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Special mention

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After more than thirty years of rising inequality, and in the midst of the Second Great Depression, the financial situation of many U.S. households is dire.

That’s my interpretation of the results of the Federal Reserve’s latest report on the economic well-being of American households.

Here are some of the facts contained in the report:

Overall, only 30 percent of the respondents considered themselves to be better off financially than they were in 2008.

In terms of credit-card debt, only 57 percent of respondents reported that they pay off their balances in full each month. (Among the remaining 43 percent who revolve their credit card balances, 82 percent had been charged interest on their balance at some time in the prior 12 months.)

The median percentage of 2102 income reported saved was only 2 percent (the mean was much higher, 9 percent), while 45 percent of respondents reported that they were not able to save any portion of their income in 2012.

Respondents were asked how they would pay for an emergency expense that came along and cost $400. The majority responded that covering such an expense would be a challenge: 19 percent indicated that they simply could not cover the expense; 9 percent would have to sell something; or would have to rely on one or more means of borrowing to pay for at least part of the expense, including paying with a credit card that they pay off over time (17 percent), borrowing from friends or family (12 percent), or using a payday loan (4 percent).

student debt

24 percent of respondents have education debt for themselves, someone else (spouse, child, or grandchild), or a combination of the two. Among those with each type of education debt, the average amount people reported owing for their own education was $25,750, with a median value of $13,000. Overall, 37 percent of respondents said that the financial costs of education outweighed the benefits. Those who did not complete their program of study were far more likely (56.5 percent) than others (38 percent for those who completed programs, 17 percent for those still enrolled) to say that the financial benefits of their education were much smaller than the cost.

When asked if they could afford to cover the cost of a major out-of-pocket medical expense, 43 percent of all respondents said that it was not likely that they could afford to pay. Only 21 percent of respondents indicated that it was very likely they could afford to pay for a major out-of-pocket medical expense. In fact, almost a quarter of respondents experienced what they described as a major unexpected medical expense that they had to pay out of pocket in the prior 12 months. The result? One quarter of respondents went without dental care in the prior 12 months because they could not afford it, 18 percent went without a doctor visit, 15 percent went without prescription medicine, 11 percent went without a visit to a specialist, and 10 percent went without follow-up care. Overall, 34 percent of respondents reported going without at least one of these types of care because they could not afford it.

retirement

Finally, 23 percent of¬†Americans¬†who are near retirement age (ages 45 to 59) have zero money saved. So, what are they planning to do? Basically, rely on Social Security benefits (58 percent), continue working (25 percent), and/or expect their spouse/partner to keep working (11 percent). Not surprisingly, people’s expectations depend on their level of income:

Responses to the question about the path to retirement also vary consistently by income, indicating that expectations around retirement are closely linked to financial circumstances. While 35 percent of those earning six figures reported that they intend to work full time until a retirement date and then stop working, only 15 percent of those earning less than $25,000 intend to do so. Similarly, 28 percent of¬†those earning less than $25,000 indicated that they expect to ‚Äúkeep working as long as possible,‚ÄĚ while only 13 percent of those earning $100,000 or more said the same.

The bottom line: a¬†very large group of¬†Americans are financially on the edge. They’re broke and getting broker.