There are plenty of misconceptions when it comes to debt. One of those misconceptions is that Connecticut residents with higher incomes have enough disposable income to not even take on that much debt in the first place. And if they do bankruptcy is not an option because paying everything off must be fairly easy. However, income does not protect everyone from getting into this situation.
Regardless of income, a study from LendingTree found that most adults in America started out 2020 with financial stress. Although there are conflicting figures, that same LendingTree study showed that 60% of people with debt experience significant stress as a result. That financial stress can take many different forms. For example, Online Loans analyzed information from Federal Reserve Data and discovered that 10% of people who responded said they were losing their financial grounding.
Households with higher incomes are stressed over finances too, especially when it comes to credit cards. Some of that stress can be contributed to overspending, but a lot has to do with rising costs of living. A lot of Americans just cannot keep up with even the basics, so they turn to credit cards, which then rack up interest when they cannot afford the monthly payments. Using balance transfers to shuffle debt from credit card to credit card does not help, either. Not only does it generally cost money to transfer, but low or even zero interest rates are usually only temporary.
Income is not a reflection of one’s ability to pay off debt, especially when more and more of that monthly income is allocated for things like utilities, groceries and other necessities. This can be very frustrating for people in Connecticut. These individuals often feel as if they have failed even when they were just trying to do the very best they could. Although filing for bankruptcy might feel like one more misstep, it is actually a smart choice when debt spirals out of control.