A March survey of 1,000 U.S. adults from the online platform Clever, in fact, found half the respondents back then feared they would deplete their savings after just one month if the pandemic continued. As of November, the average American had fallen $7,512 deeper into debt in order to cover expenses like auto payments, credit cards, and student loans, among other necessities.
Total nonmortgage debt is now a striking $41,559 for the typical person.
That's according to a follow-up survey of 1,000 adults to get a sense of people's financial situations and to gauge whether, and how, a second stimulus check could help.
That surge in debt spells trouble for several reasons, but most notably because Americans were already falling behind on their bills. More than half (54%) said they've missed or deferred at least one payment in 2020 versus 29% who said the same earlier this year.
Of those not able to cover expenses, 45% said they missed a student loan bill, 34% skipped a TV, internet, or phone bill, 30% couldn't pay their credit card bill, and another 30% were forced to skip a medical bill. Utility payments also fell by the wayside for 27% of the respondents.
The top reasons for missing a payment included paying for food or groceries instead (37%), prioritizing other debts (34%), lost income (28%), or covering an unexcepted emergency (25%).
What's more, almost a quarter of those in the survey needed to dip into their savings to help cover expenses, and 31% have taken over $5,000 from their emergency funds.
Video by Jason Armesto
More than 80% of survey respondents agreed that a second stimulus check of similar value as the first would be a big financial help, and 46% of the total said they would spend it on bills.
While the status of another round of payments isn't clear, President-elect Joe Biden called for a reprieve for the many people who are struggling: "For millions of Americans who've lost hours and wages, or have lost jobs, we can deliver immediate relief, and it need be done quickly," he said Monday. "Congress should come together and pass a Covid relief package."
Biden has said that he supports a stimulus like the $3 trillion HEROES Act relief package passed by the House in May, the proposed amount of which has since been lowered to $2.2 trillion. That included enhanced unemployment benefits, aid for state and local governments and housing relief, and individual $1,200 stimulus checks.
So far, the Senate has ignored that proposal. Its $500 billion "skinny" bill in September, which didn't pass, didn't include individual payments for Americans or state aid. Senate Majority Leader Mitch McConnell says he expects the government to pass more stimulus in 2021.
Video by Stephen Parkhurst
For now, struggling Americans can only imagine how they would spend the extra cash if they had it. And according to recent findings from the New York Federal Reserve's Survey of Consumer Expectations, many would focus on covering essentials and paying down debt.
Almost half of the respondents, 45%, say they would put the extra money toward their savings. Another 31% would use it to pay debt such as student loans, credit cards, and mortgages. And about a quarter, 24%, would spend the funds on food, housing, and other necessities.
That isn't a surprise to Lou Abrams, CFP, the founder of financial start-up Fisecal, who told Grow this month that most of his clients paid off significant portions of loan debt "using the CARES Act as cash flow rather than dip into savings or take money from their paycheck."
If your financial situation needs a boost now, experts suggest not waiting for a potential stimulus package. Review your expenses and find out where your money is going. Try calling your credit card company or cellphone provider to see if you can land a better rate, and cancel any streaming subscriptions or other services you're registered for but may no longer use.
Video by Ian Wolsten
You could pick up a side hustle, too. According to a nationwide survey of 2,000 adults in the United States done by the savings and investing app Acorns, 34% of workers say they have a side hustle outside their normal job, and another 19% want to start one.
Even if your finances have remained stable during the crisis, it makes sense to budget and plan for later down the line by placing a portion of extra income in a high-yield savings account, which offers compound interest and allows your money to grow.
"Paying yourself first should always be a top priority," Adam Murray, CFP, a financial advisor at Berman McAleer, told Grow this month. "Whether that means paying down high-interest debt, such as credit cards or student loans, or increasing an emergency fund or retirement savings, by focusing on improving your financial health you are helping yourself now and in the future."
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