What Would You Give Up To Get Out Of Debt?

The government shutdown may have ended in January, but it’s highly likely that some of the nearly one million government employees affected are still feeling the financial ramifications. That’s because for many Americans, it’s becoming harder and harder to simultaneously save and pay for their day-to-day needs. And as a result, a growing portion of the population is financially ill-equipped to handle missing a paycheck.

It’s not hard to see why. Student loan debt is at an all-time high, auto loan debt is at an all-time high, credit card debt hit a new high in 2018, 79 million Americans can’t afford their medical bills, and wages have barely kept up with inflation over the past 40 years.

All of this has snowballed into one theme: Americans have more debt and are more stressed about it than ever.

According to Freedom Debt Relief, 57 percent of Americans struggle financially, 42 percent say that the biggest contributor to their credit card debt is everyday expenses, and 41 percent cannot cover a $400 expense.

What Consumers Would Be Willing To Give Up To Get Out Of Debt

In a survey of over 2,000 adults aged 18-65 meant to outline just how pervasive consumer anxiety around the issue is, the debt consolidation company asked what people would be willing to give up if it meant they could get out of debt.

22 percent of respondents said they would give up going out to eat. 21 percent said they would give up vacationing for 10 years. 13 percent would give up the right to vote.

As far as how this debt is affecting daily life, more than 40 percent said they either can’t take a vacation, are unable to save, feel very stressed, or are delaying life goals because of their debt.

Some other disturbing findings from the survey:
Only 53 percent of respondents surveyed have a rainy day fund
38 percent have less than $1,000 in their savings and checking accounts, and 72 percent have less than $10,000
More than half (53 percent) of respondents said they carry a credit card balance month to month.

What contributes to all this credit debt? According to the survey, 42 percent of respondents blamed daily expenses such as gas and utilities.

Biggest causes of credit card debt among Millennials

Biggest causes of credit card debt among Generation X

Biggest causes of credit card debt among Baby Boomers

One thing the survey makes clear is how interconnected each area of debt is, and how the stresses of each tend to play off each other. Debt forces people to shift costs throughout their budget, picking and choose what areas of debt to pay down at a time.

In addition, a study of 3,000 consumers conducted by the L. William Seidman Research Institute at the Arizona State University W.P. Carey School of Business in conjunction with Freedom Debt Relief found that, unsurprisingly, consumer financial health and emotional health are directly connected.

The study compared consumers’ financial capability with perceived stress, and concluded that consumers who worked to consolidate their debt had lower levels of financial stress.

"Consumers who successfully complete the debt settlement program offered by Freedom Debt Relief are significantly more financially capable and have significantly less stress about their finances,” said Dr. Timothy James, a co-author of the study. “With the economic difficulties many families in the United States are currently facing, it is important to give consumers a variety of financial tools to improve their financial and emotional well-being."

It should be noted that Freedom Debt Relief also has pending litigation with the Consumer Financial Protection Bureau regarding misleading customers about its fees and services.

With tax day coming up, 41 percent of people said they will use their tax refund to help pay down debt. While that is sure to help, it doesn’t appear that the issue is improving much. 66 percent of survey respondents said they have about the same or more credit card debt than they did a year ago.