On the surface it appears that the U.S. economy is still roaring along. But as consumer debt continues to grow and remain at historic levels, we are also seeing a gradual ramp up of credit card interest rates. In addition, a recent analysis showed that Americans are on track to pay $122 Billion in credit card interest this year, which is 50 percent more than they paid five years ago.
The latest Freedom Debt Relief debt attitudes survey asked questions around debt, housing, and financial habits. The results paint a picture of an under saved population that is struggling on many levels.
28% of Americans said when growing up, both parents had an equal influence on their financial habits, but 24% said their mom had the most influence and 17% said their dad had the most influence. However, once individuals leave home things change. If they need financial advice today, 27% say they would do self-research, while another 27% would ask a financial adviser.
When it comes to assessing their financial situation, a substantial majority of Americans – 87% – said they know how to check their credit score. Of those, 41% said they check their credit score monthly, while 30% said they check it annually.
Day to day saving and retirement saving continues to be problematic for many. 32% of Americans said the biggest barrier for increasing their day to day savings is everyday expenses. 17% said it was their debt burden and 15% said it was their wages.
Retirement saving continues to lag as well. 19% of Americans said they set aside between $1 and $1,000 for their household retirement each year; 18% set aside between $1,000 and $5,000; and 12% set aside between $5,000 and $10,000.
41% of Americans said they do not set aside any money for their household retirement plan.
29% of Americans said if they needed $2,000 for an emergency, they would use a credit card.
35% of Americans said if they had an unexpected windfall of $5,000, they would pay off debt. 29% said they would save it and 26% said they would save part and spend part of it. Of those that said they would pay off debt, 62% said they would pay off credit card debt.
55% of employed (full-time & part-time) Americans said the last time they looked at their pay stub to review deductions and/or withholdings was their last paycheck.
However, 27% have gone more than three months without checking their pay stub
Of those that looked at their pay stub, 62% checked federal income tax, 46% checked state income tax, and 43% checked 401k contributions.
Perspectives on Debt
Overall, 79% of Americans surveyed said they have debt. 46% said they have credit card debt, 31% have mortgage debt, and 28% have auto loan debt.
In the past year, 25% of Americans charged their credit card with groceries/food and were unable to pay it off right away (had to carry a balance because of the expense). 15% charged an unexpected car expense and 14% charged a medical expense.
When it comes to paying off that credit card debt, 33% said that it would take 3+ years to pay it off.
Debt impacts people’s personal and professional lives, with 18% saying the amount of their debt impacts their productivity at work, and 44% saying they find it difficult to talk about debt with friends and family. Of those with debt, 26% would rather go to the dentist than talk about their debt and finances, and 21% would rather go to the DMV, without an appointment.
The Cost of College Education
Nearly 40% of college graduates thought that their college education was not worth what it cost.
31% percent of those surveyed carry mortgage debt. For those who do not own a home, 28% consider the cost of the down payment to be the biggest barrier to buying a home in 2019. Another 27% said a lack of overall savings was the biggest barrier, and 26% said it was the cost of the monthly payment. 20% of those with children in childcare said the cost of childcare is as expensive as, or more expensive than, their monthly rent or mortgage payment.
Of total respondents, 36% of Americans said they typically spend less than $1,000 on rent or mortgage every month. 27% said they spend between $1,000 and $2,000 on rent or mortgage.
Methodology: Freedom Financial Network commissioned Atomik Research to run a general population online survey of 2,008 adults in the United States. The margin of error fell within +/- 2 percentage points with a confidence interval of 95 percent. The fieldwork took place between April 25 and 27, 2019. Atomik Research is an independent creative market research agency. Download the raw data here.