According to a survey from the National Foundation for Credit Counseling, conducted by Harris, 32% of Americans feel like they are just getting by financially while 31% of Americans don’t pay all their bills on time. As times of uncertainty and volatility are challenging, it can be difficult for Americans to find ways to manage their budgets so they don’t fall behind.
National Foundation for Credit Counseling (NFCC) Senior Vice President of Communications Bruce McClary joins Wealth! to discuss ways to help Americans who feel like they are just getting by and fix their budget to stay afloat during trying times.
McClary offers this advice: “Look for more affordable ways to manage your debt. If you have a high credit score, you can qualify for low interest rates, balance transfers. If you’re in a tough position…reach out and get help. Nonprofit credit counseling agencies are out there to help you make decisions and move forward and tackle some of those challenges that you’re having. You shouldn’t feel you have to go through this alone, and you shouldn’t let things slide so far behind that you’re getting calls from debt collectors and having somebody pull your car out of the driveway with a tow truck.”
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This post was written by Nicholas Jacobino
Video Transcript
BRAD SMITH: According to a new survey by the National Foundation for Credit Counseling, 31% of Americans do not pay their bills on time, while 32% feel like they’re just getting by financially. So to help dive into some of these numbers is Bruce McClary, who’s the National Foundation for Credit Counseling Senior Vice President of Communications. Bruce, thanks so much for taking the time here with us today. First and foremost, you know, you take a look into the survey results and the findings here. What was most striking to you, and does it seem like consumers, people who feel behind the eight-ball, are charting a pathway to more financial clarity perhaps?
BRUCE MCCLARY: Well, yeah. Thanks, Brad. It’s– I appreciate being on the program being able to dive into these details about our survey because I think there’s some things that are really troubling about what we found in the survey.
I think one of the things that struck me most significantly is how many people are carrying high interest rate credit card debt from month to month, and how difficult it is for them to pay off that debt and pay down that debt, as they have to deal with it. And also, on the flip side of that, how few Americans are putting anything aside into retirement savings. We found that about a third of Americans not only aren’t contributing actively to retirement savings, but have no retirement savings to speak of.
And so, when you couple that debt burden with the lack of savings, it’s no wonder that about a third of Americans feel that they’re just stuck financially, and they’re not getting ahead. And some of the good news that they hear about the economy isn’t filtering down to them. So that’s deeply troubling to see that so many people are burdened with debt. And I would add one more thing that of the people who are carrying the high interest rate debt from month to month, the most well-represented group in that response area are people who are 45 to 54 years old. And that’s the last group you want to have trouble clearing out high interest rate debt, especially when they’re on the runway to retirement.
BRAD SMITH: Yeah, certainly. You know what was interesting within the survey as well? Identifying two in five– 40% of Americans who carry an average of $5,000 in credit card debt on a monthly basis. And one in four of them saying that that’s an increase over the last year. What notably are you witnessing on the credit card side and the amount of people that are tapping to credit where cash just isn’t cutting it?
BRUCE MCCLARY: Yeah. And I think there’s an increased level of comfort in using available credit to gap fill where there is no money in the budget. We found that one in three Americans are comfortable maxing out their credit despite any potential economic downturn.
And then, about one in five feel that if they’re going to be in debt, the amount they owe doesn’t even matter. So I think there’s– I think people are just deciding, well, if I don’t have the money, I need to buy these things that are important, I’m going to use whatever available credit I have. And then, I’m going to deal with the consequences later.
But I think there’s another layer to this story that’s very important too because I think people are struggling to get the things that are the necessities in life because inflation is still a very significant issue. And your money just doesn’t go as far as it used to. And people who go grocery shopping only– can only buy about 2/3 of the items that they could have bought with the same amount of money three years ago. So they have to make very difficult choices. And rather than giving up those items, some people are just using credit to pay for the necessities on a daily basis.
BRAD SMITH: OK. So what’s the fix here, Bruce? I mean, where can people who are watching right now put some type of plan that’s into action where it stops the cash bleed, if you will, in the near term, and perhaps gets them back on the pathway towards reestablishing better credit than current?
BRUCE MCCLARY: Yeah. I think the first thing you need to do is take a good close look at your circumstances. And if you really are just treading water, you’re not making any progress paying down your debt, and you’re having to lean on your available credit more than you should, stop– try to find ways to stop the spending.
Look for areas in your budget where you can find room to make cuts to put extra money towards your credit card debt to pay it down faster. Look for more affordable ways to manage your debt. If you have a high credit score, you can qualify for lower interest rates balance transfers. But if you’re in a tough position, you’re already sliding past due, reach out and get help.
Non-profit credit counseling agencies are out there to help you make decisions and move forward and tackle some of those challenges that you’re having. But you don’t– shouldn’t feel that you have to go through this alone. And you shouldn’t let things slide so far behind that you’re getting calls from debt collectors and having somebody pull your car out of the driveway with a tow truck.
BRAD SMITH: If you do get a call from a debt collector, what is the first thing that you should be discussing with them, Bruce?
BRUCE MCCLARY: Well, you should be honest about your circumstances. I used to be a debt collector, by the way. You should be honest about your circumstances. And you should be realistic about what you’re offering the debt collection agency.
I mean, don’t make a commitment just to get off the phone and to have them stop talking to you. Just be realistic about it, and try to work out an arrangement where you can make installment payments. Portion it out to get back on track. Depending on how far past due you are, there may be options you’re not aware of to amicably resolve the situation and get things back on track.
But don’t make promises you can’t keep when you’re talking to a debt collector. That’s very consequential. And it could hurt you later on.
BRAD SMITH: All right. Some valuable insights. And I didn’t know that about you, Bruce.
So appreciate you disclosing and sharing that with us. Bruce McClary, National Foundation for Credit Counseling Senior Vice President of Communications. Bruce, thanks so much for taking the time.
