FARMINGTON HILLS — Debt perception, positive thinking and split financial situations for Metro Detroit residents are some of personal finance themes that emerged from the second installment of Allstate Financial’s “Life Tracks” poll. Just half (50 percent) of respondents have money left over at the end of the month after paying for essentials. Additionally, 46 percent are living paycheck-to-paycheck and half know what they are supposed to do financially, but don’t always do it.
“This survey shows Detroiters are torn between their desire to stay optimistic and the reality of their financial situations,” said Matt Smith, Michigan financial sales consultant. “As we continue to push ourselves to be smarter financially, we also need to be realistic and seek help in taking careful steps to secure our futures.”
The December 2012 survey polled 18 cities across America and responses pointed to an overall lack of financial management skills and resources, along with an over-confidence in their abilities to manage personal finances.
The poll revealed four themes in Detroit, including:
Divided we stand: The split between those with money left over after paying for expenses and those that don’t is reinforced by findings from the poll.
- Forty-seven percent of Detroit-area respondents feel their personal financial situation is “excellent” or “good,” while 53 percent say it is “fair” or “poor.”
Positive thinking: Despite the range of financial experiences, 88 percent of respondents are confident in their own ability to manage personal finances.
- For those who lost their job or had someone in their household lose a job, 49 percent cut back on long-term saving, which is more than the national average. Thirty-one percent also put more expenses on a credit card, which is eight percent more than the national percentage.
- Eighty-two percent of parents are very confident about their ability to pay for educational opportunities for their children.
- Seventy percent of Detroit-area residents say they are very confident about their ability to pay for a new car.
- Seventy-nine percent of prospective homebuyers are very confident about their ability to buy a new home; 49 percent are looking to buy a smaller house.
Debt perception: Although they have earnest intentions to pay off debt, Detroiters are “treading water” when it comes to debt, savings and investments. Ninety percent of respondents are making debt payments.
- Fifty-four percent make credit card payments, 46 percent have a mortgage, 38 percent make car payments and 26 percent have medical debts.
- Among the 57 percent of Detroiters expecting a tax return, 34 percent intend to pay off debt with the money.
- Eighty-one percent of responders with credit card debt say their level of debt has increased or remained the same in the last year.
Priorities, priorities: Every day, Americans consciously decide to place a higher priority on activities other than their finances, yet they recognize they need to do more to improve their financial situations.
- Detroit responders said they spent an average of 10 hours watching television and seven hours surfing the Internet, but only about two hours paying their bills and managing household finances each week.
- Forty-six percent of Metro Detroit residents say they’re saving less than they should be.
While an individual’s recommended actions for tackling their financial challenges depend on his or her personal situation, three basics are relevant to everyone:
1. Do your homework: You can find a wealth of valuable yet free information about managing your finances, such as personal finance websites, books, newspapers and seminars. Financial professionals can guide you through this information and help you set financial goals. For information about specific products, such as life insurance, you also can ask for a referral from professionals you currently deal with and trust – such as your auto/home insurance agent.
2. Set goals and a timetable to achieve them. But – rather than trying to make progress on all your goals at once – prioritize those goals every year and focus on the two or three that are most important to you.
3. Make a date once a year for an annual life insurance checkup to double-check that the amount and type of coverage is right for your current situation.