As 2015 breaks on the horizon, many people may realize they overspent during the holidays. They find themselves in the unenviable position of having a burdensome amount of debt hanging over their heads. And, according to a recent (2014) survey, some of them believe they will not get out of debt during their lifetimes.
The national survey, commissioned by CreditCards.com and performed by the prestigious Princeton Survey Research Associates, found that 18 percent of Americans expect to die while in debt. They believe debt will be a lifelong companion from which they will be unable to extricate themselves.
The findings are a sober reminder that many people do a poor job of handling their finances, either from lack of financial literacy or from reckless spending. In addition to those who never expect to escape the shackles of debt, another 11 percent do not expect to become debt free until they are in their 70s.
Much of the debt is due to a familiar culprit – credit cards. Perhaps most shoppers intend to pay off the debt. But the ease of purchasing with credit cards allows many to overextend themselves without realizing it. Before long, they are mired deeply in debt without the financial resources to escape.
In fairness, the lingering effects of the Great Recession contributed to the level of indebtedness. On average, income adjusted for inflation has fallen since the beginning of the millennium. Many people have taken on debt with the expectation of repaying it as income starts rising. But this has not occurred.
There is a glimmer of hope in the findings. About one in seven Americans (14 percent) surveyed reported they were debt free. And 60 percent had not incurred new debt during the holidays.
Perhaps the major conclusion from the survey is the need for better financial education, especially among younger people. Most have adopted the financial behavior of their parents, many of whom never formally learned about personal finance. Exposing students to the principles of personal finance at an early age can help prevent this from occurring among future generations.
For older adults, the keys to overcoming debt are tracking spending, creating and following a realistic budget, eliminating services you can do without, and minimizing the use of credit cards.
Happy New Year!
Wayne Curtis, former superintendent of Alabama banks, is a retired Troy University business school dean. Email him at firstname.lastname@example.org.