debt

Americans worried about debt

Men are much more likely than women to say they don't worry about the amount of debt they carry (40 percent vs. 30 percent). Similar results are reflected for income: Americans earning $50,000 or more are significantly more likely than those earning less to say they don't worry at all about their monthly debt (40 percent vs. 29 percent).

25 million working-class households are dealing with unmanageable debt load.

Dvorkin warns that consumers should drop their nonchalance and prepare for the changing economic climate. "With the impending recession and inflation rising, I warn consumers to take a hard look at what they owe and to pay off as much as possible. Most people handle their debt fine until an unexpected event happens, such as a layoff, illness or death in the family."

Consumer debt educator Christopher Viale says some groups have greater cause for concern.

Working class individuals, who comprise 35 percent of the overall American population, are having increased difficulties managing their credit responsibilities. "For instance, close to 25 million working-class households are dealing with unmanageable debt load," Viale says. "Families are behind on their credit card payments, receiving late fees and are over their spending limit. These individuals also have little, if any, savings, and are very concerned about the future of the U.S. economy."

Says Detweiler: "There's only so much you can do, so really worrying isn't going to help unless it makes you take action."

Unbelievably knowledgeable
The very confident responses to a set of debt-knowledge questions are met by either surprise or skepticism by all of our experts:

85 percent know the interest rate on each of their debts.
"When you ask people 'do you know the rate on your debts,' of course they're going to say 'yes' because they would appear to be ignorant if they said no," says Mandell.

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Detweiler suggests that if asked to provide proof, respondent optimism might prove misplaced. "My guess is that if you asked them to itemize it, then show you their statements, there would be a number of people who had underestimated or who had the interest rate wrong and be surprised by it."

"I think about this and write about this all the time, and I'm afraid I don't really know what the interest rate is on many of my debts," says Mandell. "I haven't any idea what interest rate is charged on my credit cards, maybe because I try not to pay any interest, but still. If I had an auto loan, chances are very small that I would know what it is because most people don't even shop for loans of that type."

-- Posted: Feb. 25, 2008

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