American Debt and Financial Trends
American Debt: US Putting Tax Refunds to Work
American Consumer Credit Counseling (ACCC) recently conducted a survey to determine how Americans will spend their tax refunds and found that a number of consumers surveyed will be using their funds to improve their financial situation.
In fact, 33% of those surveyed stated their tax refund will be used to catch up on bills, while 29% said they will use their tax refunds to pay off debt. Only 3% were excited to use their refund to go shopping. No one surveyed was even thinking about saving up for retirement - at least not with their tax refund.
Although the number of consumers surveyed was relatively small (721), this representation still gives us an idea of what’s trending in American right now, and that’s getting caught up and back on track financially. Note that the majority of consumers are catching up on bills, which means they had been struggling with debt or falling behind, which no doubt affected their credit.
Using tax refunds to repay debt shows that Americans are taking the reigns of their finances and preparing for their financial futures.
American Debt: But Only Some of US Save
Of course, this doesn’t mean Americans are preparing to save, as paying down debts is just a way of paying back money borrowed for purchases previously made. While there’s a chance that consumers are paving the way to start a savings, there’s also a chance that credit cards are being paid down just to be charged up again - it’s just a matter of how much you make.
Analysts believe that Americans are being split into two groups: Those that save and those that spend. Low-priced food chains and stores, such as McDonald's, have reported a dip in sales this year; whereas higher-end retailers, such as Starbucks, have seen sales increase.
These financial trends suggest that people are spending and saving according to their income levels, with lower-income and middle-income earners spending more frugally than those with higher incomes. This may be due to the fact that higher-income earners have been able to ride out the recession with their jobs still intact, while those with lower incomes may have had closer encounters with unemployment and underemployment.
Those with less are making the decision to minimize their debt obligations and prepare for any further bumps in the road. High-end earners could learn from their example.
Taking a look at American financial trends provides us with a better understanding of what’s going on in the economy and how people are affected. If you have been struggling to make ends meet, know that you are not alone. Even those with higher incomes can recognize that life is still tough financially; no need to flaunt money you could be saving (Note that no one surveyed is using their refund to save for retirement). Take the time to assess where you stand and what steps you want to to go forward financially.