RSS Facebook Twitter LinkedIn

Featured Advisor

Kim Butler

Partners for Prosperity, Inc.

City:Mt. Enterprise

State: TX

I have 20+ years of handling alternative investments in cash, growth and income for clients nationwide.  I strive to help my clients with all things financial in every way possible over the phone and the web.  I own an alpaca farm which I enjoy working during my downtime.  I also enjoy gardening, writing and reading books.  I also train other advisors on Prosperity Economics.

Click to see the full profile

Share |

Saving, Spending and Debt: Part 2 – Main Street Investors

Debt can prevent Main Street Americans from achieving important financial goals. Find out more.

| BY Adriana Reyneri

Debt is the single most pressing financial issue for Main Street Americans, according to Millionaire Corner research that indicates high levels of debt are limiting the ability of U.S. households to save and plan for retirement.

Reducing debt tops the list of personal financial concerns of most U.S. households – those with less than $100,000 in investable assets, according to a survey of 1,150 investors conducted by Millionaire Corner in February.  Job security, the ability to save and retirement security rounded out the top four worries of less affluent households.

More affluent households are also concerned about personal debt levels, according to a study of investors from a range of wealth levels conducted by Millionaire Corner in the first quarter of 2012. One-fourth of the “Mass Affluent” – investors with a net worth of $100,000 up to $1 million not including primary residence – are worried about household debt and 29 percent agree with the statement, “at the present time, my household is not saving enough to meet our financial goal.” More than one-fourth of these Mass Affluent households say they will be delaying their retirement because of the current economic environment.

The latest data available from the Federal Reserve shows that Americans continue to whittle away credit card debt, which fell 3.3 percent nationwide to $798.6 billion in February. At the same time, Americans borrowed more to finance college costs and car purchases. This non-revolving debt rose 7.7 percent to more than $1.723 billion in February. The statistics do not track debt owed through home mortgages or home equity loans and credit lines.

Education costs are the most significant source of debt for Main Street Investors, who are also likely to owe money for unexpected medical bills. Job loss and pay cuts and excessive spending are also common sources of debt.

Among households with less than $100,000 in investable assets, 37 percent say educational expenses contribute to their personal debt levels. The second most common cause of debt stems from a lay off or pay cut, factors that contribute to the personal debt levels of more than 30 percent of households with less than $100,000 to invest. Medical bills are a source of debt for 26 percent of these households, and excessive spending has created debt for about 24 percent of the households.

More than 70 percent of households with less than $100,000 in investable assets express some degree of concern about their personal debt levels. About 18 percent are “very concerned,” while 27 percent are “concerned” and 26 percent expresses “mild concern” about the amount of debt they owe.  Concerns about debt levels subside with wealth, and more than 70 percent of millionaire households express little or no concern about personal debt.

High levels of personal debt can prevent households from achieving financial goals, such as saving for college, a home or retirement, but personal debt also weighs down the U.S. economic recovery. Consumers burdened by debt and experiencing flat or declining income can’t do their part to stimulate the economy through additional spending.