Feeling like you’re drowning in credit card debt, student loans and medical bills?
If you are, you’re likely not alone — and that could explain why everywhere you turn you hear ads offering some quick-fix deal to cope with debt.
About one in five U.S. households owe more on credit cards, medical bills, student loans and other debts that aren’t backed by collateral — so not including car loans — than they have in savings, checking accounts and other liquid assets, according to a new University of Michigan report.
“Some families have not been able to make substantial headway,” said Frank Stafford, an economist at the U-M Institute for Social Research and co-author of the report, in a statement.
Average savings levels have gone up since 2008. But the U-M research showed that there had been no improvement in financial liquidity between 2009 and 2011 — except among families with more than $50,000 in savings and other liquid assets.
Families feared the worstIn other words, families who could afford to save more money often did so because they feared the worst.
Stafford said the research did not show how families built more savings. But he expects they cut spending and they sold riskier assets and put that money into savings accounts.
At the same time, others who were hit hard with higher payments on adjustable-rate mortgages, declining home values and job loss had an extremely tough time rebuilding their savings.
Source: USA Today | Susan Tompor, Detroit Free Press
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