The Debt Payoff Paradigm

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If you had an unexpected cash windfall of $5,000, what would you do with it? We asked that very question to over 2,000 people to see how they would use the money. The number one answer was “pay off debt.”

Individuals were not feeling particularly generous if they were to come into money, with less than 1% saying they would donate it or gift it to someone else. As for the types of consumer debt likely to be paid off with a $5,000 windfall, credit card debt leads the way.

This behavior was also fairly consistent with how people used their tax refunds in 2019 with 36% saying they paid off debt.

Debt continues to play a part for Millennials and Gen X that want to buy a home.

56% of individuals surveyed were not confident that they would be able to pay off all of their credit card this year.

Day to day saving and retirement saving continues to be an ongoing issue for many people. 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 is stagnate with 60% of Americans saying they set aside less than $1,000 to their household retirement plan.

Michael Micheletti serves as the Director of Corporate Communications at Freedom Financial Network where he is responsible for the strategic communications planning, knowledge dissemination and outreach to key consumer audiences. Before joining Freedom he held a variety of high profile communication and consumer education roles focusing on healthcare, tax and housing. He is a former reporter for FOX News, CNN and served as news director for Clear Channel Radio San Francisco.