Statistically speaking, we are $#@&!
“They” say, if you believe every statistic presented, you are a fool, but if you don’t believe every statistic you’re shown, you are a bigger fool. Damned if you do, and damned if you don’t – as the saying goes. That said, I spent some time this week studying some statistics from multiple sources*, and was quite shocked at what I discovered.
Over 50% of adults are financially anxious, and there is plenty of reason for concern. It is reported that 2 out of 3 families lack an emergency fund, which was exasperated even further due to COVID. Approximately 70% of Americans have less than $1,000 in savings, and about 45% have no savings.
Over three-quarters of U.S. adults are living paycheck to paycheck, with a record 80% of Americans now living with some kind of debt. The average interest rates for credit cards in 2021 climbed to 17.31%, and the Federal Reserve reports that only 48% of Americans with credit cards pay their bill in full every month. The price of a used car rose 29% in 2021 with people scrambling to get alternative financing for these acquisitions.
There is approximately $34 Trillion in nonmortgage debt, including Student Loans, Credit Card balances, auto loans, and other non-secured debt. According to the CFPB, over 27M people with student loans qualify for reduced monthly payments or actual debt forgiveness.
Most people have less than 100,000 in assets in retirement years and waste hundreds of thousands in interest expenses because they didn’t manage their mortgage and liabilities in the smartest way possible. Over $8 Billion were collected in “overdraft” charges by the top 5 US Banks this past year.
There are approximately 49 million outstanding mortgages in the U.S. comprising over $16 Trillion in loan balances. Of those, millions of homeowners are still eligible to refinance and save over $200 a month on their payments but have yet to attempt.
As of August 2021, the inflation rate in America increased to 5.3% from the previous year. This is poised to rise even further as Federal Reserve Chairman Jerome Powell noted, “Inflation Could Turn Out To Be Higher And More Persistent Than We Expect.”
The one piece of good news - unless you are an aspiring home buyer - is the recent surge in home value appreciation. At the start of this year, the median home price in America was 13.4% more compared to 2020. There is an estimated $19.4 trillion of “equity” available for homeowners. That statistic is the highest level it’s ever been.
The moral of the story here is that a home can represent a very sensible way to optimize your finances to help create wealth and maximize long-term equity. Don’t become a bad statistic.
*Sources: CFPB, New York Fed 2020 Report, 2020 U.S. Census Bureau, Federal Reserve 2020, OppU, Gallup, RamseySolutions.
Shout out and Happy Birthday to Aliza Bochner, Elana Cohen, Zohar Kastner, Yael Mandel, Talia San Solo, and Ronnie Weinblut. With special birthday wishes to my father and incredible wife Esther!
Shmuel Shayowitz (NMLS#19871) is President and Chief Lending Officer at Approved Funding, a privately held local mortgage banker and direct lender. Approved funding is a mortgage company offering competitive interest rates as well as specialty niche programs on all types of Residential and Commercial properties. Shmuel has over 20 years of industry experience, including licenses and certifications as a certified mortgage underwriter, residential review appraiser, licensed real estate agent, and direct FHA specialized underwriter. He can be reached via email at [email protected]