PlanStrongerTV?的动态

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Our guest is Bruce Mcclary, senior vice president, membership and communications for the National Foundation for Credit Counseling. Welcome, Bruce. Hi, David. Thanks for having me on the show. Good to have you. So why do so many Americans struggle with debt? Uh, a lot of the struggle has to do with how much spend ability people have in the, in the pressures of rising cost of living and the fact that income levels are not increasing at a pace equal or greater than that rising cost of living. So it's essentially the classic definition of the squeeze. So those financial pressures that are being placed on consumers with inflation, monthly, monthly expenses going up on average of $300.00 per month per household. That sort of cuts into people's spend ability. So where do they turn if they don't have enough money put aside in savings, they don't have the ability to regularly contribute enough to savings. They turn to available lines of credit. And as they use those more and more frequently, those balances grow and it gets more difficult to pay off. And that's what gets people into trouble. Well, and speaking on that point about debt and managing it, what are some of the signs of debt mismanagement that you've seen from your position and. Of course, in FCC's research. Yeah. Well, uh, the, the biggest issue in terms of debt mismanagement is about it all comes back to budgeting. Are you keeping an eye on your borrowing? Are you keeping an eye on your spending? Are you looking at the details of your budget and your planning accordingly? Planning and borrowing planning, planning all the expenses and necessities and discretionary and putting aside and prioritizing savings. What our data has shown, our most recent data is that. Only about 1/3 of Americans are actually paying attention to their budget and keeping track of their expenses. 1/3 That means that 2/3 do not regularly do that. And so that's, I think when you take your eyes off the road, that's where the car starts weaving a little bit and it gets people into trouble when it comes to over borrowing and overspending. And I think that's where the wheels come off the wagon. Indeed. Boy, that's a staggering statistic. How about this concept, which of course a lot of people have heard about and they're like, they're not sure maybe where, where, where to to take it? Is this idea that there is good debt and bad debt? Is there such a thing as good debt? Is that, or is that just a euphemistic way of talking about dead and how people use it? Yeah, well, there are a couple of, uh, of, of viewpoints here and I'm going to go way back into my deep dark past, but I used to work for a lender whose slogan was never borrow money needlessly. And so obviously any debt that you have should be purposeful. So that is one check box. But the other thing that I guess really separates good debt from bad debt is how much are you paying to borrow? And there's higher interest rate debt and there's lower interest rate debt and typically the lower interest rate. Debt is collateralized with some exceptions. Student loan debt is typically a lower interest rate. It's not necessarily collateralized, but that's where we kind of draw the line of separation. So if you have a high interest rate, credit card debt, which you're carrying a balance that's costly. So higher interest rate debt is considered bad debt, lower interest rate debt, collateralized debt, especially mortgage because you're building equity in your home. So that's more of an investment. So that's considered positive debt. And if you have. Have payday loans and other types of pawnshop loans that can go upwards of 300% interest in some areas. Well, that's probably the most toxic bad debt that you can get. Yeah. Yeah. Well, and I think you really struck a key point, Bruce, and that is that what are you going to do with the money, the money you're pulling from that credit card, the debt that you're incurring? Is it it's, is it 5 Finance your lifestyle. And so you're, you know, you've got an obligation to pay in the future for what you've spent in the past. Or is it for, is the debt for housing or things that can appreciate or things, you know, like a car that you must have to be productive and get around and maybe go to work? So you know, it also depends on the utilization of those funds and how you're leveraging the debt. Exactly, and a lot of it comes down to why you're what you're using the money for. Why are you borrowing if you're just using your credit card to pay for fun stuff, club memberships, subscriptions, expensive vacations that you know you probably shouldn't be taking because you can't afford, that's not really helping you out any at all. And even people who chase credit card rewards by spending when they may not have otherwise spent and using those. Credit cards to earn the rewards, well, you know that can get you into trouble as well. The rewards might be nice, but dealing with the debt is going to be. That's going to leave you with a big headache. Yeah. Well, I've done them. I've done the math, Bruce. You know, you're talking about one or two percent. So, you know, it doesn't make sense to spend a hundred, 100 pennies to get 2 pennies back for something that you really, really don't need. Exactly. Exactly. Cash back rewards, things like that. Let me ask about one more key topic is the idea of cosigning for loans, especially for retirees. And we see this, you know, come up from time to time and it's really. It's kind of a surprise, but can be a challenge. What what do you say to that cosigning? Yeah, I, I say be careful. Be very careful. Understand what you're getting into before you put any ink on that paper and sign on that dotted line, because you're putting your good credit and you're putting your name on the line for someone else. So if they stumble in repaying that debt, if they fall behind, if it goes into collections, that hurts their credit, but it hurts yours too. And so you really, you're tied at the hip with this other person. So you have to have a lot of faith in their ability to. Honor the agreement to pay the debt. And you have to be prepared for the situation that might arise where they can't pay. And what are you going to do then? Are you going to take over the payments to keep your own credit in good standing or are you gonna take the hit and then suffer the consequences? So just please be careful there and treat it as a business agreement. I know a lot of these situations are emotional, but you have to look beyond that. Good information, Bruce, thank you. And I'm more concerned about the impact on their finances. As opposed to the credit, but all of that's important. Bruce Mcclary, thank you very much. More information over at nfcc.org. Thanks, Bruce. Alright, thanks, David. If you would like more information about the topics and our guests featured in this series, please visit [email protected]. Also, if you have a question you would like David to answer, please send it to [email protected].