The economic recovery may be revving up, but a growing number of Americans are still attached to the shackles of enormous debt levels. A new poll finds that consumers are so overwhelmed with debt that they feel they may not pay it off no matter how long they live.
According to a survey conducted by CreditCards.com, 18 percent of all adults with debt and 13 percent of overall adults expect to perish with debt. This number has doubled in the last year, and the study authors say this is very surprising. Some of the reasons for this debt uptake include stagnant wages, rising student loan debt levels and increases in credit card balances.
This type of thinking is found in all of the age demographics, except for millennials, a group that has been straddled with immense debt levels, particularly when it comes to student loans. This under-35 demographic is the most optimistic one out of all the age groups.
Matt Schultz, senior analyst at CreditCards.com, was quite interested in this data point because it is regularly reported that millennials face dire financial consequences stemming from credit card and student debt.
Although the issues of income inequality, inadequate wages and minimum wage hikes are front and center of the business and political discourse, higher incomes don’t necessarily equate to paying off debt. Ostensibly, between 12 and 14 percent of Americans in all income brackets, including those who earn more than $75,000 annually, expect to pass away with debt burdens.
“These numbers are disturbing,” said Christopher Viale, president of Cambridge Credit Counseling of Massachusetts, a nonprofit organization that helps people become free of debt. “I am most concerned about the 13 percent who expect that they’ll never be debt-free, given all the negative consequences that come with such a bleak outlook.”
With the holiday shopping season in full gear, the amount of credit card debt is expected to rise significantly. The poll discovered that 38 percent of respondents reported buying presents on credit – more than half (55 percent) expect to pay off this Christmas debt within one month, and 74 percent predict they’ll pay it off within three months.
In fact, the richer the households the more in debt they’ll be during Christmas.
Viale added that holiday debt needs to be resolved as quickly as possible. Essentially, he presented the case that no one should go into debt that will take them more than three months to pay off. If it isn’t paid off quickly then it could very well hinder your other financial objectives.
Moving forward, Viale recommends that everyone, whether they’re young or old, should take part in some sort of personal finance education. Today’s generation adopted their parents’ financial habits, but they in turn also didn’t undertake any serious personal finance education. Essentially, individuals must take a look at their overall debt situation and see how it affects their lives.
The landline and cellphone survey was conducted with 1,001 adult Americans between Dec. 4 and 7. It contains a margin of error of +/- 3.6 percentage points (non-indebted respondents) and 4.3 percentage points (indebted participants).