In 2024, I’ll celebrate a decade as Debt.com’s editor. Well, “celebrate” is too strong a description.
It’s not that I hate my job. I actually love it. People are the problem.
While I feel a warm glow helping individuals get out of debt, I’m irked at the millions of U.S. adults who keep making terrible financial decisions – even though help is so easy to find.
Here are the facts that frustrated me in the first four days of 2024.
Fatal (and fatalistic) finances
This morning, WalletHub released a new poll. I know people there, and they’re cool, so I don’t doubt its accuracy, but come on…
- “45% of Americans say they spent too much during the holidays.”
- “28% of people say they regret some of their holiday purchases.”
- “68% of Americans think 2024 will be better for their finances than 2023.”
Did you see that? Respondents to this poll admit they spent too much over the holidays, they even regret it, but they think 2024 will rock.
I knew before I read any further how that contradiction would be explained: “74% of people say inflation affected their holiday spending more than they anticipated.”
Since experts predict inflation will keep receding from its record highs last year, many Americans figure that alone will solve their financial problems. Interest rates are supposed to drop, too. So a rising economy will raise all bank accounts, right?
Alas, life doesn’t work that way.
A costly inconsistency
If you overspent for the holidays so badly that you have regrets, the problem isn’t the economy. It’s you.
Look at overall credit card debt from the past five years. In 2019, right before the pandemic, The Federal Reserve said each household carried an average of $7,499 in balances. The next year, as the pandemic was at its worst, that plummeted to $6,612. As we grew accustomed to masks and shots in 2021, it crept up to $6,935. In 2022 – even with inflation and supply-chain issues – it soared to $7,951.
Credit card balances are the most expensive debt we carry. Interest rates are hovering around 25% right now. That means for every $4 you carry, you’re paying $1 in interest to a big company – and getting nothing in return.
Let’s say the economy roars in 2024. You get a hefty raise. Prices plummet. Will you take that windfall and pay down your credit cards? Or will you buy more stuff? If the past five years are any indication, you’ll buy more stuff.
An important exception
Before I revisit my disappointment in the U.S. consumer, let me explain that none of my emotions apply to the 11% of Americans who live at or below the poverty line. Their debt is caused by simply trying to make ends meet. They need more help than a debt counselor like me can provide.
I’m talking about the other 89% of us, who probably could achieve financial freedom if we had the discipline to do so.
A simple solution
Here’s why the past decade has frustrated me so much: It’s easier than ever to pay down or even pay off your credit cards.
When I was born – I’m old – your options were bankruptcy or borrowing from your family. Both sucked. Today, you can call a certified credit counselor who will give you a free debt analysis over the phone.
It’s an in-depth call. You’ll create a household budget on the phone. You’ll hear about free and fee-based options for getting out of debt – although whatever it costs you will dwarf how much you save.
Of course, I’d love it if you called Debt.com. But after 10 years here, I’ll be happy if you just call someone, anyone who’s reputable. (That means: Don’t pay anything up front, get everything written down, and never feel pressured into doing anything.)
I’ve been reading how the most common New Year’s Resolution is losing weight, and how Ozempic is making that finally possible. Well, consider Debt.com and other places like it as Ozempic for your debt.
It’s also like my anti-depressant. If you get out of debt, you’ll make this old editor very happy.