A new survey from Highland Solutions revealed some startling stats about Americans’ spending habits during the pandemic. How many of these describe your situation?
- 63% are living paycheck to paycheck
- 47% have run out of their emergency savings
- More than one-third have opened up a new credit card since the pandemic to help cover expenses
- 42% have taken on more debt than normal, and nearly a third have racked up over $10,000 in new debt (a recipe for disaster)
- 82% could not cover a surprise $500 expense
- 67% regret not having enough savings before the pandemic hit
So How the Heck Did We Dig Ourselves into this Debt Hole?
For starters, you only need to look no further than the conventional advice about emergency funds. [Read more…] “New Survey Reveals Majority of Americans Now Live Paycheck-to-Paycheck Due to COVID-19 Pandemic… Here’s How to Avoid That”
Total U.S. household debt just surpassed $14 trillion for the first time ever, and credit card debt hit a new record, as well. These scary debt stats come from the latest report from the Federal Reserve Bank of New York.
As economist Heather Boushey noted… “In the abstract, more debt signals optimism. But in reality, families are using debt as a mechanism to pay for things their incomes don’t support.”
The optimism comes in because the stock market can’t seem to stop hitting new records, and the economy is prospering, so it’s time to spend, spend, spend – even if it’s money you don’t have.
Then the reality sets in as 8.36% of credit cards are now delinquent. Almost 5% of auto loans are at least 90 days overdue. And at least 12% of student loan borrowers are delinquent or in default.
For the moment, let’s ignore the fact that most people have forgotten that the balances in your market-based retirement accounts are “paper” – not “real” – wealth which will vanish with the next market crash.
Let’s focus instead on the lessons most people have forgotten from the last debt crisis. Americans were feeling flush from rising stock market and real estate values, and they were in hock up to their eyeballs.
Then the Bubbles Burst and…
[Read more…] “Are You Cruisin’ for a Bruisin’? Americans Are Spending Money They Don’t Have and Hitting Record Debt Levels”