Debt continues to plague Americans, with many so fed up with it that they would go to extraordinary measures to be free, including giving up traveling, their car, and even their pets.
With the average American in debt to $21,800, it’s no wonder why so many would give up many of life’s pleasures to be debt-free. Upgraded Points conducted a survey of 1,000 Americans, asking them what they would give up to get out of debt. The results speak volumes about the weight that people carry when their finances have gotten out of hand.
A Debt Snapshot: What People Owe
Credit card debt tops the list for debt that American’s carry. There are other types of debt, too, though, that have Americans stressed out, including:
- Credit card debt: 44.5%
- Student loan debt: 22.8%
- Auto loan debt: 10.5%
- Mortgage debt: 10.4%
- Medical debt: 4.8%
- Personal loan debt: 4.1%
- Other debt: 2.9%
The average federal student loan debt per borrower is $37,338, and the average private student loan debt is $54,921. Half of students who took out a student loan for their education have outstanding balances of at least $20,000 on each loan 20 years after starting school.
Auto loans are another cumbersome debt, with the average monthly payment for a new car at $725 and loan terms averaging 68.6 months. Auto loan debt is the third largest category of debt.
The average American mortgage debt is $241,815, with average payments at $1,427 per month.
It’s no wonder that people would go to great measures to eliminate their debt. They are drowning in it.
What They Would Give Up
When the survey asked what people would give up to get out of debt, the respondents had some surprising answers:
- Alcohol for two years: 73%
- Travel for two years: 70%
- Sex for a year: 56%
- Streaming services for two years: 59%
- Exercise for two years: 48%
- Amazon for life: 42%
- Social media for life: 38%
- Their car for a year: 30%
- Their phone for a year: 22%
- Their pet for a year: 12%
Those with significant debt — meaning debt that exceeded $40,000 — also had some interesting responses about sacrifices they’d make to be debt-free:
- Sex for a year: 68%
- Their phone for a year: 35%
- Their pet for a year: 19%
While these responses imply a magical moment of being suddenly debt-free, there is a shred of truth in them. Making short-term sacrifices to pay down debt is not exciting, but many people could improve their finances by doing so.
How Far They Would Go
The survey also asked respondents about the lengths they would be willing to go to be debt-free in terms of work. More than a third said they would work every day for a year. When asked if they would give up their paid time off for the next two years to achieve that goal, 36% of the respondents said yes. Generationally, younger workers are less willing to give up paid time off than their senior co-workers:
- Gen Z: 27%
- Millennials: 31%
- Gen X: 47%
- Baby Boomers: 44%
The majority of respondents — 65% — said they would work a second job to pay off their debt, and 24% said they would take money out of their retirement accounts. Many Americans would be willing to downsize their living space to pay off debt, with 50% responding in the affirmative.
How People Manage Their Debt
The methods Americans use to manage their debt are often ineffective in getting it under control and paid down in the most cost-effective way possible.
Regarding monthly payments, 21% of Americans with credit card debt only make the required minimum payment each month. This practice results in interest charges accruing, burying consumers deeper in debt. Even though most Americans make the minimum payment, they want to pay off their debt.
Forty-four percent of Americans said debt was their most pressing financial concern and strongly desired to eliminate it. Similarly, 22.8% of respondents felt overburdened by their student loans. However, 59% said they would not seek financial help from anyone to pay off their debts.
Most Americans (87%) responded that they would pay off their debt if given a check that was the exact amount of what they own on their credit cards.
Controlling Debt (Without Giving Up Amazon)
Debt is restrictive. Almost half of Americans (4.6 out of every 10) who want to purchase a home can’t because of their debt. It doesn’t have to be like that, though. There are things a person can do to improve their financial management.
Tools like Dave Ramsey’s Baby Steps can help those in debt create a plan to get their finances back on track. They help build a solid financial foundation and a straightforward strategy to pay down debt. As one’s finances improve over time, they can do more of what they enjoy and maybe even purchase a home.
Establishing a budget is another good place to start. It provides a visual of income and expenses, helping to reduce wasteful spending and put more money toward debt. There are countless budgeting options online, allowing everyone to find one perfect for their needs.
Of course, the best way to pay down debt is to start doing it. It may be challenging to take the first step, but most people develop motivation as they see their balances decrease. And for those who have become debt-free and reached financial independence, few regret making paying off a debt a priority.
This article was produced by Media Decision and syndicated by Wealth of Geeks.
Source link by Jon Dulin
