With a financial catastrophe potentially lurking around every corner, many Americans are living on the edge.
By the numbers
Conventional wisdom says the more people earn, the more they spend. However, having more money does, in fact, make it easier to save and avoid credit card traps.
High-income earners were the least likely to report more credit card debt than savings, at only 20 percent versus an average of 29 percent for other income groups.
At the other end of the spectrum, people earning less than $30,000 per year were more likely to have no credit card debt and no savings, at 25 percent.
Disproving the notion that younger people are more financially reckless while the older generations know better, millennials were less likely than older baby boomers to have more credit card debt than savings, 24 percent versus 31 percent, respectively.
"These are the people who are supposed to be getting ready to retire. This may be an indication that they are not really ready," says Mackey McNeill, CFA, president and CEO of Mackey Advisors in Covington, Ky.
One piece of conventional wisdom did hold up in the survey: Kids are expensive and can weigh down their parents financially.
Parents were more likely than nonparents to have more credit card debt than savings. Three in 10 parents, or 31 percent, say their credit card debt is higher than their savings, compared to 22 percent of the unencumbered.
Turning it around
Here's the ideal scenario: Consumers would have ample savings and no credit card debt.
To get there, start building your emergency fund. Experts recommend that consumers who carry debt fund a small savings account while making minimum payments toward credit cards.
"I really land on the side of savings. People absolutely need to service their debt, but I do know that people's entire financial well-being can be wrecked by one flat tire, one visit to the emergency room or one leaky toilet," says Gail Cunningham, vice president of membership and public relations at the National Foundation for Credit Counseling.
Opinions vary as to the level of emergency savings needed, but the consensus view is that more is better and any amount greater than zero is a good start.
"Ideally, I would like two years' worth of expenses. That is really optimistic, though. At a minimum you'd want six months to a year," says Kimberly Foss, CFP, president of Empyrion Wealth Management in Roseville, Calif.
Pay off the debt
Digging out of debt will go faster if you can concentrate resources on just one credit card at a time. There are two schools of thought when it comes to choosing which one to pay off first: the most expensive debt or the smallest bill.
Quickly dispatching the most minor of your bills could give you a feeling of accomplishment and add to your motivation.
But, "if you're a real numbers person and you know how damaging the largest bill with the higher interest rate is, you are going to find more satisfaction from directing all extra income to that debt repayment while still paying the minimum on the others," says Cunningham.
While you're getting your financial house in order, call up your other creditors and ask for a lower interest rate.
"Find out the lowest rate you're charged. That gives you validity. And go to the other issuer and say, 'I am going to move this debt over to another card that offers me a lower rate. I'm willing to leave it on your card if you're willing to lower my rate to 12 percent. If you don't want to match that rate, I'm moving it to this card,'" says Foss.
It never hurts to ask -- and keep asking. Persistence can pay off.
Keeping it off
Some people may need to completely revise their beliefs about money to change their behavior and stay out of debt.
That can be something of a struggle in a culture that encourages overspending and an economy dependent on ever-increasing levels of consumption.
"We're trying to live up to the image that our culture tells us will make us happy. And then we run out there and buy stuff. And the problem is that we didn't buy enough, so we go buy more," says Eddie Reece, an Atlanta-based psychotherapist who works with clients on financial issues.
Like booze for an inveterate alcoholic, "our tolerance for the amount of stuff is so high it's going to be tough to ever get to the point where we can say we have enough," he says.
Breaking addictions begins with awareness. Tune out the spending messages, and try to gain insight into damaging behavior. It is possible to get debt and savings under control for good.