Americans are reducing debts but need to monitor spending better
According to a poll of 3,201 Americans recently conducted by the National Foundation for Credit Counseling , slightly more than half of all respondents said the recession has inspired them to take steps to pay down their debt.
"Consumers have apparently become uncomfortable carrying debt, realizing how detrimental it can be to their overall financial well-being, and have gotten serious about doing what it takes to pay it off," Gail Cunningham, vice president of public relations for the NFCC, said in a statement that accompanied the poll.
There's still plenty of room for improvement, though, Cunningham told WalletPop via email. In a broader study conducted by the NFCC back in March, only 37% of respondents said they had a good idea of how much they spent or where their money went. Clearly, this new desire to pay down debt is a step in the right direction, but the NFCC's poll also showed that only 20% of respondents actually plan to track their spending as a result of the recession.
"Tracking your spending is one of the basic building blocks of financial stability, but I think that people avoid doing this for a number of reasons," Cunningham says. Some people may find it a hassle, but she points out you only need to do it for a month or so to get a good picture of your spending habits and your fiscal weaknesses. Or, people might not want to face the truth about their spending in black and white, to which we can only say: Knowledge is power.
Another misconception is that you need to install a complicated computer program to monitor your spending (and, in fact, many financial institutions do provide online tools to help their customers with this). But all you really need is a pad of paper, a calculator and a willingness to document every dollar that leaves your wallet for a 30-day period.
Perhaps because of this resistance, only 6% of NFCC respondents reported that they actually saved more in response to the financial climate. This stems from our unwillingness to track our spending, Cunningham asserts. "I can't see financial stability existing without a firm grasp on how you're spending your money," she says. "Anyone can do anything for 30 days," she points out.
Readers, have you tracked your spending? Did it reveal anything surprising? Were you better able to figure out where your hard-earned dollars were going as a result?