Surveys Are the Key to Stats
Summary of Research and Surveys for the More Money FP Program
April 29, 2011
The amount of the consumer debt in the US currently stands at approximately 2.4 trillion. Based on US census that is approximately $7,800 in debt for every man, woman and child in the US.
The size of the total consumer debt grew nearly five times in size from 1980 ($355 billion) to 2001 ($1.7 trillion). Consumer debt in 2010 now stands at $2.4 trillion. (Data from Federal Reserve)
As of Oct 2010, appx 33% of that is revolving debt. Most commonly Credit Cards.
The other 67% is in non revolving, ie, student loans, auto loans, and other leisure loans.
Average new car loan is 27,600 and the loan value is 87%. Only 17% is actual investment money.
The consumer debt statistics above does not contain mortgage debt.
Average American renter spends appx 24.99% of their disposable income on all their debt. Average American home owner spends 15.27% of their disposable income on their debt.
Average of 9 credit cards per American.
A staggering 1 in 177 homes in the U.S. has received at least one foreclosure notice. Canada’s is about 3x less (exact stats not available)
A whopping 61% to 70% of American households live from paycheck-to-paycheck (various surveys and polls), and not surprisingly, they have less than $1,000 in assets. 60% of Canadian households live paycheck-to-paycheck (Stats Canada)
The US national average is $48,800 debt per capita.
The Canadian national average is $43,800 debt per capita.
60% of people making 100,000 a year + are still living paycheck-to-paycheck
Credit Card Debt and Counseling Statistics
From a Georgetown study – credit card debt and related statistics:
Roughly 2.0 to 2.5 million Americans seek the help of a credit counselor each year, mostly to avoid bankruptcy.
From 1990 to 2000, the number of Americans seeking the help of a credit counselor doubled.
In two thirds of the counseling cases, the individual is referred to a household budget counselor, financial advisor or a social worker.
Many individuals experiencing financial difficulties have experienced a job loss, an interruption to their income due to illness, or a divorce / separation.
Nearly 75% of those seeking help from a credit counselor held a credit card.
The average person seeking a credit counselor carries a balance on two credit cards.
The average client seeking the help of a counselor had $43,000 in debt, of which $20,000 was consumer debt and $8,500 was revolving debt.
There are currently over 6,000 debt consolidation companies in the US.
Despite the Fed’s feelings about consumer credit, the bankruptcy law changes that were instituted in the fall of 2005 resulted in a rush of indebted consumers to file for bankruptcy. At that time, personal bankruptcy filings rose to their highest levels on record, with estimates in excess of 2 million filings.
According to Lundquist Consulting, a research company based in California, there were 115,000 bankruptcy filings in November 2010. Year-to-date, there were 9% more bankruptcy filings by November 2010 compared to that same timeframe a year earlier. Nationally, there were roughly 6,000 bankruptcy filings per million individuals, or 1 in every 160 people.
Attitudes and feelings on debt
According to a recent survey conducted by the National Association for Business Economics (www.nabe.com) the combined threat of subprime loan defaults and excessive indebtedness has overtaken terrorism and the Middle East as the biggest short-term threat to the U.S. economy. 32% of the survey participants cited loan defaults and excessive debt as the biggest threat, compared to only 20% citing terrorism as the biggest threat.(source: Dan Seymour, Associated Press)
64% of the people polled who carry debt admitted that debt is a cause of worry for them. In addition, the study found that men worry less than women about the debt they carry.(source: www.bankrate.com , Feb 2008)
Americans have conflicting attitudes about debt. While 91% believe debt can be controlled by disciplined saving and spending, 72% also believe that debt is a part of modern life and difficult to avoid.(source: www.bankrate.com , Feb 2008)
66% of Americans say debt is often the result of unfortunate circumstances beyond a person’s control, while 60% say it is usually the result of bad decisions.(source: www.bankrate.com , Feb 2008)
It’s little wonder that most U.S. consumers have an “I want it now” mentality. They don’t want to save up money to buy that cool smartphone or that antique bedroom set. They want it now. If that requires putting thousands of dollars on their credit cards, that’s what they’ll do.
And that’s what the federal government, and most state governments, do, too.
States in Financial Turmoil
A recent news story in Forbes Magazine reported that at least 39 states expect to face a significant budget shortfall in 2011. In other words, more than half of the country’s state governments are broke.
Forbes reports that this total budget shortfall equals more than $180 billion in debt.
Survey done by Perkstreet in January of 2011, 83% of their survey respondents said that their current situations financially are the same or better, but 56% of the survey respondents said they are planning on putting “getting out of debt or saving more money” as their #1 resolution for 2011.
Associated Press Poll Nov 2010 (1000 Participants):
Even with the better overall feelings and spending plans, harsh debt problems are weighing down many people. About 1 in 8 people surveyed expressed worry about ever getting out of debt, 1 in 5 acknowledged brooding about their debts all or most of the time and 1 in 10 predicted his or her debts will be a major problem for the next five years.
In a survey of how people feel about debt the main buttons that came up were:
Just want out of it
Want or Need to figure out how to make “More Money”
50% of them had a “plan” to get out of debt, where the other “50” had no plan and felt “hopeless or depressed” so therefore did not see how a plan would help them.
For the people that had debt and a plan, 90% of them “hated the debt” or “were unhappy that they ever got into it”
Of this survey only 1 consumer was debt free out of the 50 talked with. His response to when he got out of debt was that he felt “15lbs lighter” and was ready to “tell everyone and yell from the mountain tops”.
The phrase “More Money” was mentioned on average 3 times per survey.
The majority of the focus is the non-confront of the debt and being apathetic about it rather than confronting what is there, starting to really look at all life expenses, cutting them and then focusing on making more money to move away from the debt faster.
Out of the 50% of participants that had a plan, 95% were still interested in a program that could help learn how to better take care of their money to keep them out of debt.
The average these participants were willing to pay for a program was $158.00.
The most common numbers to come up were between $97 and $125 individually
Sadly, many of the solutions in the market (especially the big players) seem to have little to do with helping people get out of debt and save more money, but rather seem more focused on forced upgrades and turning a deaf ear to a large (but largely unsatisfied) userbase. –Chance (budget software surveyor, personalfinancessoftwarereviews.com) 22 Softwares he reviewed.
Get out of debt/budget programs:
In a survey of these programs the majority of them work in the same way.
Pushing the button of “Easy”, “Simple” and “Quick” to get out of debt.
Line up all your credit cards and choose the one with the highest interest rate and pay it off with your extra cash and move to the next one doing the same thing.
Put the majority of your “FOCUS on the DEBT”, rather than looking at the debt, figuring where you can cut even common expenses and then beginning to focus on making more money, selling unneeded items and focusing on flourish and prospering.
End of Summary