5 Debt Statistics You Should Avoid
Whelp folks, 2021 numbers are in and not to anyone’s surprise, things didn’t go great for us financially. The good news is that you have the power to change your life! The tricky part is that only you can do the work to change your life.
But don’t fret, I am all about giving you the tools and empowering you to change the financial path you’re on. Below are a few 2021 financial statistics, provided by SpendMeNot.com along with some free advice to help you ditch debt and live rich.
The average credit card debt in America is $6,270.
SpendMeNot claims that “credit card debt is one of the biggest financial problems that households face in the modern world. According to estimates, 45.4% of families carry some sort of credit card debt.”
When we carry over a credit card balance, not only are we paying high interest, but we are proving to ourselves that we can’t afford the lifestyle that we are living. This doesn’t necessarily have to mean that you are living extravagantly, but that you are spending more than you make.
When creating a debt payment plan, paying off credit cards is often top priority as the interest rates are unaffordable. Getting personal loans or transferring the balance to another card is always an option to reduce this debt, but should be consulted first with a professional. Whichever debt payoff strategy you choose, eliminating this high-interest debt should be top of mind.
Just 39% of Americans have enough cash to cover a $1,000 emergency.
When we think about the emergencies that happen in our life, it’s often a car needing repairs, a water heater going out or an unforeseen medical expense. It’s important to have money set aside for these obligations as they often find their way to credit cards, resulting in paying high amounts in interest.
A simple plan to increase your savings will ensure you don’t have to put unforeseen expenses on a credit card. Even if that means putting a pause on other financial obligations, it will be worth it in the end. If you don’t have additional income to build up your savings, you may want to look at temporarily cutting unnecessary expenses or increasing your income.
70% of Americans say their financial planning needs work.
If you feel like you don’t have enough tools in your toolbox to make the financial decisions in your life, you’re not alone. Enlisting the help of a financial planner or coach can help you ensure you reach the goals you have outlined for your life. No goal is too big or too small and the time to start saving is today!
I offer a free initial call to those seeking out expert advice in budgeting and managing debt, you can schedule here.
16% of Americans say they have more debt than before the pandemic.
The pandemic created a financial mess in our lives, lost jobs, reduced hours, business closures and so much more. The key takeaway is that we don’t have complete control over our lives but we should always be doing our best to prepare and move on from financial hits we take.
If you have increased debt, create a plan to pay off your debt and increase your savings to reduce the amount of debt you might have to take on in the future.
It’s also smart to think about diversifying your income. If you were to lose your job today, how else would you make money? When we have multiple income streams we are adding a layer of protection in case our employment changes.
Only 24% of Millennials demonstrate basic financial literacy.
While this stat is scary for millennials, I am not sure it’s any better for Gen X or Gen Z. A basic understanding of expenses, income, assets, liabilities, tracking spending and creating a budget is crucial to your financial success.
The ball is in your court to improve your financial literacy. By gaining basic knowledge in managing your income, debt and assets you’ll be able to set yourself up to build real wealth to reach your future retirement goals.
A key takeaway from these statistics is that no matter how bad you think your finances are, you’re not alone and hiding from the problem will never make it go away.
