of research for Savingforcollege.com

“My first thought when I heard the news is what an amazing graduation gift!” said Lynita Taylor, diversity and inclusion program manager at the Mike Ilitch School of Business at Wayne State University. “College can certainly be seen as a worthy investment, but the staggering amount of debt you can accrue while pursuing that investment is heartbreaking.”

We Need More than Gifts

If gifts are the only way to end this problem, we aren’t going to see the end of the crisis anytime soon. The total amount of student loan debt out there currently sits at $1.53 trillion. That’s even before this most recent year has been tabulated yet. Those numbers are set to be released this fall. It’s going to be nearly impossible to raise a trillion dollars by gift alone.

It may help several individuals, but is Smith going to do the same next year if he’s invited back? And the year after? You can’t count on a gift or the government stepping in to help. They may provide some assistance, but they won’t just forgive over a trillion dollars’ worth of debt. You took out the loan, so you have to take responsibility for that.

If you’re a recent graduate, there are three ways you can make the situation easier on yourself.

1) Don’t wait out the grace period. You have about six months until you’re expected to start making your first payment. But during that six months, interest will accumulate. If you start paying off a $25,000 loan right away, you’ll save yourself $795.

2) Get a handle on what you owe. It can be frustrating once you leave college and see that bill for the first time. Don’t wait. Take the bull by the horns. Create an account on the Federal Student Aid website at studentloans.gov. Once you do that, be proactive. Track your payments. See how long it will take to pay it off.

3) Don’t make minimum payments. Kevin O’Leary of Shark Tank says the best thing to do is to devote nearly every dollar you have into your loans. When you graduate isn’t the right time to start buying fancy stuff, getting a car loan, or wasting money. Live frugally. Move back home for a year. Put all that extra money towards your loan to pay it off much quicker and get it out of your life.

Written by adminMay 30, 2019

Politics

Scientists are quite busy as of late, creating new medications that help advance the human race. The problem is, pesky big pharma keeps getting in the way by putting profits over life. We saw it over the past few years when the life-saving epipen drug that stops anaphylaxis in its tracks for a few dollars suddenly starts selling for as much as $700.

While that is incredibly expensive for something that saves lives, it doesn’t hold a candle to a new drug called Zolgensma. Developed by a Swiss drug company called Novartis, Zolgensma helps saves the lives of children who are born with spinal muscular atrophy. This disease kills hundreds of babies every year and finally a new medication has scored FDA approval.

It’s unlikely to be affordable for the vast majority of patients. The asking price for a drug they simply call “Z”? The answer is $2.125 million. Yes, that’s over 2 MILLION dollars. For a drug that stops spinal muscular atrophy. It’s a horrible disease that forces a child to lose complete control over their limbs and weaken their bodies to the point where they can’t even breathe.

“Z” and it’s Effectiveness

Z has been showing a lot of great promise in reversing the effects of spinal muscular atrophy. It works by using genetically modified viruses to shoot healthy copies of the damaged genetic code into the body of the child. Those viruses then make repairs that eventually relieve and even cure the symptoms. It’s an incredible feat of genetic engineering.

The company says the price tag is essentially a lifetime worth of treatment crammed into a single dose of Z that will ultimately save lives. They also expect that insurance companies are willing to cover at least most of the cost of the drug while offering payments plans to parents who cannot afford it otherwise.

“We’re talking about a lifetime of benefit being condensed down into a one-time treatment,” David Lennon, president of AveXis, Inc, which developed the drug, told NPR. “We’re not used to thinking about this that way. We’re used to a system of a chronic medication where we spread things out over years if not decades.”

Opponents of the Price

Because the price of Z is sky-high, there are many opponents to these types of sales tactics. With a price tag of $2 million and up, many parents will spend a lifetime paying for a single dose. Still, there’s more to the story. Novartis has claimed that the current price tag is a bargain at ‘half-price’ the $5 million estimate it’s worth.

Parent’s know that such a hefty price tag is insignificant when it comes to the life of their child and they’ll do whatever they can to pay it. Others say that sort of thinking is why companies continue upping the price for life-saving drugs. They say it’s irresponsible and may end in the death of a child whose parents ultimately couldn’t afford the drug.

At this point, it’s unknown if any insurance companies will actually take the brunt of the cost of Z. It’s probably just a stall tactic to prevent too many people from protesting against the company for making the drug so expensive.

Written by adminMay 30, 2019

Loans

In a battle between burger chains, Burger King just fired a significant shot at the competition. Earlier today, the company announced a new bid to help take some of the student loan burden off of college grads. The way they plan to do it is through their BK app in a program called “Whopper Loans”. Students have until June 6^th to claim this help.

