According to the September poll hosted on the National Foundation for Credit Counseling (NFCC) website, 22 percent of more than 1,900 respondents indicated they could not make ends meet without access to credit.
“There are hundreds of millions of credit cards in circulation, making the plastic temptation very real,” said Gail Cunningham, spokesperson for the NFCC. “Nonetheless, credit was intended to be a convenience, not a piggy bank to supplement income.”
An additional 24 percent of poll respondents said they would have to make significant lifestyle changes if they did not have access to credit. Taken together, 46 percent of Americans would experience major interruptions to their financial lives if denied the use of credit.
The inability to responsibly manage credit is one of the first financial danger signals. Consider the following data from the NFCC’s 2012 Financial Literacy Survey:
• Thirty-three percent of consumers do not pay all of their bills on time, the highest percentage since the question was first posed in 2008, up five percent over 2011;
• Thirty-nine percent of respondents indicated they carry debt over from month-to-month, a sure sign that a person is living beyond what his or her income can support; and
• Sixteen percent have experienced an overdraft related to a checking account.
No one ever intends to dig a deep financial hole. Life’s unexpected events often throw a curve to even the most stable financial plans, making credit the choice of last resort to meet monthly obligations. Many well-meaning people think living off of credit will be a short-term solution; the new job is just around the corner; the medical event won’t be serious; the divorce decree will read differently. Others have not experienced a financially back-breaking life event, but have built a lifestyle that their income simply will not support.
The solution for either group is a three-step process: stop charging, increase income, decrease expenses. Facing the financial facts can be hard. Changing ingrained habits is never easy, but it is not only worth the effort, it is essential to a person’s current and future financial stability.
“Although the 22 percent of people indicating they could not make ends meet without credit is a minority among those polled, it is a significant minority,” continued Cunningham. “People are masters at deceiving themselves and justifying spending. Don’t be one of them.”
To determine if your finances are on the brink of disaster, try living without credit for one month. If successful, it is likely that credit is being managed responsibly. If you are not successful, consider getting some advice from the experts at The Village Financial Resource Center at 800-450-4019.