Do not focus on statistics when exploring the causes of credit card debt problems faced by Pennsylvania. While it is important, it doesn’t always tell the whole story. There are too many variables involved to overgeneralize. However, there are some issues that appear too frequently to ignore.
Unemployment and Underemployment in Pennsylvania
Just prior to the recession starting in 2008, the state’s residents were enjoying a period of relatively low unemployment. Both urban and rural areas have seen rates under five percent. From 2008 to 2010, the rates of unemployment skyrocketed. The rural rates around the state peaking at roughly nine percent in 2010 and urban areas experiencing closer to eight and one-half percent. By March 2018, the unemployment rate is 4.8% – which is back to its pre-recession levels.
Even those figures are somewhat misleading, as the size of the labor force in the state has shrunk as job seekers simply gave up looking for jobs. The Department of Labor and Industry recently released a report citing a reduction of nearly 40,000 people in the workforce during 2017. That means many families are continuing to struggle to earn enough money to get by from day to day.
It’s also important to remember that job growth in the state, like other states, tends to be in lower-paying industries like leisure and hospitality rather than high-paying industries. In many cases, workers are forced to get by with jobs paying far less than in the past.
Comparing Pennsylvania to Other States
The costs of living in Pennsylvania also contribute to financial instability for many people and help to explain why many of the state’s residents are facing credit card and other consumer debt problems.
The median household income for Pennsylvania households has been steadily rising and is now at roughly $57,000. That’s slightly less than the national average of approximately $59,000. However, it’s important to remember income disparities are significant throughout the state, with individuals in some areas living far more comfortably than those in other, usually rural, regions. It’s also important to understand the state’s income levels are still lower than they were in 2007 before the recession took hold.
According to industry data, Pennsylvania’s housing costs are greater than those in 31 states. However, the rate of homeownership continues to be higher than average. Nearly 80 percent of residents own their homes. The cost of housing varies dramatically from one part of the state to another. Wayne homeowners, for example, pay more for homes than those in rural areas of the state.
Pennsylvania residents pay a disproportionate percentage of their incomes for basic food costs. That means those higher costs will place an additional burden on anyone already finding it difficult to pay day-to-day expenses.
State residents get a slight break here, with total expenses being roughly three percent lower than national averages. The costs are rising steadily for all types of healthcare, however, and there is no indication those costs will be reduced in the coming months. Those expenses put additional stress on budgets, creating more debt issues for many families.
Keeping the lights on is more expensive in Pennsylvania than in much of the nation. Harsh winter weather also increases utility expenses, making it even more difficult for lower-income families to stay abreast of their financial obligations. Using credit cards to pay bills leads to increased long-term debt that only exacerbates existing conditions.
Obviously, there are other expenses families have to deal with. Home repairs, automobile expenses, and even replacing worn clothing all contribute to debt issues. Families with debts left over from the recession years have even more problems keeping up with ever-increasing expenses.
Credit Card Debt: Is It Really a Problem in Pennsylvania?
Statistics indicate Pennsylvania residents, as a whole, carry less total consumer debt than the national average, and that’s important. However, it is still high enough at $32 billion. With the cost of living being relatively high, keeping up with any debt can be problematic.
Credit card debt, however, is near the national average of $2,820. That’s less that than the state’s peak average of $3,350 in 2008. That’s likely because slow or non-payment of credit card debt caused account cancellations during the recession years, with few people really recovering to pre-recession levels.
One area of concern is the state’s high level of student loan debt. Pennsylvanians are struggling with roughly 20 percent more student loan debt than the national average. That level of debt puts additional pressure on families and frequently leads to people using credit cards to pay bills, which simply moves debt from one place to another.
The end result is that, for many residents, credit card debt is a problem. In some cases, the situations are manageable but, in others, debt levels are not manageable and families are suffering.
What Happens When Credit Card Debt Becomes Overwhelming?
At some point, using credit cards to take care of daily expenses results in users maxing out their credit limits, which means there is no longer a way to cover routine costs. This is a critical time as to how credit card debt is managed will make a dramatic difference in the financial future of the credit card holder. Facing the necessity of making budget changes is vital for dealing with credit card debt repayment.
How Can Debt Be Reduced to Allow Repayment of Credit Card Debt?
Since every family’s situation is different, consumers must explore a variety of potential solutions to see which ones will provide the most benefit. Cutting monthly expenses is a must to make repaying credit card debt possible. Explore just a few of the strategies people are using to reduce their monthly expenses and allow repayment of their credit card debt.
Cut Utility Costs
In cold weather, it pays to dial back the thermostat a few degrees to reduce heating bills. Wearing a sweater around the house or closing off little-used rooms will reduce energy use. Always turn off lights and devices when they are not in use. Even using a toaster oven rather than a range can reduce energy consumption. Look for ways in your own home to cut down on energy use and take advantage of any programs available from local energy providers to cut use.
Explore Ways to Cut Food Costs
Because Pennsylvania already has higher-than-average food costs, it really pays to look for ways to cut those expenses. Shopping experts recommend avoiding prepared foods and taking the time to prepare meals from scratch. Foods made at home from fresh ingredients are healthier and, in most cases, cheaper to make.
Avoid Eating at Restaurants
Although the prevailing trend is to eat out more often, eating in restaurants, even fast-food locations, costs far more than eating at home. No one is saying a family should never go out for a meal, but eating out multiple times every week will make it far more difficult to repay credit card and other consumer debts.
Eliminate Cable or Satellite Service
One trend gaining in popularity is cutting the cable. While doing without some premium channels can be unpleasant, the cost of cable and satellite services continues to climb. That, in turn, makes it harder for families to repay credit card debt and still cover monthly expenses. Most areas have free, over-the-air channels available, and streaming services offer programs at relatively low costs for those in areas where antennas won’t work.
These are certainly not the only ways people can reduce their expenses. Options, like using public transportation or carpooling, should also be considered whenever possible. Doing so may even make it possible to eliminate the need for a second vehicle, which would significantly reduce transportation expenses. Examine your specific situation and look for additional options to consider.
If everything possible has already been cut from the budget and it’s still impossible to repay that credit card debt, it may be necessary to look for other solutions. If you’re at that point, there are a couple of options to look at.
Discuss a Consolidation Loan with a Lender
A large percentage of people with too much credit card debt have the option of using a debt consolidation loan. This will get their monthly payments reduced to a more manageable level. The lender provides a loan large enough to repay the existing credit card debt. It is meant to replace multiple, high-interest payments with a single, lower payment.
If your credit is already damaged and lenders are reluctant to provide a debt consolidation loan, there are still ways to reduce your monthly payments. The most commonly used method is exploring debt settlement options.
How Do Debt Settlement Options Help?
Debt settlement specialists negotiate reduced payment plans with creditors. While few credit card companies will readily negotiate with individual cardholders, many are willing to work with third-party negotiators. Debt settlement will not be the best option for everyone, but it always pays to discuss the option with a provider.
Be Proactive in Resolving Your Credit Card Debt
It’s always important for anyone having difficulties paying their credit card debt to resolve the problems before they get any worse. Waiting won’t help. Developing a truly workable strategy to repay your credit card debt should start now. Contact a debt relief specialist today for help.
One of the ways that you can resolve your debt is by being smart about your expenses. However, there are specific expenses that you should never think about sacrificing. Here is a video that will explain this further.