“65% of college graduates enter the world with student debt,” a Burger King spokesperson said. “BK App users can enter to win a chance at total student loan payoff.” Burger King says they’re looking to give away $250,000 in total to needy students. They enter for a chance to win by making a purchase using the BK App.

Currently in the United States, 44 million Americans owe $1.53 trillion towards student loan debt. This is a major crisis in the United States that isn’t likely to go away anytime soon. Some companies are looking to capitalize on this problem by offering some type of debt relief. 11.5% of borrowers are in serious delinquency.

“This is a nice gesture, and the students who benefit from it are very lucky,” Climb Credit CEO Angela Ceresnie told Yahoo Finance. “Millions of other students continue to take on heavy debt loads, and we need to shift the focus toward fixing the systematic problems that created this debt in the first place. If we don’t change something, we’ll be perpetually stuck playing catch up like we are now.”

Twitter Response

Burger King kicked off the initiative by making a cryptic tweet “Got student loans? What’s Your $cashtag”. A cashtag is what users of the Square Cash app call their user ID. This was enough to get the buzz out about Burger King’s new plan to help former students. Many thousands tweeted the burger chain their cashtag in response.

“$CalebSynan pay off my loans and I’ll never eat McDonald’s again,” said one user. “$evecoron10 if you pay off my loan I’ll actually start eating your food,” said another. There’s no word yet on if anyone has actually won any money or when Burger King plans to pay out. They also appeared to be networking with Earnest, which is a student loan refinance platform.

Earnest also tweeted out that Burger King customers would get a $200 bonus if they can show they made a purchase with the BK App. This buzz recently came after a billionaire entrepreneur told students listening to his commencement speech that he will pay off their student loans. Hopefully, more companies will seek to pitch in and reap the rewards of the attention they’ll draw to themselves.

With so many people struggling under the weight of student loan debt, it’s going to take help to start paying it down. Interest payments are swamping so many Americans and making it unlikely they’ll pay their debt down. In many instances, it can take a decade or longer. It’s forcing many young Americans to put off making major life decisions.

Written by adminMay 30, 2019

Taxes

It can sure be tempting, right?

It wasn’t but a few years ago that an article came out claiming that Americans spend more on their taxes than they do housing, clothing, and food combined.

Of course, it depends on your income bracket. If 35% of your budget goes towards food, rent, and clothing, but you’re under the poverty line, you’re not paying another 35% in taxes. But, on the flip side, there are a lot of Americans paying more than that, especially the more they make.

The tax rate in the United States was at 39.6% before the recent tax reform law was passed this winter. Paying 40% of your income to the government isn’t exactly ideal for anyone, but it gets worse.

Our 7-bracket system is a nightmare to navigate. If you happen to make a little extra, receive a large gift, or have a quick side job, it can push you from the top of one bracket into the bottom of the next, increasing the rate you pay.

Do Americans Cheat?

Does this mean Americans are more likely to push the envelope by fibbing on the amount of money they made?

According to a survey conducted by Credit Karma Tax, despite heavy complaints about high tax rates and the complicated system, the vast majority of Americans do their due diligence and pay their taxes honestly.

94% of those surveyed said they never cheated on their taxes knowingly, with 6% admitting to small fibs in areas where they didn’t think it mattered much.

The survey, as a means of measuring the honesty of those surveyed, asked if they ever cheated on a significant other, their diet, or on tests. The fact that 20% admitted to cheating on a spouse, 25% on tests, and 56% on a diet reveals a lot about us, but only 6% on taxes reveals a lot about us.

“Americans overwhelmingly value honesty when it comes to filing their income taxes, even if we’re willing to cheat on our diets and other aspects of our lives,” said Credit Karma Tax spokesman Rick Chen, in an interview with Fox Business.

How did the 6% respond when asked how they cheated? Here’s what they said:

-3% of them claim they didn’t report any gambling wins.

-5% paid an employee under the table.

-5% didn’t report gifts.

-7% exaggerated on the number of dependents they had.

-7% didn’t report the income they made under the table.

As much as we hate paying taxes, there seems to come with it a sense of civic pride. We enjoy the good things that come with being an American, like having good roads, the best military in the world, great schools, and beautiful communities.

Written by adminMay 25, 2019

Mortgage

After the 2008 economic collapse that resulted in the downfall of the housing market, the U.S. government has been working hard to try and provide relief for families that were stuck. HARP was designed to allow homeowners to refinance and get a better loan suited for the home’s updated value.

