Many Americans Found Lacking in Financial Literacy
by Steve Cypher on Wednesday, May 13th, 2009The latest survey conducted for the National Foundation for Credit Counseling finds that many Americans come up short when it comes to understanding their own finances.
Our purpose
At Auto Credit Express, it’s our job to help folks with credit issues reestablish their credit with a bad credit auto loan. This can be an expensive process, since most subprime auto loans carry with them much higher than normal interest rates. But for most people in this situation, it’s one of the few avenues they have in which to raise their credit score while, at the same time, giving them the means to get to and from work and earn a living.
That being said, we sometimes wonder how many of our customers get into this situation in the first place. At least lately, the economy is a big reason: reduced hours, salary cuts and even layoffs have impacted many people’s lives. But even in the “good times”, our business is still brisk. So what might be more of an underlying reason that so many people get into financial trouble? Some answers might be found in the results of a recent survey released by the National Foundation for Credit Counseling – and conducted annually by Harris Interactive.
2009 Consumer Financial Literacy Survey
Here are excerpts from the topline report of the survey:
Financial Literacy:
41 percent of U.S. adults, or more than 92 million people living in America, gave themselves a grade of C, D, or F on their knowledge of personal finance, suggesting there is considerable room for improvement. This number is highest among Gen Y adults at 47 percent. 80 percent of adults agree that they would benefit from advice and answers to everyday financial questions from a professional, and more than one-third (35 percent) strongly agree.
Budget:
Showing no improvement since 2007, less than half of adults (42 percent) keep close track of their spending. Nearly 16 million adults (7 percent) don’t know how much they spend on food, housing, and entertainment, and do not monitor their overall spending.
Debt and Credit Cards:
26 percent, or more than 58 million adults, admit to not paying all of their bills on time. Among African-Americans, this number is at 51 percent. In the last 12 months, 15 percent of adults, or nearly 34 million people, have been late making a credit card payment and 8 percent (18 million people) have missed a payment entirely. More than 13 million adults (6 percent) report that their household carries credit card debt of $10,000 or more from month to month, and the same number have debts in collection, are seriously considering filing for bankruptcy, or have already done so within the past three years.
Credit Score:
In spite of it being free, nearly two-thirds (64 percent), or 144 million people, have not ordered a copy of their credit report in the past year; this grows to nearly three-quarters (72 percent) among Hispanic Americans. Additionally, more than one-third (37 percent) admit that they do not know their credit score.
The Bottom Line
Given these facts, perhaps it’s not so surprising that many people experience financial problems. Most of these issues are hard enough to deal with during normal economic times. Given the current recession, many more Americans may have to deal with rebuilding their credit.
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My simple suggestion is get rid of your credit cards COMPLETELY. Most of my problems were due to my credit cards and my infatuation with using them to buy shoes.