Experts: Key to shedding consumer debt is a plan

Eighty percent of survey respondents said they will be debt-free, but were not taking steps to do it.


Published: Wednesday, January 12, 2005 at 6:01 a.m.
Last Modified: Tuesday, January 11, 2005 at 10:48 p.m.
Most Americans dream about being debt-free but few do anything to make it happen, and some plan to add even more debt in 2005, according to LendingTree Inc.'s Smart Borrower Survey.
Online market researcher Insight Express conducted the poll of more than 1,000 people, 21 and older, in December on behalf of LendingTree Inc., an online multi-lender exchange that links consumers and lenders.
Survey results revealed that 80 percent of respondents believe they will be debt-free in the future, although they're not taking steps to ensure such an outcome.
"All of these people say they want to be debt free, but not only do they not have a plan, some plan to add debt in 2005," said Ed Powell, chief consumer officer for LendingTree. "You need to have a plan. The plan doesn't have to be complicated."
Of those making a New Year's financial resolution, 80 percent said they don't plan to seek help to manage their debt and finances, and 13 percent said they don't intend to develop a financial plan.
"What we find in our conversations with other agents across the state is that it's pretty much a given that people know they need to be debt-free, but sometimes there is a huge chasm between where they are and where they ought, or want, to be. As agents, we often find out that people just are not sure where to start," said Brenda Williams, Family and Consumer Sciences agent with the Alachua County Cooperative Extension Service.
One problem can be getting people to admit that they need help, she said.
"Another part of that is whom do they go to for help," Williams said. "Unfortunately there are places out there that indicate they will help and end up causing more grief."
In response to other questions in the survey, 60 percent of respondents indicated they were moderately to extremely concerned about their overall level of debt, but 19 percent said they intend to purchase a car in 2005. Also 21 percent of these respondents are planning home improvements costing more than $3,000, though more than one-third said they don't know how they will pay for these projects.
A surprising survey finding, Powell said, was that 55 percent of Americans have some level of credit card debt.
"I actually thought the number was going to be lower," he said.
Overall, 76 percent had outstanding balances on both credit cards and personal loans, and of that number 37 percent are only making minimum payments and playing "credit card bingo" by rolling over balances to lower interest cards, according to the survey.
"The real upshot of all this is that it's never too late to fix it," Powell said.
A variety of free information is available about personal finances from the county extension service in Gainesville, 2800 NE 39th Ave. Williams may be contacted at (352) 955-2402, or BCWilliams@ifas.ufl.edu.
LendingTree Inc. at www.lendingtree.com also offers personal finance tips.
Doris Chandler can be reached at (352) 374-5094 or chandld@gvillesun.com

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