HAMP, the Home Affordable Modification Program, set out to help the homeowners who, for the most part, was enduring some type of hardship (due to the economy) and had trouble paying their mortgage each month. Those who qualified for help under HAMP were the most at risk for foreclosure of their homes, so the government stepped in to help.

The main purpose of HAMP was to make mortgage payments more affordable in the long-term until the economy could be straightened out. Well, that time has come. HAMP was discontinued at the end of the year 2016, but a new, more streamlined successor has risen from the ashes.

Flex Modification and How It Works

The new idea, created by Fannie Mae and Freddie Mac, is a newer, better version of HAMP. HAMP was sort of a troublesome program that required a ton of paperwork, thus congesting the system. What this new flex modification does is takes out most (or even all) of the paperwork and easing the restrictions for users, making it easier to get help.

In order to receive a flex modification to lower your monthly payments, you must send in a Borrower Response Package if you’re less than 90 days behind. If all goes well, you should see a 20% reduction on your monthly mortgage payments. If you’re more than 90 days delinquent, then you won’t even have to provide borrower documentation.

Are You Eligible?

To qualify for this loan modification, you must:

-Have a mortgage owned by Fannie Mae or Freddie Mac.

-Submit a BRP (Borrower Response Package).

-Be at least 60 days late on payments.

-Prove your hardship.

-Have been started 12 months before your modification evaluation date.

*Reminder: If you’re 90 days or later, then some of these qualifications disappear. A lot of homeowners wait the 90 days before applying to make the process easier.

Getting help if you’re struggling to keep up with your mortgage isn’t a bad thing at all. There will be times during the owning of your home where finances might not always be in order. Being able to lower your payments will be able to improve your overall quality of life. Consider whether a home loan modification will work for you.

Written by adminMay 25, 2019

Saving

Times are surely changing in the United States and not for the better. While the economy is roaring back to life after a decade-long recession, it’s not good news for everyone. There’s still a lot of income inequality and massive quantities of debt. Social Security is being drained out. The cost of living is rising while incomes are staying the same.

$20 used to buy you a lot more at the grocery story just a few short years ago. Gas prices are one crisis away from jumping past $3 and even $4 per gallon. All of these struggles and worries combine and prevent average Americans from being able to save any money. They can’t afford healthcare costs or insurance. Prescription drugs are too expensive.

And because so many people are living paycheck-to-paycheck, they worry about a lot of things. Retirement is one of them. If you can’t save money for retirement, you’re going to be worried about whether you can retire at all. In fact, one-fourth of all Americans already think they’ll never be able to stop working in their lifetime.

According to a study from the Economic Policy Institute, more than one-fourth of the population should be more worried about retirement. Over one half of working people have absolutely nothing saved up for retirement at all. Many apparently think they’ll be able to make up the difference at some point. They’re deluding themselves if they think they will.

Debt is a Major Driver in Preventing Retirement

There are several things that contribute to this lack of saving for retirement. Healthcare costs, longer lifespans than previous generations, and other issues can creep in. But the main driver is debt. Americans can barely afford to live on a typical salary and take out hefty loans throughout their lives. These loans have high interest rates and are difficult to pay back.

Maybe we can afford all of our bills, but many Americans borrow more than they can afford. If interest rates rise, then it hits the economy like a ton of bricks. One study from the Transamerica Center of Retirement Studies reveals that 66% of U.S. citizens say they’re biggest concern in life is paying off their debt.

The study also revealed that paying off debt is a major priority over saving money. “Retirement is all about cash flow. In my mind, it doesn’t matter what your income is. It doesn’t matter what your portfolio size is,” retirement expert Bill Losey told Bankrate. “It really all boils down to habits: having a plan, being frugal, making sure that you have a debt reduction plan.”

It’s so much debt, it’s difficult to pay off in an entire lifetime. Americans expect they’ll be paying the debt well into their golden years, forcing them to work longer than expected. That can be a difficult thing, as companies often like to replace older workers with faster, younger, and cheaper employees.

Retirees Aren’t Ready for Healthcare Hikes

If you think healthcare is expensive when you’re a young adult or even middle aged, you haven’t seen anything yet. It’s much more expensive when you’re at retirement age. It’s common sense. We get older, our bodies start falling apart more. We might be fine for a while, but eventually, our age always catches up with us.

Women in particular have it rough. They pay more in healthcare throughout their life than men do. They also live longer than men, so they spend even more money on healthcare and retirement then men do. In a lot of circumstances, women leave it to the men to budget the money and save, leaving them in a massive hole.

