Coming in at just under $4 trillion is American household debt, which is enough to let any sane consumer feel the pressure. But there is a light at the end of this very bleak tunnel, as there is a significant reduction in credit card debt. What this means for the American public, is that more debt is going into products, goods, and services that increase the overall quality of life of the average American. These include mortgages, car loans, and student loans. Consumers are learning to use their debt more wisely, and the impact it has on household finances is worth a second look.
Cash Flow Constraints A Thing Of The Past
One of the biggest obstacles consumers face when starting out their careers is that they often have a student loan debt burden that swallows up those earnings before consumers have the opportunity to save. According to research, the affordability index has dropped to 92.5%, which means that households will be short on their monthly mortgage payments. One of the ways to improve this index is by shuffling payments around in order to get to a more streamlined cash flow. Some of the best products to help with this is consolidating high-interest items into a consolidated loan.
Smarter Use Of Credit To Speed Up Repayments
While the ultimate goal is for consumers to manage their finances more effectively, it take enormous effort and sometimes financial hurdles come along. Medical bills, car maintenance, and even unplanned trips can do a number on a budget. For those moments, it’s important to not just take the first best thing that comes along. Instead, consumers are encouraged to compare prices, fees, and even interest rates to ensure they partner with the best product. This means doing lots of research on the various card options when looking for additional funding. Card companies are highly competitive and there are many that offer low or no interest rates, access to unique rewards programs, and even offers of VIP activities. Around 36% of consumers opted for their particular card based on the rewards offered.
Time To Do Things On Autopilot
While money management relies a fat chunk on the ability to manage debt, there is also the reason why you don’t want debt: a better quality of life. One of the ways to fast-track this is by banking your change. While it doesn’t seem like it will make a difference, a few dollars here and there do add up. Apps such as Acorns, Stash, and Robinhood offer consumers a low barrier to entry in a market that often requests a substantial amount to get started. The result is the ability to enter the investment game early on despite not having a chunk of change to put down. These funds are often not even felt which means very little pressure on the pocket. The reward? A chance to grow wealth without much effort.
For consumers, simple, easy, and cost-effective are the staples of money management. And if those three items manage to ease up cash flow or at the very least not inhibit it, then it’s full steam ahead.
