Posted by Tiffany in Daily, Finances | 0 Comments
U.S. Debt + U.S. Spending Priorities = ??
I LOVE this stuff though! I have seriously looked into becoming a financial counselor and being trained – not a financial adviser, I don’t want to sell insurance – but a financial counselor. I’d love to do that. To sit down with those who need someone to talk them through their current situation, be honest with them, and work to put together a plan, hope. That would be so much fun. I’ve looked into it and have mentioned it to R a couple of times, I think when Lil Man gets old enough for me to be gone for a week I’ll really step into it and get trained. I did sign up to be on the team in church, but I want to take it a step further and get certified.
I love educating myself on what people who are smarter than me know, for example Dr Thomas Stanley’s The Millionaire Next Door. Highly recommended, I read this a couple of years ago. I most recently picked up the next study, The Millionaire Mind. It’s his further, in depth study of the decamillionaires (approx net worth per individual/family – $9.6 million). Absolutely fascinating stuff. Oddly enough, I’m reminded of my fantastic husband on almost every page. He truly is on the right track, he’s courageous, bold, doesn’t let himself get beaten down. The best thing about this study is that it’s not rocket science, really. The latest story/example I read is of an individual who started a used truck parts business. He makes $700k a year. His technicians/the guys who take apart the old vehicles for the parts? $130k… a year. He saw an opportunity where others didn’t and took a risk.
I also am drawn to these articles when I see them on Yahoo Finance or just surfing the web. It’s amazing to me the different mindsets out there. Or when I see everyone posting on Facebook their, “Taxes are coming in! New big screen TV? Or downpayment for a car?” Well, I don’t know your personal finance book so I can’t judge nor make a recommendation – however, this is what is interesting.
Take these stats from CreditCards.com on personal debt in the US:
- Average credit card debt per household with credit card debt: $14,750
- 609.8 million credit cards held by U.S. consumers. (Source: “The Survey of Consumer Payment Choice,” Federal Reserve Bank of Boston, January 2010)
- Average APR on new credit card offer: 14.73 percent (Source: CreditCards.com Weekly Rate Report, Feb. 9, 2011.)
- Average APR on credit card with a balance on it: 13.67 percent, as of November 2010 (Source: Federal Reserve’s G.19 report on consumer credit, November 2010)
- Total U.S. revolving debt (98 percent of which is made up of credit card debt): $796.5 billion, as of November 2010 (Source: Federal Reserve’s G.19 report on consumer credit, March 2010)
- Total U.S. consumer debt: $2.40 trillion, as of June 2010 (Source: Federal Reserve’s G.19 report on consumer credit, November 2010)
- The total amount of consumer debt in the United States stands at nearly $2.4 trillion. Based on the 2010 Census statistics, that works out to be nearly $7,800 in debt for every man, woman and child that lives here in the U.S. (So Prayse, at the age of three – counts in this statistic, nice.)
- 67% of that debt is derived from loans that are not revolving in nature. This type of debt would include automobile loans, student loans, as well as loans on boats, trailers, or even vacations. In fact, these statistics also tell us that the average new car loan is over $27,600, and the loan to value ratio is 83%.
- Consumers spend roughly 12% of their disposable, after tax, income to pay off mortgage obligations and consumer debt such as automobile and personal loans.
- A broader measure of consumer debt is the financial obligations ratio or FOR. This measurement of consumer debt adds other financial obligations such as car lease payments, rental properties, property taxes, and homeowner’s insurance. The FOR is arguably a better overall measure of how much disposable income goes towards paying off all “mandatory” financial obligations.
- As of December 2010, this financial obligations ratio stood at 15.27% for homeowners and 23.99% for renters. Nationally, including all groups, this number stands at 16.78%. What this data tells us is that the typical homeowner spends around 15% of their disposable income just to own their homes and cars. Renters outpace homeowners by over 8%, and spend nearly 24% of their income on these same types of debts.
- About 13.2 percent of Americans said they will spend their refund on a big ticket item such as a television set or furniture, up from 12.5 percent last year.
- About 11.9 percent are earmarking the money for a vacation, compared with 10.0 percent last year who eyed a trip.
Sigh, really? But then I see it – a light:
- About 42.1 percent of those surveyed said they would put their refund in savings. That’s also higher than last year, when 40.3 percent said they would save it.
That’s great, okay- so what about the $796.5 billion of debt we’ve managed as a PEOPLE (not a government) to rack up?
- Fewer people will take the money and pay off debt. About 41.9 percent said that’s where their refund money would go, compared with last year when 43.9 percent said debt reduction was the plan.
Sigh. It’s good news and frustrating at the same time in my limited observation. On one hand, a much higher percentage is saving which is EXCELLENT and a much higher percentage is paying off debt than splurging (at least the plans). I wish that number wasn’t going down however. But I have high hopes I do see a shift, even if this indicates it is slightly going down, I see those I love and care about being intentional about where they are going financially and I see the hope and change in them when they do. There is victory in that.
This coming to you from your local wannabe financial truth guru 
