Stressed Out by Debt?
Debt dogs many Americans, stressing them out even as they firm up their own financial foundations.
There are new jobs produced but old worries persisting for people despite belt-tightening and boosted savings, according to an Associated Press-GfK poll.
About 46% of those surveyed say they’re suffering from debt-related stress, and half of that group described their stress as “great deal” or “quite a bit.” On the other hand, about 53% say they feel little or no stress at all.
That’s in line with findings from last year, even though times seem better today: The economy is growing and generating jobs, and households have made progress in repairing their financial footing, trimming debt, watching spending and saving more.
It’s a big turnaround from a year ago — a shrinking economy, jobs jettisoned as businesses struggled to survive the deepest recession since the 1930s.
So why aren’t the stressed — and the not-so-stressed — feeling better?
For starters, it just doesn’t feel much like a recovery to many people.
Unemployment is stubbornly high — 9.9%. The jobless face fierce competition for work. Those with a job are watching their paychecks shrink.
A growing number of people are at risk of falling into foreclosure, and only those with the most stellar credit probably can get a new loan. AP-GfK polls show that only 20% say the economy is good, compared with 15% last year.
People are whittling their debt.
The average amount owed on credit cards is $3,900, the poll said. That’s down from $5,600 in the fall and $4,900 last spring.
Families with incomes over $50,000 have sliced their credit card debt by more than half, yet their stress from debt hasn’t changed much — it’s moderately low. Families with incomes under $50,000, however, have added only slightly to their debt, while their stress level rose sharply.
More broadly, people are cutting their debt at the fastest rate in more than six decades, according to the Federal Reserve. People defaulting on mortgages and other loans factor into the reduction, economists point out.
Household debt fell 1.7% last year to $13.5 trillion, according to the Fed. It was the first annual drop, based on records going back to 1945.
People on average carry around $44,000 in debt — mortgages, credit cards, auto loans and other consumer debt. That’s a far bigger load than in the early 1980s, when unemployment topped 10%. In 1982, per capita debt totaled about $14,000 in today’s dollars.
At the same time, people are building up their savings — 4.2% of their disposable income last year, the most since 1998, the Commerce Department says.
What about you? Do you feel stressed by debt? We’d love to hear from you. Just click the comment link below and tell us how you feel about the economy and your personal debt/stress level. You email address will never be published, and your comments can remain annonymous if you’d like.