US money woes make Americans fret over own debt
WASHINGTON - Just last fall, Americans were feeling better about their personal finances. Now, they are starting to worry more about how they will pay off debts as they feel the nation’s economic recovery wobbling.
With Congress deadlocked over how to deal with the national debt, household debt is causing stress for nearly half the country, according to an Associated Press-GfK poll. One in five adult respondents worries about debt most or all of the time. If they bought something on a credit card in the past month, more than a third said, they won’t pay it off when the bill comes.
The increased stress represents a reversal from last fall’s AP-GfK poll, which found increasing confidence about personal finances. Debt-related stress is up 17 percent from that November survey, bumping such worries back up to levels seen in 2009 and in the spring of last year.
“It’s not that our debt is huge. It’s just hard to make it, month to month,’’ said Theresa Telford, 45, a teacher’s aide raising four children with her husband, a sheriff’s deputy. “It seems like everything is going up, but wages aren’t going up.’’
Telford is also nervous because she has seen many people lose their jobs in her small town of Davenport, Wash., and some of her friends still can’t find work.
Although the recession officially ended in June 2009, Americans display little faith in a recovery hobbled by grinding unemployment, slow economic growth, volatile gasoline and food prices, and political feuding over how to stem the skyrocketing national debt. Consumer confidence fell to a seven-month low in June in the Conference Board’s survey.
“We’re starting to be fearful again that things may fall apart,’’ said Paul J. Lavrakas, a research psychologist and AP consultant who analyzed the survey. Lavrakas and other researchers have found that debt can be bad for the health as well as the wallet. Those suffering the most anxiety over their debt are at risk for stress-related illnesses, such as ulcers, depression, or heart attacks.
The poll found that households earning more than $75,000 had the biggest increase in debt-related stress since November. But stress levels continue to be highest within the most vulnerable groups: households that have lost jobs, people with family incomes below $20,000, single parents, and adults without high school diplomas. Married mothers and adults under 30 years old showed significantly more anxiety than in the fall.
In all, more than 40 million Americans are feeling serious stress over the money they owe, whether it’s for credit cards, mortgages, car loans, or other debts, the poll indicates.
It’s a tough period for high school dance instructor James J. Moran of Shelton, Conn. He doesn’t get paid during summer break, except for the occasional dancing or acting jobs he lands.
“For three months I scrape by and I can only afford to make the minimum payments on my credit cards,’’ said Moran, who owes $5,000 on his cards and about $14,000 in student loans.
The news isn’t all bleak. Although it ticked upward, the Debt Stress Index based on the AP-GfK poll came in at 29.2, still within the range considered moderately low. Most people say they are handling their credit cards well in lean times.
Nine out of 10 people with credit cards say they trust themselves to handle debt. Most say they use credit cards because they are more convenient than cash. About half say they charge only what they can afford to pay for at the end of the month.
Americans have been borrowing less and saving more. Credit card borrowing increased in May, only the second monthly gain since August 2008, according to the Federal Reserve’s latest figures. The total is 18.5 percent below its peak in August 2008.