Debt Consolidation

From Mississippi Residents to Divorced Couples to Black Americans, These Groups Are Struggling the Most to Pay Expenses

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With the national unemployment rate remaining stubbornly high — 6.9% in October — and the coronavirus relief package a distant memory, many Americans are still struggling to pay their usual household expenses.

According to LendingTree’s analysis of Census Bureau data from late September and early October, there were significant differences in where U.S. residents were struggling the most financially over the past seven days.

Our researchers ranked the states by the percentage of residents having the most difficulty paying their usual expenses. We also looked at various demographics to see who these people are. Here’s what we found.

Key findings

  • Mississippi (41.4%), Louisiana (40%) and Nevada (38.2%) have the highest percentage of residents who say it’s been somewhat or very difficult to to pay their usual household expenses over the past 7 days.
  • Wisconsin (23.3%), Minnesota (23.4%) and New Hampshire (23.6%) have the lowest percentage of residents who are having the most difficulty paying their usual expenses.
  • Divorced or separated Americans report more difficulties in paying their usual expenses than married couples. In fact, 43% of divorced or separated Americans say it’s been somewhat or very difficult to pay their usual household expenses, versus 25.6% of married Americans.
  • Black Americans (48.4%) report difficulties in paying usual expenses at nearly twice the rate of white Americans (25.9%).
  • Income is a strong predictor of whether people can pay their expenses. In fact, 58.5% of people who make less than $25,000 a year report difficulty in paying expenses, compared with just 6.3% of people with incomes of $200,000 or above.

Residents in Southern states having the most difficulty paying expenses

Five of the top 10 states are in the South:

Several non-Southern states (Hawaii, New York and California) that made the top 10 are among those with the highest cost of living nationwide.

For example, Hawaii’s cost of living is nearly double that of the U.S. average, per the Missouri Economic Research and Information Center (MERIC) cost-of-living index, with housing costs at more than three times the average. That means that more coronavirus relief would be needed to provide adequate support in Hawaii.

The majority of the Southern states that top the list have a lower cost of living. For example, Mississippi (which is No. 1 on this list) is also the cheapest state for living costs, with overall costs about 15% lower than the U.S. average. The state has a housing index score of 66.7, versus the average of 100. That means any future coronavirus relief bills would likely go further in the low cost-of-living state.

Paying usual expenses — with a single income — harder after a divorce

There were more 780,000 divorces in 2018, according to data from the Centers for Disease Control and Prevention. And divorce can complicate finances, with the split of assets and debt varying based on the circumstances, including location and fault. Figuring out how to navigate finances post-divorce can be difficult, too.

“When a couple gets married, their living expenses are essentially cut in half because they can share the burden of bills like a mortgage payment and utility costs,” said Erika Giovanetti, LendingTree’s personal finance writer. “When a married couple separates, each partner has to pay for their own living expenses — often, for the first time in years.”

Indeed, it can be a struggle to make the switch back to individual finances, particularly with extra costs — such as alimony or child support — factored into a single income. That can make it especially difficult to keep up with expenses during times like these. In fact:

  • 43% of divorced or separated Americans were finding it somewhat or very difficult to pay their usual household expenses over the seven-day period examined, compared with 25.6% of married Americans.
  • About 41% of Americans who have never married stated the same, which isn’t far off from those who are divorced or separated.

One common factor between divorced or separated Americans and those who have never married is that they don’t live on a dual income. Married Americans, on the other hand, have that privilege, which could help explain why they have the lowest rate of reported difficulty.

Yes, race affects Americans’ ability to pay expenses

Here’s a race-based breakdown:

  • Black Americans (48.4%) are nearly twice as likely as white Americans (25.9%) to report having trouble meeting expenses.
  • Latino Americans closely followed Black Americans, with 44.2% reporting trouble meeting their expenses over the past seven days.
  • Asian Americans (26.8%) responded similarly to white Americans.

Part of the reason that Black Americans are struggling so much more than white Americans is likely due to the racial wealth gap.

White American families’ median net worth ($189,100) is more than seven times that of Black American families ($24,100). And Latino American families ($36,050) have a slightly higher median net worth than Black families.

Having less money at your disposal puts you at a higher risk of financial difficulty, even in the best of times. And Black and Latino Americans tend to earn less than white Americans, making the risk even more pronounced.

Americans with highest income aren’t doing universally well

While income is a strong predictor of whether people can pay their bills, it’s not the same across the board.

For example, 11.7% of residents with an income of $200,000 or greater in Mississippi report struggling to pay their usual expenses, compared with just 2.2% in New Hampshire.

“While wealth grants certain Americans more privilege than others, no single group is completely immune to financial hardship,” Giovanetti said. “Some high earners live in areas that have a high cost of living, which means they might still struggle to pay mortgage payments and living expenses despite having bigger paychecks.”

For example, Nevada — where a higher-than-expected number of high earners are having difficulty meeting expenses, at 14.6% over the seven-day period — ranks No. 38 for cost of living (according to MERIC data), with expenses like housing, groceries and transportation exceeding that of the U.S. average.

Still, high-income Americans are generally much better off than those with lower incomes who have been hit harder by the coronavirus pandemic.

How age, education and more affect paying expenses

Other factors contribute to the ability to meet expenses, too, such as:

  • Americans who aren’t able to rely on regular income sources are struggling the most. More than 8 in 10 Americans who say they relied on money borrowed from friends or family to meet spending needs are struggling to pay their usual bills. And nearly 5 in 10 Americans who relied on a credit card or personal loan to meet their spending needs reported struggling. Meanwhile, for those with regular income sources, that figure plummeted to just below 2 in 10 Americans.
  • Higher education levels are also associated with a stronger ability to meet expenses. For example, almost half of those who didn’t obtain a high school diploma reported difficulty during the week-long period, while only 18.3% of those with at least a bachelor’s degree said the same.
  • Younger Americans are much more likely to report difficulty with their usual household expenses. Nearly 40% of those ages 25 to 39 report difficulty in paying their bills, versus 36% of those ages 40 to 54 and 29.1% of those ages 55 to 64.

Resources to help Americans pay bills during COVID-19 crisis

Contact your lenders and creditors

“Many banks, lenders and credit card issuers have hardship programs designed to help customers who are struggling to keep up with payments due to COVID-19,” Giovanetti said. “Get in touch with your creditor as soon as you think you may fall behind on a bill. They might be willing to cut you a break by waiving late fees or temporarily suspending payments.”

Know your eviction rights

There’s a federal ban on evictions through the end of the year, and many states have enacted their own moratoriums. That means that those who have qualifying reasons for missing rent are protected. So be sure to look into your local and state guidelines to understand where you stand and how you might be able to keep your housing, even if you’ve fallen behind.

Make use of public benefits

Besides unemployment benefits, check to see if you’re eligible for other programs, such as Medicaid, and the Supplemental Nutrition Assistance Program (SNAP) or food stamps. “When you’re saving money on food and health care costs, you’ll have more wiggle room when it comes to paying other bills,” Giovanetti said.

Methodology

LendingTree researchers analyzed U.S. Census Bureau Household Pulse Survey data from Sept. 30 to Oct. 12, 2020, to rank the states where households reported it’s been somewhat or very difficult to to pay their usual expenses over the past seven days.

 

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