‘Survival Debt’ Is on the Rise: 3 Smart Ways To Stay Afloat
Written by
Cindy Lamothe
Edited by
Jenna Klaverweiden
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
Let’s face it — life can throw some serious curveballs, and sometimes keeping your head above water financially feels like a full-time job.
Rising prices are pushing Americans into what Zety calls “survival debt.” According to its Survival Debt Report, nearly half of workers (48%) have borrowed money in the last year to cover groceries or utilities, while 71% carry credit card balances and 21% can make only minimum payments. Plus, 22% have delayed saving for retirement in order to stay financially afloat.
Despite all of the above, there are some smart, practical ways to stay afloat without drowning in stress. Here are some top strategies to help you take control and keep your finances steady.
Understand Debt
“To maintain a good credit score, you should use no more than 30% of your available credit,” said Jeanna Coates, community partnership manager and Certified Financial Counselor, Evergreen Credit Union, a member of Backbone Coalition.
Unfortunately, she said credit cards are being used as an emergency fund, as well as for general everyday purchases.
Luckily, there are things you can do. One key step is educating yourself on debt and finances. “Members who request financial education, coaching or debt repayment are on their first step to financial freedom!” Coates said.
Make a Plan for Your Money
It’s important to have a plan for your money.
Start by listing all expenses and separating needs from wants, Coates advised. Then, redirect unnecessary spending into savings. Coates said even small amounts add up. “Pay yourself first,” she added. “Saving just $15 a week adds up to $780 a year. Every cent counts,” she said.
Once you have a clear picture of your expenses, create a monthly budget with a budgeting tool and consider whether you can consolidate expenses.
If you do need to borrow money at some point, have a plan for that too. Coates advised people to explore safe, low interest borrowing options when necessary, avoid payday or predatory loans, and take advantage of financial tools and educational resources offered by credit unions.
Build Long-Term Financial Wellness
“Reducing debt is key: stop borrowing, analyze debt and create a realistic repayment plan,” Coates said.
She also advised using credit wisely, refinancing responsibly and setting clear goals. Consistent action and education, especially around budgeting, credit, loans and general financial literacy, will help build lasting stability.
“Long-term financial freedom begins with paying yourself first. Earn, save and spend, in that order,” she said.
By focusing on both short-term solutions and long-term financial wellness, Coates noted that individuals can better navigate rising costs and avoid being trapped in a cycle of high-interest debt.
More From GOBankingRates
