New Year Resolutions: Some Startling Statistics About American
Consumers
Before you whip out your credit card, stop and think. America is
often called a consumer society, and it's true. We're also a
nation of credit card debt, which is evidenced by some of these
startling facts.
We all know that acquiring overwhelming debt is stressful from a
financial standpoint. However, it might surprise you to know
that more than 70 percent of divorces in America are brought
about due to financial problems.
One thing Americans are NOT is savers. We simply don't put away
enough money to protect us in the case of financial emergency.
In fact, the average American consumer carries so much debt load
that they're a mere three paychecks away from having to declare
bankruptcy.
Financial emergencies arise all the time, of course, but
Americans continue to build up credit card debt, without thought
of the possible consequences. That's why nearly 1,500,000 people
in the United States are forced to file for bankruptcy every
year. Another 1,500,000 people will turn to the various consumer
credit counseling organizations for help in order to try to
avert bankruptcy. That's a staggering number, but it's dwarfed
in comparison to the 37,000,000 people who endeavor to work out
plans with their creditors on their own. That's 40 million
people a year who are in enough financial trouble to take
drastic action!
How do people get in such horrible financial condition? One way
is through the use of credit cards. They may be convenient, but
they certainly make consumers pay more for the merchandise they
buy. For instance, a person paying for a purchase with a credit
card will pay, on average, more than 130 percent for that item
than if they had simply paid cash for it.
A large majority of consumer only pay the minimum payment on
their charge cards, but those payments are generally 90 percent
interest, with only 10 percent going toward reducing the
principal. A staggering 71% of all credit card holders pay only
the minimum payment, and they do it without a thought to the
consequences. If they can easily afford the monthly payment,
they just keep paying it, without realizing how expensive their
purchases ultimately have become.
If you are one of the millions of Americans who are only paying
the minimum amount on your charge cards, start paying MORE each
month. Even if it's only a little more. Reducing the principal
balance will shorten your overall payment schedule--sometimes by
hundreds or even thousands of dollars.
The statistics are mind-boggling, and with interest rates headed
even higher, you must educate yourself on the wise use of
credit, pay cash whenever possible, and try to live within your
means, even if it means doing without some things. It's the only
way you can avoid becoming one of those sad financial statistics
yourself. Include monitoring your credit card use in your New
Year's Resolutions.
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