Americans fall short in debt reduction
|January 14, 2005|
Survey finds many consumers' financial situations will grow worse this year
Many Americans dream of a debt-free future but few are doing anything to plan for that scenario, according to a new survey released this week by LendingTree.com.
Moreover, the vast majority of people who are most concerned about their debt have no intention or definitive strategy to manage it, but instead are planning to make big-ticket purchases that will make their financial situation worse.
Occurring at a time of year when people traditionally take stock of their finances, The LendingTree.com Smart Borrower Survey finds that many Americans long to become smarter borrowers but have quite a ways to go. LendingTree.com hopes the survey, which polled 1,000 consumers, will highlight the importance of approaching debt wisely through smarter borrowing techniques and decisions as we enter 2005.
"When it comes to breaking the cycle of debt, most Americans have good intentions. What they lack are the tools, support and knowledge to manage their debt wisely. They dream of a debt-free future, but need to learn how to become smart borrowers to make that dream a reality," said Ed Powell, chief consumer officer at LendingTree.com. "The good news is that it's never too late to become a smart borrower, and there are sensible measures and methods that can help people get off the treadmill of habitual debt. The New Year is the prefect time to rekindle that resolve and become fiscally fit."
The Debtors' Dream: The vast majority of respondents, almost 80 percent, believe that their future holds a life completely free from debt. Few, however, plan to incorporate a stricter regimen of smart borrowing practices and decision making to convert this dream into a reality. The survey illustrates an overall disparity between best intentions and actual deed. Ruled by inertia, apathy or worse, denial, consumers indicate in their responses that they are either not doing enough to improve their debt standing or are making matters worse with unnecessary purchases that will ultimately aggravate the situation.
The survey finds that of those making any kind of New Year's resolution, most center on health matters. Those who make a financial resolution do so with somewhat feeble conviction:
The survey also finds that a significant number of respondents, 60 percent, are moderately to extremely concerned about their overall level of debt. However:
A portion of those who are moderately to extremely concerned with their overall debt indicate plans to make their situation worse by making unnecessary purchases, prolonging the vicious cycle of debt:
Of the 76 percent of those with outstanding balances on credit cards/personal loans who are concerned about their overall level of debt, 37 percent are only making minimum payments and playing "credit card bingo" by rolling over balances to lower-interest cards.
Twenty-six percent of those who claim to be knowledgeable about loans and finances are approaching credit card debt in the same manner.
LendingTree.com, via Insight Express, conduced the survey during December 2004. The survey had an overall margin of error of +/- 3 percent. The survey criteria is based on an age population of 21-plus with sampling balancing for household demographics.
Copyright 2005 Inman News