A national survey completed by the Consumer Financial Protection Bureau shows that 40 percent of the adults in the United States are struggling to remain financially solvent.
The CFPB has been working to understand the economic factors that are influencing US households, in addition to providing online tools for customers to measure their financial well-being and attempt to improve upon it.
Though the United States economy as a whole has been improving over the last few years, the consequences of a decade of market crashes and recessions can still be seen in the finances of individual households.
America’s Consumers Have Still Not Recovered From 2008
These hardships identified by the CFPB were considered to be substantial: not being able to pay for medical treatment, not being able to afford a place to live, or even running out of food.
With a full one-quarter of reporting consumers unable to fill their basic material needs, national financial wellbeing is considered to be quite low. Medical treatment and medical debt is one of the leading costs in the nation, and debates surrounding the Affordable Care Act and changing insurance costs may have made it more complex to seek treatment. Homeownership is also down across the nation, as a consequence of increased housing costs relative to earning potential.
Many Americans are unable to pay their bills on a monthly basis — and that may have some additional impacts related to spending. Americans that are unable to pay their bills are also unable to contribute to their local economy, start their own businesses, or plan for their retirement. Long-term, this could cause ramifications for the nation. Short-term, the real estate industry and service-related industries are feeling the impact.
Though older Americans (those about 65) are in a relatively better financial situation than average, those who are under the age of 34 appear to be in dire straits.
The Recovery Effort
In addition to collecting data, CFPB has also been attempting to take action to improve the economic outlook for consumers. The Consumer Financial Protection Bureau is not only designed to record information about American income and spending, but also to protect U.S. citizens from predatory tactics.
In the past year, CFPB has:
* Tightened protections surrounding payday loans and car title loans in Tennessee
Payday loans and car title loans are notoriously difficult to pay off, with extremely high interest rates and associated lending fees. Many who are in adverse financial situations take out payday loans or car title loans in the hopes of repaying them immediately. When they cannot, they get trapped in a cycle of debt.
* Called for audits against financial institutions collecting on student loans
CFPB has claimed that the National Collegiate Student Loan Trusts may be collecting on loans that are poorly documented or have passed the age of collections. A total of $8 billion in loans will need to be audited to ensure that they are collectible. Student loans are one of the major expenses of young Americans, and one of the primary issues holding young Americans back from purchasing homes.
These actions alone cannot improve the current situation for many consumers. The average American household currently has $8,377 in credit card debt alone. If they went to college, they likely have an additional $37,172 in student loan debt. And at least credit cards and student loans are paid in installments.
The average American also has $1,766 in overdue medical bills. These added costs are preventing American consumers from making additional purchases, paying off their rent, getting the medical care they need, and ultimately in investing in their retirement and their future.
With all this in mind, it’s more important than ever for Americans to be conscientious about their financial situation, savings, and retirement funds.
Advice for economic security still remains the same: Americans need to focus on reducing their expenses, increasing their retirement savings, and investing wisely. For many Americans it appears that many individuals simply have too many bills to pay off and that they need to either increase their income or reduce their living costs accordingly. Once these major issues are taken care of, they can begin building for the future.
Regards,
Ethan Warrick
Editor
Wealth Authority