It’s really difficult to know what to expect when you’re older. Maybe we can look at family history and expect some health issues, but most people don’t. They don’t save or plan for accidents. They don’t have a rainy-day fund. Worst of all, they don’t save much for retirement at all, expecting it to be covered later.

Retirees Are Scared

As we continue to age, more Americans start feeling the retirement crunch. They begin to feel as if they won’t have enough money to last the rest of their life. What happens when they officially run out of retirement money? This is a real fear that’s growing. Retirees are becoming increasingly scared of running out of all their money before they die.

While this is going on, it’s going on quietly. The rest of us aren’t really as concerned about it. Statistically speaking, we’re showing we don’t really care to save money for retirement. More studies are coming out all the time proving that we don’t put our money where our mouth is. Short-term goals constantly take precedence over long-term goals and it’s hurting us.

Why save when we want that giant house or brand-new car? There are credit cards we need to max out buying stuff we really don’t need or care about once we have it. It’s this thinking that desperately hurt us later in life. We get to the point where we realized just how much money we wasted and regret not saving more. 68% of millennials have no retirement plan.

“Many people today are outliving their assets because they did not include retirement in their long-term financial goals,” says Doyle Williams, an executive at COUNTRY Financial. “Americans need to seek financial guidance now so they can eliminate the fear of never being able to retire. By taking some simple steps almost everyone can put a plan in place to secure their financial future.”

A World Economic Forum Study

A new study from the World Economic Forum bares all of this out. We’re living longer than we anticipated. “The key driver of the challenges facing retirement systems is increasing life expectancy and a falling birth rate,” the study says. “This leads to a smaller workforce supporting an ever-growing population of retirees.”

“The lack of awareness of the basics on how interest and returns will compound over time, how inflation will impact savings, and the benefits of holding a broad selection of assets to diversify risks means that many individuals are ill-equipped to manage their own pension savings,” WEF says. “Some groups are particularly vulnerable, including women, the young and those who cannot afford, or choose not to seek, financial advice.”

Written by adminMay 25, 2019

Credit & Debt

Back in December, CreditCards.com did a survey asking 1,000 Americans about their debt and their thoughts surrounding it. What the survey revealed was quite shocking. It found that as much as 25% of the population believes their debt is so great, they’ll never pay it off. In fact, they expect to die with a large amount of debt left to be dealt with.

41% of those surveyed say they have no clue when they’ll be able to pay their debt off. They’re working on it, but apparently don’t have it budgeted out. 65% say they’re not sure when or even if they’ll ever. These are terrible statistics that are making life difficult for everyone. Having significant amounts of debt hurt the economy as a whole.

An analyst for CreditCards.com, Ted Rossman, described these stats as “depressing” and one that everyone should try to avoid.

“You’ve got to do whatever you can — whether it’s a balance transfer, taking on a second job, cutting expenses, or whatever you have to do,” he added. “Credit card debt has a much greater impact on your finances than something like a mortgage, an auto loan, or a student loan, because those products are all in the 4, 5, 6% range. Credit card rates are so much higher.”

Growing Credit Card Rates

Credit card interest rates are currently higher than any type of loan out there. These rates recently came into focus after both Bernie Sanders and Alexandria Ocasio-Cortez came out in favor of legislation to se the rate at 15%. They hope lowering the interest rates will help all Americans, but especially the working class.

“There is no reason a person should pay more than 15% interest in the United States,” the freshman representative wrote on Twitter. “It’s a debt trap for working people + it has to end.”

“Practically speaking, I don’t think that’ll become law any time soon,” Rossman said of the proposal, “but I still think it’s an important discussion to have because credit card rates are really high.”

“We know … that about 40% of cardholders are already paying their bills in full each and every month, so that’s great,” Rossman said. “Those are the kinds of people that are great candidates for rewards. But, the 60% who are carrying debt really need to prioritize their interest rate over all else. Unfortunately, a lot of people aren’t doing that.”

The reality is, overall household debt has been creeping up in recent years. Despite a robust economy, people are leaning more on debt than ever before. Perhaps they believe they can afford it with the extra cash in their pockets, but it’s still only 40% of people who pay their credit card debt in full.

“We feel like most people are being responsible,” Rossman said. “Most people who have credit card debt didn’t get there because of a vacation. They didn’t get there because of a shopping spree. They got there because something happened with their health, their car, their home, or they’re just having trouble making ends meet.”

“That’s a tough situation to be in,” Rossman added. “I think it brings up some of the fundamentals of personal finance about doing whatever you can to budget, live within your means.”

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