Thanks to today’s economic situation, debt has become a scary thing. Maybe not as scary as Freddy Kreuger, but certainly more frightening than the Boogieman of your childhood.
Debt is a four-letter word that most people live with every day, but simply talking about it doesn’t have to send chills up your spine. Debt’s isn’t all that bad. After all, without debt, most of us couldn’t ever buy a house or car or help our children go to college. They key is the type of debt and how much you carry.
The latest Allstate/National Journal Heartland Monitor poll of 1,000 adults found that Americans often have varying—and sometimes conflicting—attitudes and concerns about debt based on their experiences, race, education and income.
About 25 percent of those polled said that their debt load had increased in the past few years, while just 8 percent said carrying too much debt was their biggest financial worry. However, lower-income families, non-college Caucasians and minorities were all much less likely to say they could manage their debts with little concern.
A majority of those earning at least $50,000 a year believed that debt was a positive force in their lives. Yet 56 percent of all respondents also said that personal debt creates an obstacle to achieving the “American Dream” by encouraging people to spend beyond their means.
Credit cards ranked as the most common form of debt, and a plurality of respondents across the major racial, economic and educational lines all said that the downturn had encouraged them to reduce debt. Another survey by The Associated Press and market research firm GfK Group showed that consumers’ increasing frugality with credit card debt may be why they feel less stressed about their finances.
One thing practically everyone agreed upon was that excessive borrowing escalated the severity of the grueling economic downturn. Nearly eight in 10 believe the federal debt and deficit have a meaningful impact on their personal finances, and 65 percent said that the government’s focus should be on reducing debt and cutting government spending.
So is debt good or bad? That’s a trick question, because the answer is: neither. Debt is nothing more than a tool for taking advantage of opportunities. The questions you need to ask include: Are the opportunities essential? Do the benefits outweigh the costs (interest payments)? What are the risks? Also, consider how much debt you currently have and take steps to pay it off.
Whether debt is haunting your nightmares or just the harmless thing that goes ‘bump in the night’ is completely up to you. If used wisely, debt can help you reach the goals that populate your dreams.
Need help assessing your debt? Check out Allstate.com’s financial solutions for the information you need.