The State Of America 's Household Finances

What would you do if you had $15,000? Perhaps you donate money to charity, or perhaps buy a new car? Maybe you could finally get that watch or purse that you’ve always wanted. The issue is that many people thought they had this much money. Unfortunately, they paid with credit and are now paying 18% extra on their purchases; in some cases, it’s even as high as 26%. That equates to paying roughly $18,000 dollars for something that only cost $15,000. Many Americans are regrettably faced with these bills today, but there is hope. There are people out there who want to get us out of debt, and back on our feet. This essay will look at two of those people, Dave Ramsey and Suze Orman. Of course, you will have to decide which will work best for you. Hopefully this will help you find your way to being debt free.

Undisputably, with hard work, one could achieve the American dream. But, the rewards of Americans hard work need to be protected. People living in Washington Metropolitan Area are obviously financially insecure. According to the reports of the survey held by the National Foundation for Credit Counseling, about (64 percent) of Americans do not have enough money at hand to handle a $1,000 emergency expense, gloomily only (36 percent) of americans could draw out $1,000 out of their savings account to cover an unexpected expense. Clearly, our society does not encourage saving. Our society encourages us to borrow insurmountable amount of money or taking out too much cash on a credit card with the expectation of improving one’s credit score, but at the expense of drowning in debt. Obviously, most household are spending greater than or equal to their income. The temptful and irresistible act of spending has resulted into the acquiring of large sum of credit card debt, unpayable loans, mortgage, debt, and extreme poverty. How will a person be happy and successful? How can a man achieve the American Dream if his unemployed, homeless, and entrenched in dept. The act of acquiring knowledge through education was suppose to be a solution or the pathway towards achieving this great American Dream; However, education has now become a very significant barrier that hinders most especially the youth from pursuing

Debt has become the new American bedfellow; “The average U.S. household with debt carries $15,762 in credit card debt and $130,922 in total debt” (Issa). One should keep in mind that the “$130,922”is a median debt; some live debt-free while others have substantially higher debt (Issa). For twelve years running, the cost of living in our country has grown greater than our median wages contributing to the overall mountain of debt incurred (Issa). Our country has grown used to the debt that looms because that is what the American way has become; buy bigger, one can always settle finances at a later date. Juliet Schor discussed how “The new consumerism, with its growing aspirational gap, has begun to jeopardize the quality of American life”. Americans have grown tired of carrying a proverbial weight of their debt and are fighting against the normal American life of living

Finance stability has been a problem since “big business”, the Gilded Age in the 1870s, the Stock Market Crash in 1929, and even with the sixteenth amendment in 1913. Living is becoming expensive in the 21st century automobile expenses, house payments, food, clothing, and so on are ways an individuals income can be tampered with. That’s why America should learn to budget themselves to keep money in their pockets. When it comes to making decisions on purchases one should, "Wait overnight, put some time between your emotions and the transaction." (Rachel Cruze). Saving money will not only build your income but the savings act as a ‘life line”; this prepares you for a life time enjoyment after retirement, provide a safety net in case of an emergency and aid in being financially

Many of the Americans in today's world believe that life is not life without debt. In order to buy big ticket items or have vacations requires you to get migraines the next day thinking about the debt you have just created. I am here to tell you that it is simply false way to think of money. I am here to tell you to go out and have fun, go buy a 60 inch flat screen, go to Europe. But I am telling you to do it responsibly and with debt free burden. To live free willed with your money. Do not follow the average American even if they look wealthy. Because the truth is the average American IS broke. Living barely paycheck to paycheck and paying debt off for almost every big ticket item they own. But how are you to live without a credit card?

The costs in homes are consistently going up and many families across the U.S. cannot afford them. They can’t pay off the mortgages and end up going bankrupt because they cannot pay for the house let alone a car, utilities or any other costs that Americans face today. Let’s take a step back from the situation I believe in order for people to be able to payoff their homes without going under in debt is that they manage their money in a better way. People that aren’t able to pay for their homes are people who spend their money on other things that aren’t as important. Some things would include they spend around three hundred dollars in coffee every month. Now what if people saved that money and put it into bills that they really needed to

Americans are overly confident when it comes to finances, yet many Americans do not have a solid financial plan to ensure a financially secure future.

Every day millions of individuals struggle with the idea of maintaining and establishing their financial obligations. Many Americans simply fail at the necessary tasks needed to manage their monthly income. Let alone gather enough funds to secure a respectable financial future. In some cases people struggle to make ends meet due to dealing with issues associated with impulsive buying, wasteful spending and extreme overcompensation (Jinhee, Thomas & Benoit, 2005). Financial matters such as these can lead to bankruptcy, repossession and most importantly a lack of financial promise (Jinhee, Thomas & Benoit, 2005). Without future prosperity many Americans end up returning back to work, for minimal jobs or even working past the age intended. Therefore, it is important that people deal with the issues associated with emotional ties to spending because eventually these ties may lead to other areas. According to Maryam, Mohammad & Sajad (2015), emotional spending is an extreme problem, which often leads to a host of other problems. Saving and retirement is also an area in which many people tend to deal with. It has been estimated that many Americans will return back to work to supplement their income after leaving the job that they have worked for several years. This is why retirement and saving income is such a viable concern for working adults.

