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Dealing with debt can seem like an overwhelming process, but it doesn’t have to be. Use these realistic tips to get back on your feet financially.

Facing the Financial Capability Month Facts

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April is Financial Capability Month. You probably won’t find any greeting cards celebrating that fact, but don’t let that stop you from taking a closer look at your personal economic situation.

It’s always fun to see how we stack up against our peers, and the NFCC’s hot-off-the-press 2013 Financial Literacy Survey is a great way to do that.

This year’s survey results provided somewhat of a mixed message. More than one in four respondents indicated they are spending more than last year, yet 77 percent admitted to having financial worries, listing insufficient savings as their top financial concern. Yes, you read that correctly. Americans (that means you) are spending more, but at the same time are worried about a lack of savings.

Taking a closer look at consumers’ top financial concerns, check out the following. (Respondents were allowed multiple responses, so don’t worry about the percentages not adding up to 100.)

  1. Not enough savings – Overall, 57 percent of Americans indicated they are worried over a lack of savings, including 43 percent who are concerned about not having enough “rainy day” savings for an emergency, and 38 percent concerned about retiring without having enough money set aside. Although fairly evenly divided, the data suggest that having enough money to resolve daily emergencies takes precedence over the longer term retirement planning.
  2. Not being able to pay financial obligations – A total of 26 percent of those responding, or roughly 61 million people, were worried about servicing their debt commitments, including concerns around paying credit card debt (13 percent), repaying student loan debt (8 percent), an inability to make monthly vehicle payments (7 percent), and not being able to pay off existing medical debt (6 percent).
  3. Health insurance – One in four (25 percent) are worried about health insurance – either not being able to afford it (19 percent) and/or not having any (17 percent).
  4. Credit – While 19 percent were worried about their credit score and/or lack of access of credit overall, 16 percent were anxious about their score, with 9 percent concerned over their lack of access to credit, suggesting that consumers continue to realize the importance of credit in their lives. However, most adults have neglected to review their credit report (65 percent) or score (60 percent) in the past year.
  5. Job loss – Eighteen percent, or more than 42 million Americans indicated fear of job loss as a major concern, a number that is disturbingly high.
  6. Foreclosure – As the least of consumers’ concerns (among those listed), a comparatively small 4 percent of Americans are worried over losing their home to foreclosure, undoubtedly a positive signal for the housing industry and the economy as a whole.

The good news is that 20 percent of U.S. adults indicated they do not have any financial worries, a strong sign of consumer confidence.

Remaining stubbornly consistent over the past three years, 40 percent of adults gave themselves a grade of C, D, or F on their knowledge of personal finance. How would you grade yourself? Should you put yourself in financial time-out?

Based on this poor report card, it is not surprising that nearly four in five (78 percent) agree that they could benefit from additional advice and answers to everyday financial questions from a professional.

Know that there is ample opportunity for you to improve your level of financial literacy and take steps to resolve any financial problems. Not surprisingly, most adults indicated that if they were having financial problems related to debt, they would first turn to their friends and family for assistance (28 percent). A similar number (27 percent) also said they would reach out to a professional nonprofit credit counseling agency for help, demonstrating a high level of confidence in the value of credit counseling.

So, how did you fare? If any of this data hits too close to home, take action. Ignoring a financial problem rarely solves it, and looking the other way only makes the problem harder to solve. To get started, consider renaming April My Financial Capability Month and resolve to make positive changes that will move you into a more stable financial future. Then start planning your Financial Capability Month 2014 party!

At the end of fiscal year 2011, the federal debt totaled $14.8 trillion.

The debt limit determines when the U.S. Department of Treasury can or cannot borrow money to cover the country’s debts.

Learn more about the federal debt and the debt limit in Federal Debt 101, from the Government Accountability Office.

Minimum Payments on Credit Cards

Video description

What happens when someone makes just the minimum payment on a credit card balance.

Video transcript

Voice over: On the hottest day of the year, Marta’s air conditioner broke. Marta decided it was an emergency. So she went to the store to buy a new air conditioner. Marta didn’t have enough cash, so she used her credit card. The air conditioner cost $300. That evening, her family was cool and happy.

The next month, Marta got her credit card bill for the $300 air conditioner. Marta had it in her budget to pay $15 each month until she finished paying for the air conditioner. $15 was her minimum payment.

Then, every month, Marta sent the minimum payment. But Marta’s balance didn’t go down $15 each month. The credit card company added interest to her balance every month. The annual interest rate on Marta’s credit card was 23 percent. So the credit card company added interest to Marta’s balance every month.

It took Marta more than 2 years to pay for the air conditioner, because she paid only the minimum payment. At the end of 2 years, Marta had paid $382: $300 for the air conditioner and $82 in interest.

Video from the Federal Trade Commission

Get Help Managing Your Debt

If you’re in debt, consider getting credit counseling. These services can help you negotiate better terms with your creditors and guide you on budgeting your money.

Find a list of credit counseling agencies approved by the Department of Justice.

Get additional resources on debt and credit