Survey: 54% of Americans Can’t Handle a $500 Expense

Survey: 54% of Americans Can’t Handle a $500 Expense
BY John Russo
Feb 27, 2019
Key Takeaways:
  • A Freedom Debt Relief survey found that over half of Americans would have difficulty covering an unexpected $500 expense.
  • The most common reason to reach for plastic, according to respondents, was "everyday expenses." Only 18% said "retail purchases."
  • If day-to-day living has gotten you into unaffordable debt, consider debt relief for a fresh start.

Credit card debt has been on the rise in the U.S. for the past several years, and it seems that more and more Americans appear to be in a position where they may not have any other choice but to rely on credit.

In a recent Freedom Debt Relief survey, 54% of the people surveyed said it would be difficult (32%) or very difficult (22%) to handle a $500 expense. It’s clear that many people are turning to credit cards to make ends meet month to month, probably due to factors like increases in consumer pricing and flat wage growth.

In the survey, 42% of those asked said that household expenses like food, utilities, and gas were the biggest contributors to their credit card debt—much more than retail purchases (17%) and medical bills (13%). While household expenses were the main driver of credit card debt overall across the country, other drivers varied by region:

Among men and women, contributors to credit card debt also varied:

If you find yourself struggling with your finances, here are some steps you can take to get back on track.

1.Talk about your situation

Many people find it difficult to open up about their finances—even with close friends and family. But having a support system could lift the burden of financial stress and give you the motivation you need to improve your situation. Don’t be afraid to discuss your finances with people you trust. They could help you get through this rough patch, and they might even be going through a similar situation.

2. Start budgeting

Whether you want to get out of debt or start an emergency fund, sticking to a budget could help you achieve your financial goals. Downloading a budgeting app or using a spreadsheet to track your monthly income and expenses can help keep you financially accountable and much better able to handle a $500 expense. Plus, budgeting helps give you a better picture of how you’re spending money, which could make it easier to make adjustments that could end up saving you money in the long run.

3. Find ways to save

Even if your budget is perfectly balanced, there are always other ways to save money. Canceling entertainment apps you no longer use, unsubscribing from emails that tempt you to spend, and cooking at home instead of eating out are all easy ways to save. Taking a close look at your expenses can help you reveal areas where you could make some additional cuts.

4. Pay more than the minimum

It’s tempting to just make minimum payments on your credit card debt, especially if you’re dealing with a lot of it. But making minimum payments may end up costing you thousands of dollars in interest by the time you pay off the debt — if you’re able to pay it off at all. That’s why you should consider paying more than the minimum each month, using the avalanche or snowball method.

5. Get debt help

Depending on how much debt you’re dealing with, making more than the minimum payments each month might not be enough. Fortunately, there are many ways to get out of debt with help from debt professionals. Some of these solutions include:

  • Debt consolidation: Using a loan or balance transfer card, you can roll all of your outstanding debts into a single account with a lower rate. Consolidating your debt could simplify your payment schedule and save you money on interest.

  • Debt management plans: Credit counseling agencies, which are typically non-profit organizations, offer debt management plans where they will negotiate with your creditors to reduce your interest rates and fees. Similar to debt consolidation, a debt management plan could save you money by getting you a lower rate.

  • Debt settlement: When you work with a debt settlement company, they will negotiate with your creditors to reduce the total amount of debt you owe instead of just reducing your interest rate. This method could save you a lot of money, but only unsecured debt like credit card, personal loan, and medical debt qualifies.

With over half of Americans unable to handle a $500 expense, you’re not alone if you find yourself struggling to pay bills or save for the future. The good news is that you’re already looking into ways to improve your finances.

Need some extra guidance?

Learning how to deal with debt, money, and planning for your future can feel overwhelming, but it doesn’t need to be hard. At Freedom Debt Relief, we’ve developed a simple to follow guide to help you find the tools you need to move to a better financial future. Get started by downloading our free guide right now.