The statistics are depressing. According to a 2017 study, 73 percent of consumers had outstanding debt when they died, with amounts averaging $61,554, including mortgage debt or $12,875 without. A 2018 study found that 43 percent of Americans expect to be in debt for one to five more years, 19 percent six to 10 years, and 15 percent 11 to 20 years. Where do you fit in?
Despite these numbers, people aren’t as helpless as they may feel. Unfortunately, there are some costs that we have difficulty controlling like taxes, medical care, housing and food. Although sometimes even with these, there are choices and strategies that can help reduce some of the burden. There are many more expenses, however, that we can better manage to improve our financial health. These include not overspending on large homes, multiple cars, extracurricular activities for the kids, the latest technology and other discretionary spending. As I discussed in a prior post, many people fall prey to "lifestyle creep," where you buy more things because you can. Instead of putting extra money aside, it can feel like there is always something more you need to buy that seems essential.
How much is your debt? How does your income, wealth and savings compare to others in your situation? Pew Research offers an interactive Portrait of Financial Security tool, which allows users to explore how their level of education, race, family structure, and presence of children affect family income, wealth, and liquid savings. You can also see how others in these groups perceive their financial well-being.
No matter where you fit in, it’s important to realize that controlling your debt load is an important part of building financial security. If you don’t take affirmative steps to live within a budget, it’s far too easy to fall behind and accumulate debt, making it difficult to save for a true emergency or for your long-term goals.