Smart Spending Tips discusses possible consumer overspending in 2024 and what that means for households. The Federal Reserve Bank of New York’s monthly Survey of Consumer Expectations asks people questions about how they expect economic developments to affect them in the year ahead. Beyond what the responses say about the overall economy, analyzing the survey results can provide insights into how people manage their household finances. Recent results suggest that record levels of consumer debt will continue to rise. With interest rates at elevated levels, people may do well to consider bucking the trend. Summarizing New York Fed survey results…

Smart Spending Tips discusses debtflation and how consumer outlook on the economy may be a self-fulfilling prophecy. Several economic indicators suggest the economy is thriving. Unemployment is low, GDP is growing, and the stock market is booming. So why did consumer confidence fall in March 2024? Even before that, consumer outlook for the future was already down to levels traditionally associated with a recession. Are people being unreasonably glum? Maybe they are more focused on the impact debt has on their household finances than on broad economic indicators. Inflation is weighing on consumer confidence The Conference Board announced last week…

Smart Spending Tips discusses the difference between debt settlement and debt management and how each affects credit score. Credit counseling is a term for a variety of services offered to consumers who find themselves buried in credit card debt. It is often used to describe both debt settlement and debt management programs offered by legitimate not-for-profit credit counselors. While each is designed to get the consumer out of credit card debt, their impact on credit scores could not be more dissimilar. Debt settlement vs. debt management Settling a debt is the process whereby the consumer or their representatives negotiate a…

Smart Spending Tips discusses reduced consumer spending and the possible impact on inflation and the economy. After a brief lull during the pandemic, Americans made up for lost time. The past couple of years have seen consumers ignore high inflation, rising interest rates, and predictions of a recession with increased spending. This has helped the economy continue to grow. Recently, there have been signs that shoppers are finally tiring. This could make for a very different economy by the end of 2024. Spending and borrowing have gone hand in hand This past week, a regular Federal Reserve report known as…

Smart Spending Tips discusses steps you can before and during your student years to graduate without debt. It’s easy to believe that you can’t get through college without a load of debt. In fact, 30% of students graduate from a two- or four-year degree program debt-free. And another 25% graduate with $20,000 or less in student loan balances. How do they do this? Student loans by the numbers: who owes what? Student debt isn’t the shattering six-figure problem that news outlets make it out to be. Undergrads dependent on their parents are only allowed $31,000 in federally-backed student loans, and…

Smart Spending Tips discusses the causes of the continued consumer debt problem. Consumer debt has continued to grow, and people are finding it hard to keep up with their payments. Is inflation to blame? A new analysis shows that the real culprit may be that consumers have been splurging more than they did a few years ago. The debt problem continues to grow The Federal Reserve Bank of New York’s Quarterly Report on Household Debt and Credit showed that the debt problem has continued to grow in two important ways. Debt balances rose again. Consumers owe more money than ever,…

Smart Spending Tips explains recent data on auto loans and credit cards and why some Americans are drowning in debt. Many Americans use credit regularly without accumulating a lot of debt. For others, debt becomes a never-ending spiral of higher and higher balances. Recent data on auto loans and credit cards provides insight into how debt can grow quickly. Adding debt with negative equity when buying a car The Consumer Financial Protection Bureau (CFPB) recently released a report on the role of negative equity in auto financing. Negative equity means that you owe more on an asset than the asset…

Smart Spending Tips discusses the worrying trend that Americans expect their spending to grow faster than income. Despite high inflation, high interest rates, and high debt burdens, consumer spending continues to increase. You might expect this trifecta of financial woes to encourage consumers to tighten their belts. However, Americans continue to spend beyond their means. Recent survey data shows that elevated spending is the norm, and consumers expect to continue to overspend over the coming year. Increased spending may eventually force many households to make difficult financial choices. For the economy as a whole, current overspending might hamper future growth.…

Smart Spending Tips discusses the possibility of Feb rate cuts and whether an interest rate cut by the end of 2024 is likely. The Federal Reserve opted not to cut interest rates at its latest meeting, even though its forecasts, data, and commentary indicated an imminent cut. The official statement reflects continued optimism that a rate cut will happen by the end of 2024. But there are no sure things in economics. Managing financial risk means considering what is likely to happen and also what could go wrong. Currently, the Fed seems on track for a rate cut this year.…

Credit Sesame discusses how, despite increasing worry about debt, many consumers still take on more debt rather than address their financial situation. The latest Survey of Consumer Expectations from the Federal Reserve Bank of New York presents a confounding picture of consumer behavior. An increasing number of consumers fear they can’t afford the debt they’ve taken on. Yet, collectively, consumers plan to continue to spend beyond their means. This could mean there are a whole lot of people headed for serious debt problems. Instead of ignoring the fear, consumers would be wise to create a financial plan now. Consumers who…