RISMEDIA, June 5, 2007-Nearly five in 10 Americans (48%) are uncomfortable with the total amount? of household debt they have according to a nationwide survey released today by LendingTree. Furthermore, the survey discovered that 54% do not have a financial plan, proving the majority of Americans have no intention or definitive strategy to manage the amount of debt they have accumulated.
This survey, which polled 1,499 consumers nationwide*, explored Americans’ relationship with debt. More than 65 questions were asked to participants in categories such as: financial planning; loans and borrowing; credit card debt; borrowing to purchase a home; credit reports and scores; savings; borrowing on-line; and perceptions of being debt free.
Not including mortgage debt, the survey revealed that 74% of Americans envision themselves being completely debt free at some point in their lives.
Bridget Smith, LendingTree Smart Borrower Center editor-in-chief says, “This is great news but based on what we learned from survey respondents, we’re unsure how many will stop being a slave to debt payments and actually make a change to their current lifestyle.”
Smith continued, “The survey further uncovered that 50% of Americans confess they are concerned or extremely concerned about the amount of credit card debt they have and surprisingly, 10% chose to declare bankruptcy as the only way to solve their debt problems. These are startling results indicating some borrowers don’t seem to know the differences between good debt and bad debt and have little idea how to choose the right path towards financial freedom.”
In 2004, LendingTree launched the Smart Borrower program, a multi-year education and advocacy initiative which empowers consumers to conquer their financial challenges and to become smarter borrowers. The cornerstone of the LendingTree program is the Smart Borrower Center located at http://www.lendingtree.com/smartborrower. The Center is an online library of personal finance information (including hundreds of articles and dozens of easy-to-use calculators) that arms borrowers with the tools and advice they need to navigate the often-confusing world of credit, debt and loans.
Debt among Life Stages
Peering into the world of debt among Americans, this survey examined the mindset of different life stages as each relates to acquiring and managing debt. The survey also distinguishes different levels of acceptance, tolerance or rejection of debt between generations, and how the mindset of each life stage progresses throughout the various stages of adulthood. In recognition of the particular financial pressures and debt triggers that occur within certain groups, the study examines the following eight different life stages:
- Young Singles – Single, no children (19-34)
- Young Marrieds – Married, no children (19-34)
- Young Families – Family, children (19-34)
- Mature Singles – Single, no children (35-64)
- Mature Marrieds – Married, no children (35-64)
- Mature Families – Family, children (35-64)
- Empty Nesters – Married, grown children (45-64)
- Seniors – Seniors (65+)
A Dissection of Debt among American Young Families:
Young Families, ages 19-34 with children, had the most shocking results of the survey participants. This life stage has the highest debt-to-income ratio (59% spend half or more of their gross income on total debt expense); is admittedly the most uncomfortable with their total household debt (68%); and is the least financially prepared should an emergency occur (59% do not have savings available for an emergency).
“Young families struck us as having the biggest debt quandary on their hands,” added Smith. “What’s really unfortunate is this group is young and they are raising families with debt that they simply do not understand how to manage and this could manifest into a generational pattern.”
In addition, Young Families spend the highest percentage of their income on their mortgage (45% spend 35% or more of their gross income); are commonly associated with high credit card debt (62% have more than $3,000 in credit card debt, of which 29% have more than $10,000); and are the least likely life stage to have a financial plan (64%).
Other life stage key results from the survey include:
- Young Singles are the most likely life stage to consider an adjustable rate mortgage (24%), yet they are the least likely to understand how one works (33%).
- 68% of Young Marrieds are concerned about their credit card debt, the most concerned of all life stage.
- 59% of Young Families spend half or more of their gross income on their total debt expense, the highest debt-to-income ratio of all life stages surveyed.
- 15% of Mature Singles have declared bankruptcy to manage credit card debt, the most of all life stages surveyed. – 35% of Mature Marrieds have more than $10,000 in credit card debt, the most of all life stages surveyed.
- 22% of Mature Families have consolidated credit card debt and then accrued unmanageable debt again.
- 25% of Empty Nesters are paying an interest rate of 7% or greater on their primary mortgage, the highest rates of all life stages surveyed.
- 24% of Seniors have never checked their credit report or score, the highest of any of the life stages surveyed.
The survey was conducted by MarketWise, Inc. of Charlotte, North Carolina among a nationally representative sample of 1,499 adults, aged 19 or older. The sample was collected in March 2007, using a survey sampling of online consumers. The complete survey summary as well as detailed findings can be downloaded at http://www.lendingtree.com/debtsurvey.
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