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Tuesday, October 6th, 2009

Survey: Shoppers of All Income Levels Cutting Back

A recent survey conducted by IBM found that Americans are trimming their spending in this recession, no matter how much income they pull in each year. Here’s a look at how people are saving and how to make similar cuts work for you.

Saving Strategies at the Supermarket

  • Shopping around: 49% of respondents have apparently begun hitting multiple stores to get the best deals on food products. This strategy can be effective, especially if you currently rely on costly convenience stores for the basics. But beware of driving too far for a bargain – your time and gas are valuable, too.
  • Buying less: More than half (52%) of those surveyed noted that they now buy less at the grocery store. If you choose to follow this strategy, be sure you cut back on expensive items you don’t need and food you end up tossing rather than eating. And don’t buy so little you’ll be hungry all the time – grocery store prices are much lower than those at restaurants and fast-food joints.
  • Looking for new foods: Among those making $20 thousand or less per year, 45% admitted to turning to foods that kept them full for longer periods of time. This can be doubly effective, since many foods that meet this criterion (such as oatmeal, lentils, rice, beans and potatoes) are generally inexpensive as well.
  • Trimming luxury brands: A significant number of those surveyed (34%) mentioned opting for less-expensive versions of health care and beauty products, rather than sacrificing them altogether. This can be very effective, especially if you compare ingredient lists to make sure you’re getting exactly what you want before you buy it.

Frugality Beyond the Recession?

Perhaps surprisingly, a majority of respondents indicated that they will be continuing some or all of their money-saving strategies once the recession ends – 60% said they’d keep exploring various grocery stores for bargains.

This is perhaps the wisest move of all.

And, based on a study conducted by AlixPartners earlier this year, the frugal future of Americans may be more than an optimistic hope.

In fact, the group’s study suggested that our country’s spending levels after the recession will be at only 86% of what they were before the stock market collapsed.

That may be bad news for some industries, but those dealing with debt, job loss or rebuilding finances after filing bankruptcy, every little bit helps.

Additional Resources

Government Consumer Expenditure Survey Booklet (2005 – 2009) (PDF)

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Saturday, September 26th, 2009

CFED Releases State Financial Report Cards

In late September, the Center for Enterprise Development released data reflecting extensive research on economic conditions in all fifty states. The findings reveal alarming realities about the current financial situation for millions of Americans.

Summary of the Findings

The CFED introduces its findings with the analogy of a house built on sand, claiming that, even when our economy was booming, wealth disparities between the very rich and the poor prevented the country from being truly economically healthy.

The study found, among other things:

  • Racial disparities: Minority households are more than three times as likely as white households to have a high-cost mortgage, more than twice as likely to be “asset poor” (with insufficient funds to sustain them in crisis), and four times as likely to be unbanked.
  • Wealth gap: The difference between wealthy and poor Americans is enormous – for every dollar owned by a household in the highest fifth of wealth, families in the lowest fifth own only two cents.
  • Gender differences: Households headed by females make only 83 cents for every dollar earned by male-headed households.
  • Revolving debt jump: Since 2007 – 2008, when the last “scorecard” was released by the CFED, median revolving debt has increased by 64 percent, to nearly $3,000.

Policy Suggestions from the Report

With the findings, the CFED also included suggestions for policies to correct or improve the economic disparities. Specifically, the suggestions include:

  • Earned Income Tax Credits and Individual Development Accounts: These would encourage families to set money aside by giving them tax breaks for putting part of their incomes in savings
  • Protections from Predatory Lenders: The CFED recommends that more states adopt lending caps for payday lenders and other restrictions on predatory loans.
  • Financial Literacy Education: To increase general knowledge about and understanding of economic tools and policies, the Center recommends instituting mandatory financial literacy education in public schools.

Learn More

For a detailed look at the findings in your state, you can check out the interactive map on the Center’s website. Get started by clicking on your state and checking out the numbers recorded. You may want to compare your state to others in your region to see how you stack up.

If your finances have deteriorated, you may want to consider speaking with a local attorney about your bankruptcy options. Millions of Americans have been able to stop creditor harassment, eliminate credit card debt and stop foreclosure by filing bankruptcy

Additional Resources

2009 – 2010 Assets Opportunity Scorecard (PDF)

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Monday, September 21st, 2009

U.S. Poverty Up, Income Down from 2007

In a press release early this month, the U.S. Census Bureau reported statistics on income, poverty and health insurance in the United States. For the most part, the numbers are not especially surprising, considering the current recession. Here’s what the Bureau reported.

Income Levels

Income levels were reported as decreasing year-over-year in all demographics. The breakdown of income change by race and ethnic origin in American households:

  • Non-Hispanic white households: Decline of 2.6%, to $55,530 (reported as statistically significant)
  • Black households: Decline of 2.8%, to $34,218 (reported as not statistically significant)
  • Asian households: Decline of 4.4%, to $65,637 (reported as not statistically significant)
  • Hispanic households: Decline of 5.6%, to $37,913 (reported as statistically significant)

The difference between men’s and women’s earnings has also changed since 2007: women who work full time, year-round in 2008 reportedly earned only 77% of what their male counterparts do, down from 78% in 2007.

Poverty Levels

For the first time since 2004, the poverty rate in the United States increased in 2008 at a statistically significant level. The poverty rate of 13.2 percent is apparently the highest in the country since 1997.

  • The family poverty rate in 2008 was 10.3% (up from 9.8% in 2007), with 8.1 million families living in poverty (up from 7.6 million).
  • The married-couple poverty rate increased to 5.5% (up from 4.9% a year before) and 3.3 million people (up from 2.8 million).
  • Racially and by ethnic origin, poverty levels increased in all demographics except blacks, for whom the poverty rate remained unchanged statistically.

Health Insurance Coverage

While the number of uninsured Americans rose from 2007 to 2008, the percentage of the total population without health coverage remained at 15.4%.

  • In 2008, 46.3 million Americans were without health insurance (up from 45.7 million in 2007).
  • 255.1 million Americans did have health insurance in 2008 (up from 253.4 million in 2007).
  • Private health coverage dipped in 2008 from 202.0 million to 201.0 million.
  • 87.4 million were covered by government health insurance, up from 83.0 million a year before.

The growing rate of uninsured and government-insured Americans is a major concern cited by proponents for health care reform, as well as the rate of Americans filing bankruptcy due to unmanageable health care costs.

Additional Resources

Income, Poverty and Health Insurance Coverage in the United States: 2008 (PDF)

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