Credello: In the U.S., the bottom 90% of households saw their debt balloon this year. With so many trying to make ends meet and researching debt consolidation vs. debt relief to get back on track, we need to understand what's going on with this financial crisis to better equip ourselves and prevent a financial crisis from turning into a full-blown recession.
The reasons why debt is getting out of control
The reason for this new debt balloon for the bottom 90% of households is complex but boils down to three primary drivers: economic conditions, spending habits, and borrowing.
Economic conditions play a significant role in how quickly debt accumulates. When the economy is weak, people are less likely to find jobs, or businesses cannot borrow money, which can lead to decreased consumer spending and increased borrowing costs. This can cause debt levels to increase for those who already have high levels of debt.
Another factor that affects debt levels is spending habits. When families have to stretch their budgets due to a tough economy, they may choose to cut back on unnecessary expenses like luxury items or entertainment. This can cause people with high-interest debts (such as credit cards) to experience larger increases in their balances.
Finally, borrowing also plays a role in how quickly debt rises. People are more likely to take on more debt when they believe it is a good investment. When the stock market is doing well, people may borrow money to buy stocks and then see their assets decrease in value, which can cause them to default on their loans. On the other hand, when the stock market crashes, people may be forced to sell their stocks at a loss, which could lead to them defaulting on their loans.
What you can do to protect yourself from a debt crisis
If you're struggling with high levels of debt, there are a few things you can do to protect yourself from a full-blown financial crisis.
First, make sure you're using all of your available resources efficiently by consolidating your debts into one manageable payment. Not only will this make your payments more manageable, but it will also help you save money on interest rates.
Second, be mindful of your spending habits. If you're finding it hard to stick to a budget, consider setting up a debt relief plan with a professional financial planner. This type of plan will help you keep track of your spending and reach your financial goals.
And finally, if you struggle to pay your debts on time, speak with a credit counseling agency. They can help you learn how to manage your finances and improve your credit score so that you're less likely to experience high borrowing costs in the future.
The bottom line
The bottom 90% of U.S. households are seeing their debts get worse, not better, in 2023. This is a serious problem for many families and will likely have lasting negative effects on their financial stability. If you're among this group of households, it's essential to take steps to protect yourself from a debt crisis.
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Original Source: Credello: Why Did Debt Balloon for the Bottom 90% of Households in the U.S. This Year?
originally published at Lifestyle - Sexy Press
This news story originally appeared at Lifestyle - Sexy Press on 20 October 2022