The change in savings behavior has resulted in an overall improvement in the retirement readiness of America, increasing the number of people who are projected to be able to meet the essential expenses, such as health care and food, in retirement from 38% in 2013 to 45 % in 2015. However, this still means that over half of Americans are at risk of being unprepared to cover the basic living expenses in retirement (Saad-Lessler, Ghilarducci & Bahn, 2011).

An Economic failure, collapse, depression or recession is very much a real possibility that appears to be starting in the United States, today. In fact, unless the entire mindset of money and economics changes in America, it is inevitable. While the economy is beginning to slowly perish, it appears only a few are willing to help. The question must be asked, how do we protect ourselves from this unavoidable collapse? However, contrary to popular belief, there are multiple steps to protect against self-debt while also bolstering the entire economy’s wellbeing. First, one must understand there are multiple unforeseen expenses from college debt to death in the family. Each expense seems as nasty and as large as the next. However, these costs can be alleviated with the proper protection. This is also true with country wide failures such as a depression or a stock market crash. Finally, this type of safety is far from being selfish. In fact, this kind of spending directly helps the economy more than lucrative spending. It comes down to this; one should save money now to help their economy because it will prepare for unforeseen financial failures as well as aid in supporting the weakening economy.

The scenario for current economic conditions in the USA is characterized by slow growth and deteriorating household net worth. Although strict lending standards and tight credit are presenting sobering challenges to latent homeowners with low incomes, incomes shrinking and rent inflation have been experienced by renter households since the economic recession, and there has been a rise in the number of renters among the severely housing cost-burdened. [1] The price of houses is not within reach for many families because they do not have sufficient cash for down payment and closing costs. Moreover, they cannot pay down debts; their credit scores are low, and they have higher borrowing costs.

The process of maintaining one’s lifestyle over a lifetime operates by saving and investing during the working years and ultimately expending savings and investments during the latter years of life, to supplement the reduction of income resulting from retirement. Consequently, for a number of consumers who don’t have sufficient income, savings, or investments, borrowing funds by utilizing various forms of credit presents an opportunity to support their present lifestyle. Borrowing funds illustrates consumption smoothing. Patterns of credit card usage regarding borrowing and pay-off behavior have been analyzed within the framework of consumption

Extensive research has recently been conducted concerning teenager consumer spending. The total number of teenagers in the United States was 25.6 million. In contrast to the population, the total teen spending was approximately $208.7 million annually. Premature affluence has increased dramatically in this generation. Teenagers have been overspending on materialistic products. This was also a cause of the increasing poverty and debt rates.The term “Premature Affluence” is a concept that describes when a group of people, especially teenagers, have more income than one can manage maturely (Piquero & Tibbets, 2002).

“Money doesn’t grow on trees,” my father asserts to me for the millionth time, “where’s all the money I gave to you yesterday?” Not to offend anyone, but if you’re parents never use a phrase like this, then chances are you're spoiled. Ever since the opportunity to acquire cash became available to me, my parents have looked to cut off my financial givings as much as possible. Although it may seem detrimental having my parents cease from helping me pay for simple expenses like gas, it was one of the best things for me. Without my parents indirect guidance, my financial status may be backwards like many of my fellow students today. Their influence of pushing me toward independently funding my high school fun and necessities has taught me so much about saving money. Approaching a four-year college experience and beginning life on my own, funds are going to be tight. The way I look at it, there will be no pennies to spare. Every child growing up dreams of retaining thousands of their own dollars in the bank. Yet, few do anything to reach this dream during their young days. A trend in adolescents has caused them to lose a sense of the value in saving. Many believe that it won’t establish a difference down the road when the potential to garner larger amounts of currency proves to be higher. It really starts with the lack of value in small amounts of money and personal enjoyment that drives high schoolers away from saving. Students must begin saving money as early as possible, high

Financial decision making is an important aspect among all the consumer behaviors (Johnson, Tellis, and MacInnis 2005; Mandel 2003; Morrin et al. 2002; Zhou and Pham 2004), because consumers’ welfare significantly depends on the soundness of their financial decision (e.g., savings for retirement, investing in college funds, using credit card to fund current consumptions, purchasing insurance, etc.). Among many financial decisions, some of the opportunities provide a modest and stable return, but not the others. Consumers often times face trade-offs between financial gain and the potential risk associated with the profitable return. Riskier options usually offer higher monetary value as well as higher likelihood of loss. Pursuing riskier but potentially more profitable financial opportunities is considered as financial risk-taking. The 2011 Consumer Financial Literacy Survey by the National Foundation for Credit Counseling (NFCC) reports that 56% of American consumers do not maintain a budget or track their expenditures; 33% of them do not have any nonretirement savings; 40% carry credit-card debt from month to month; 28% do not pay all their bills on time; 7% have debt in collection; and a record 41% would give themselves a grade of C, D, or F on their knowledge of personal finance (Duclos, Wan, and Jiang 2013). It is suggested by the report that consumers often lack appropriate information and/ or knowledge to make reasonable financial decisions. Many financial decisions