Government Bailout Has Not Helped Main Street – Consumer Reports
by Steve Cypher on Friday, December 5th, 2008The latest survey results published by Consumer Reports show that more than half or respondents feel the government has not done enough to help the average American.
Personal economic issues
Here at Auto Credit Express, we have been very concerned about automotive lending, consumer lending and the general economy for quite some time. We realize that many Americans are having a difficult time making ends meet and we thought that the latest survey from Consumer Reports magazine might shed some light on how many consumers feel about today’s economy. At the end of this article, you will also find some helpful tips from CR about how to deal with your own personal financial issues.
Banks have gotten enough money
The most recent survey conducted by Consumer Reports National Research finds that only 17% of respondents felt that the government needs to do more to support banks and other lending institutions. At the same time, 29% felt the government had gone too far while 34% were unsure.
So if many Americans really feel that their government has, at this point, given enough money and support to the financial sector, what should it be doing now to help the average citizen through the current economic crisis? According to the survey, when asked this question, here is what the responses were:
• Ensuring the financial health of the Social Security system. (88 %)
• Reducing the national debt. (87%)
• Protecting pensions and other retirement accounts when companies or financial institutions go under. (85%)
• Increase spending on energy exploration, energy efficiency, and alternative energy sources. (84%)
• Ensure affordable health care for all Americans. (82%)
• Increase regulation of financial institutions to ensure responsible practices. (78%)
• Extend federal insurance to all deposits in savings and money market accounts. (78%)
• Cut taxes for working Americans. (77%)
Pay more attention to the average American
The overriding theme of the survey appears to be the fact that most Americans are concerned, and rightly so, about the impact the current recession will have on their personal lives. Older people are concerned about their personal retirement plans; younger workers are worried about unemployment while everyone (88%) is concerned about the financial health of the Social Security system.
Health care is also an issue. As you can see, 82% of those polled were concerned about affordable health care. Drilling down further into the results, 20% of the respondents were unable to pay medical bills or afford the cost of drugs, while 15% had lost health care coverage or had their health benefits reduced as a result of the economy.
Dealing with financial anxiety
After reviewing the results of the survey, Consumer Reports had this advice for consumers dealing with pressing financial issues:
DO contact your lender immediately if you can’t pay your mortgage. You might be able to restructure your loan or get your lender to agree to a lesser amount to pay it off.
DON’T borrow against your 401(k). You’ll probably need to repay the loan within five years or it will count as a withdrawal. If you leave your job before then, you’ll owe federal and state income taxes on the outstanding loan, plus a ten percent penalty if you’re younger than 59½.
DO take advantage of your employer contribution to your 401(k). Put away at least as much as you need to get the maximum matching amount.
DON’T take a refund anticipation loan. They are short-term loans that you pay back with your tax refund. Interest rates can run into the triple digits on an annualized basis. Filing your taxes online and having the refund direct-deposited can get cash to you almost as fast.
DO consider raising your insurance deductibles. That will reduce your premiums. Home-insurance policies, for instance, typically carry a $250 deductible. If you’re willing to bear more risk, you can save upward of 15 percent per year in premiums with a $500 deductible.
DON’T take cash advances. Credit-card advances can come with up-front charges of 2 to 4 percent and have a higher interest rate than regular card purchases. Payday loans, which are cash advances on your wages, can cost you $15 to $30 for every $100 you borrow.
DO cut what you can from your budget. You can save a lot on groceries by taking advantage of sales and buying less-expensive store brands. Look at your other monthly expenses to see what you can trim, including premium cable service or pricey coffee drinks.
About the survey
The Consumer Reports National Research Center calculated results based on a telephone survey of a nationally representative probability of 2,000 adults, 18 years or older in the month of October 2008. The margin of error is +/- 2.2% among a 95% confidence level.
