Recently, an article was posted on Life, Inc. that stated 1 out of 4 Americans have more credit card debt than they do in savings. But I’m a “glass is half full” kind of thinker and see this quite differently:
That’s a great statistic to hear; 75% of Americans have more in their savings accounts than they carry in credit card debt. Of course it would be nice to increase that percentage to 90 or even 100%, but 75% is a start.
So, why did Life, Inc. decide to focus on the negative? My guess is that people enjoy hearing about gloom and doom; it makes them feel better about themselves. For example, if they’re part of the 75%, they feel like they’re “normal” or part of the majority and may even feel superior to the 25% who don’t fit the description. If they’re part of the 25%, then they feel like they’re not alone and others are struggling as well (a “misery loves company” sort of outlook). Let’s face it, no one wants to be the only schmuck that can’t get their act together.
But what if you’re part of the 25% who really want to be part of the 75%? It’s not a magic trick or something only a handful of people can achieve. It really boils down to basic money sense:
- Spend less than you earn. Aren’t happy with your salary? Take on a side gig, switch careers, or move to a lower cost area.
- Save a portion of your income. Automate it every pay period so you don’t accidentally spend it.
- Set attainable goals to work your way out of debt. Make a habit of paying off your credit card debt using some kind of method; snowball, snowflake, bottom up or top down strategy, then set a budget to help you stay out of debt.
It’s really not how much you make, but how much you spend.
Which group do you fall into, the 25% of the 75%?
16 Comments
I have no credit card debt, so I guess I fall into the 75%.
@Michelle – That’s awesome!
We use credit cards only to get the cash rewards, so they’re paid off in full each and every month. Proud to be in the 75%!
@Money Beagle – Me too!
jI have no credit card debt so I am in the 75%. I wonder what percentage of people have sufficient savings to support a retirement.
@Krantcents – I’m guessing the figure on retirement savings is pretty bleak. It would be interesting to know.
@Krantcents -I found an infographic about this (love infographics!). Based on GOOD.com’s infographic, depending on your generation, this is how it breaks down: Millenials (gen Y I guess) 53% lack retirement savings, Gen X 32% lack retirement savings, Baby Boomers 25% lack retirement savings, matures 22% lack retirement savings. But, this question was “they don’t have any retirement savings.” The infographic goes into further details about those who think they’ll have to work longer, etc. Very interesting. I’m freaking out about my “pension.” I need to start working hard to make up for the fact I might not get one in 20+ years!
I am not really familiar with this but thanks a lot for the information you have shared us here…
@Niki – I would have too. It’s funny that the original article looked at this from a different perspective.
I guess people are only commenting if they are in the 75%. Oh, wait! I am in the 25% if you consider savings as a savings account. On the other hand, I have a lot in retirement accounts and real estate. My folly was in not being very liquid. I am working to resolve this.
@CashFlowMantra – The original article really only mentioned “savings” vs. credit card debt, so I guess you could count various accounts (including retirement) as “savings.” I think the moral or point of the article was to keep you credit card debt to a minimum. I know you’re chipping away at your debt and that is awesome!
@TekGems – You’re right. They did mention the origin of the data and that people making a certain income level fit this description more so than those making less than $30K annually. But, this only focused on credit card debt vs. savings. Data can be looked at from different angles and molded into a perspective; so yes – I molded my post to fit my perspective: People should have more in savings than credit card debt and some do!
It’s good to be an optimist.
Although… I can’t help but wonder if a good number of people have zero in credit card debt… and $5 in savings?? (Seems the psssimist is still trying to get through!)
@Julie – You’re right; this doesn’t say HOW MUCH needs to be in savings, as long as it is more than credit card debt, then that person qualifies as the 75%!
Wow, that number is surprising. I thought it would be closer to 50/50.
@Ashley – I was surprised as well, but it’s a great statistic to look towards.:)