More than 80% of Americans would pay down debt rather than save
Eighty-three percent of Americans admit that they would rather pay down their debts instead of save for their future, according to a recent online poll conducted by American Consumer Credit Counseling (ACCC). The survey also found that 58 percent of consumers do not regularly deposit money in a savings account – a risky financial move that could land consumers further into debt.
Of the 397 consumers surveyed in the recent ACCC web poll at ConsumerCredit.com, 83 percent say paying down credit card debt is more important than putting away funds for a rainy day or future investments such as retirement or their children’s education. Additionally, 27 percent of those surveyed confessed that they hold over $20,000 in credit card debt, which typically holds the highest annual interest rate.
“With outstanding consumer debt surpassing $2.8 trillion, Americans are being forced to choose between paying down rising debts and saving for a healthy financial future,” said Steve Trumble, president and CEO of American Consumer Credit Counseling. “Although diminishing credit card debt is important, a balance must be struck between preparing for financial downturns and limiting the amount of debt that you hold.”
ACCC’s national survey also found that 25 percent of respondents reported they simply do not earn enough money to stash away any savings for the future, while only 6 percent confessed that their excessive spending habits restrict their ability to save.
According to ACCC, there are several steps that can help consumers pay down their debts, while stowing away money for future financial security. Some initial steps that consumers can take include:
- Create a budget to see what your total monthly financial commitments look like and then list all your debts from lowest to highest, organizing debt by the highest interest rates.
- It’s really a matter of choice when it comes to choosing to either pay off the lowest debt or tackle the card with the highest interest rate. However, many consumers reap an emotional reward when they can quickly pay off an entire balance that often motivates them to continue.
- Pay only the minimum amount on other debts while you are trying to pay off your targeted debt payment and, if possible, always pay more than the minimum to pay off that debt faster.
- Cut back on any non-essential expenses such as entertainment, and utilities such as cable while trying to pay down debt and save for the future. Apply this extra savings to the targeted debt payment.
- Include a savings column in your budget, even if it is as little as $5, and put that money aside in a separate account.
- Don’t give up. Proper planning and realistic goal-setting will lead to financial success.