Santa Clarita’s Answer To Personal Finance Woes: Addressing The Growing Problem

Posted by: KHTS FM 98.1 & AM 1220 in Home Town Station June 24, 2019 - 12:45 pm 0 152 Views

America’s household debt hit new records at $13.5 million in February this year, and Santa Clarita residents are leading the debt phenomenon. In June, LendingTree’s report showed that the city had the second highest personal loan debt levels in the state of California, coming in at $6,031.22. This revelation has shifted the focus to Santa Clarita personal finance habits, and the driving force behind their reliance on debt. More importantly, focus is being paid to what the residents and the city can do to address this growing problem, both on a household and a statewide level.

Auto Debt Continues To Immobilize Residents

Compared to other cities, counties in California face an increasing need to use cars and transport to access work and school. Therefore, it is no surprise that residents in Santa Clarita are carrying an average auto debt of $21,671. However, what is lacking is knowledge of how to handle that debt. In fact, auto debt continues to be a quiet and ignored driving force behind the debt issue in the country. The reliance by consumers on leasing and car loan agreements feeds on the increasing credit culture of the country. According to data from the Federal Reserve Bank Of New York, the average loan length is a surprising 69 months, indicating a long term impact on the financial situations of consumers. It is also likened to being more painful than job hunting by 36 percent of Americans.

However, if residents can implement small changes from the beginning of the process to avoid taking on less auto debt, the issue of repayment is significantly reduced or nullified. Besides the option of using cash saved as their budget, residents continue to underestimate the power of second hand when it comes to their cars. Yet it can be a surprisingly budget-friendly alternative to fulfilling a need for Santa Clarita residents. Doing your own research ahead of meeting with a dealer can give you the upper hand when negotiating dealer financing; consider all your options, including your local bank. Loyalty and track record can work in your favor when it comes to interest rates. When it comes to paying off auto loans, you must first confirm with your lender that you face no penalties for early payments. Of course, there is refinancing, and the option of increasing payment frequency or amounts.

Credit Card Debt Management Continues To Baffle Americans – Santa Claritans Included

Credit cards continue to be the main culprit for Americans. About 50 percent of Americans have maxed out their credit cards. Part of the answer to the debt issue for those in Santa Clarita (and Americans in general) is understanding how to properly manage the credit tool that happens to carry one of the highest interest rates in the debt game. As of 2019, credit card interest rates averaged 19.24 percent, according to WalletHub’s Credit Card Landscape Report, and in Santa Clarita, credit card debt to income stood at 10.33 percent, or $11,731. Mismanagement of credit card debt can impact other aspects of your financial life, including your budgeting and staying on top of expenses. In the long term, consequences can include employment difficulties, and even the lack of access to banking/ checking accounts due to questionable banking history.

With a higher than average household income, there is a lot of space for consumers to get their credit card debt under control by practicing mindful financial habits. One of those is tackling credit card payments as a priority due to their higher cost, and exploring options such as consolidation and refinancing. A large part of the problem stems from the lack of information that is still present, even with the abundance of information available.

Financial Education Is Lacking – And Being Noticed

This leads to the issue of financial education, a nationwide problem amongst consumers. The power to changing the debt pattern begins with knowledge, and Americans are sorely lacking in the financial education department. Only 16 percent of Americans have a high level of financial literacy, according to findings from YouGov and TheKnowledgeAcademy.com. Not only is the lack of understanding when it comes to finances driving debt decisions, but it also continues to affect both the savings and investment behavior of consumers as well. Understanding the consequences and full-term impact of financial decisions provides the full picture.

However, on a positive note, locals and authorities are paying attention to the need to address this. The ongoing Foundations in Personal Finance program targets local classrooms in Santa Clarita, and is currently taught in the curriculum of 15 schools throughout Santa Clarita Valley. However, there remains much to be done in this aspect if the debt culture is to be reversed.