consumers

After a brief period of peace, families stress over household debt

After the initial shock of the mortgage crisis, the plummeting stocks and the stark beginning of the economic recession, families in Colorado and across the nation became feeling a sense of hope. In the fall of 2010, people across the nation began increasing their confidence about their personal finances.

The Associated Press conducted the same poll that found hope nearly one year ago and were surprised to find people wavering once again. Americans are feeling more financial strain and scrambling to find ways to reduce their debt and work with creditors to make repayment plans that make sense for them.

According to the poll, nearly half of Americans across the country say that their household debt is causing them stress. 20 percent of those polled even said that they are constantly worrying about debt, for some it is all of the time.

In 2009 and early 2010, Americans reported some of the highest levels of debt-related stress, and after a short period of peace, the numbers once again increased, this time 17 percent more reported experiencing the financial stress.

One of the surprising conclusions is that it is not necessarily those with the lowest incomes that are feeling the strain. Households with an annual income of $75,000 or more reported the largest amount of increased debt-related stress since the last poll in November of 2010.

A large part of the stress is due to the fact that families must continue to purchase necessary items like clothing and food and make monthly payments to keep a roof over their head, but with less income, they are forced to put the expenses on credit cards. The study found that over one third of those polled will not be able to pay off their next credit card bill.

Source: Winston-Salem Journal, “Personal debt fears increase, poll says,” 26 July 2011

5 Rising Costs on Everyday Goods Affecting Consumers in 2011: Part 2

In our last post we mentioned the first two items out of the top five rising costs that will affect consumer spending in the New Year as families look to save money, reduce their debt or even avoid having to file for bankruptcy. In this post, we continue with the remaining three.

3. Taxes:

As budget is a sensitive point in many households, it is definitely a focus in state and federal discussions as well and taxes on products like cigarettes and even bottled water are one of the easiest ways to generate added revenue.

4. Service Costs:

Airlines, banks, telecommunication companies and other service providers have been struggling in the economy as well. The cost of a barrel of crude oil has increased by approximately eight dollars and as it costs more to fuel your car, it costs airlines a lot more to fuel their jets. The major commercial airlines raised the cost of a single ticket at a record rate this past Monday, and even Southwest Airlines, the corporation who boasts having the lowest fares was forced to follow in their competitors’ footsteps only a day later.

New government regulations and restrictions on things like overdraft fees have forced banks to restructure their operating procedures and business plans in order to generate revenue lost as a result of the legislative changes. One solution has been to raise general fees on checking accounts or ATM withdrawals that affect a larger percentage of their customers.

5. Jobs and Jobs:

Although jobs are not a normally thought of rising cost, they affect a consumer’s ability to spend. The unemployment rate continues to waiver at a high level making consumers uneasy about spending their money in the event that something happens with their job. It is not a far stretch to say that consumer confidence is at a significant low.

Source: MarketWatch “7 reasons why consumers won’t spur a recovery” Jennifer Waters 1/19/11

5 Rising Costs on Everyday Goods Affecting Consumers in 2011: Part 1

Economic recovery is a topic on a lot of people’s minds these days whether they are government officials, lawmakers or average citizens living in the country. Consumers are often turned to as a way to help assist the recovery; when consumers are spending, business are thriving, etc. However, as many households struggle to reduce their debt and save money or in some instances even simply avoid bankruptcy, the costs of everyday goods are making their goals more difficult.

Although experts say inflation remains in check, the costs of smaller items and services are on the rise and will continue that trend into 2011. Of those rising costs, there are 5 major ones that will affect the everyday budgeting of most families in America.

1. The Cost of Food:

According to the Consumer Price Index, grocery store goods rose 1.5 percent in price last year and restaurant costs jumped approximately 1.7 percent. As commodity prices rise, the major food producers pass those costs along to consumers. Many major producers last year decreased the amount of discounts offered and instead increased their prices. If you choose to go out to eat in 2011, according to a Nation Restaurant News survey, 60 percent of your restaurant choices will cost a little more than last year.

Throw in with the cost of food, the cost of several smaller grocery related products affected by other escalated prices. The cost of raw cotton will make the price per unit of things like coffee filters, books or clothes made out of it rise as businesses struggle to make a profit.

2. Energy Prices:

As you fill up your car this year, do not be surprised if you notice a continued incremental increase. In fact, overall energy prices rose 7.7 percent last year and experts say it is not going to stop.

Check back in the next posting for the remaining three items on the list.

Source: MarketWatch “7 reasons why consumers won’t spur a recovery” Jennifer Waters 1/19/11