How’s this for obvious:
It’s a bummer being poor.
How’s this for startling:
Many people don’t even know they’re poor.
But what else would you call it when debt overtakes your assets and/or slow investment growth can’t keep up?
And yes, that includes the possibility of outliving your retirement savings.
According to a Federal Reserve report issued this month, USA households are carrying a total deficit of $12.3trillion. The hard fact is one in seven Americans are living in the red.
If Americans with negative net worth are split into groups of equal size, here are the results:
- One third are in the red by $12,000 with credit cards being the main culprit,
- The next third are down between 12,500 to $47,500 beyond their assets’ ability to cover, and
- The final third owe $47,500 or more.
Unsurprisingly, student loan debt is the primary reason in the last two groups.
It often makes sense to borrow in young adulthood — education is important, and becoming a homeowner is usually a better deal than renting — but in an era of stagnant wages, repayment projections can easily go awry.
No wonder more and more people are looking to get involved with e-commerce to either enhance their income or take the plunge to seek financial independence.
Austere living is never fun, but the best way to deal with debt is to make a plan and then take action.
There’s no time like the present. Debt is costing you money every day. Possibly more than you realize.