According to National Debt Relief, debt is a serious problem that many are struggling with right now. Heavy debt can limit your ability to enjoy life and take advantage of fleeting opportunities to make life better.
Debt is a major source of stress for people as well. Yet, despite all the problems that debt causes, there are still many reasons why people stay in debt throughout their lives. It doesn’t have to be that way, though.
US household debt climbed to a new record of $15.24 trillion, the Federal Reserve Bank of New York said.
Read more: Americans Are In So Much Debt Like Never Before!
“As pandemic relief efforts wind down, we are beginning to see the reversal of some of the credit card balance trends seen during the pandemic,” such as lower spending in favor of paying down debt balances, said Donghoon Lee, research officer at the New York Fed.
A study done by researchers at Columbia University’s Center on Poverty and Social Policy, found that the stimulus checks and enhanced jobless benefits lifted more than 18 million people out of monthly poverty in April.
The poverty rate fell from 11% in February to 9.3% in June, according to research conducted by professors at the University of Notre Dame, the University of Chicago and Zhejiang University in China.
The entire decline could be attributed to the one-time federal stimulus checks of up to $1,200 for eligible individuals and $2,400 for eligible married couples, plus $500 for each qualifying child, that were distributed in the spring.
So why do people stay in debt? The National Debt Relief organization notes a number of reasons, one of them is living beyond one’s means.
“People using credit cards and other loans to finance their lifestyle will often rapidly accumulate significant amounts of debt. Surprisingly, the people earning respectable levels of income are the ones that typically find themselves in this situation. High earners often have easy access to correspondingly high amounts of debt,” The NDR says.
“They can qualify for credit cards with high limits, and they often have assets that enable them to apply for secured loans, such as a home equity line of credit.
If they’re too liberal with using that access to finance a lavish lifestyle, they can rack up dangerous levels of debt extremely fast.”
Another reason is job loss. People who have had debts before going unemployed may see their debts go higher, or they are forced to seek more loans or rely on credit cards to remedy expenses.
Now, the pandemic has also contributed to why Americans are experiencing record-breaking debts. From hospitalizations, medications, and other expenses, COVID-19 is the number one reason, at least right now, why so many people are suffering from debt.
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