NEW YORK (NCC News) — New York has the fourth highest household debt in the nation, and it’s rising fast according to the state comptroller.
Total household debt in New York rose over $312 billion, or 2% in April-June, compared to the previous quarter, according to the New York Federal Reserve’s quarterly report. The Fed reports that mortgage and credit balances are the two largest contributors to the surge in household debt. And it reports that mortgage debt increased by $207 billion, accounting for 66% of the increase. Credit card debt increased by $46 billion, roughly 15% of the total increase.
“The second quarter of 2022 showed robust increases in mortgage, auto loan, and credit card balances, driven in part by rising prices,” said Joelle Scally, administrator for microeconomic data at the New York Fed.
According to the U.S. Bureau of Labor Statistics, inflation in New York is currently at 5.32%.
For consumers who think these trends are moving in the wrong direction, a federal Office of Financial Readiness offers consumers some ways to save money and make ends meet. Before spending money on a financial planner, the staff at this federal office recommends these strategies:
1. Avoid taking on more debt. The average household debt in New York this time last year was $53,830 and it’s still climbing, according to a report by state Comptroller Thomas P. DiNapoli.
“Borrowing can help individuals achieve their personal and financial goals, but high levels of debt can cause damaging long-term consequences,” DiNapoli said in his report.
2. Don’t make unnecessary purchases. The experts say you don’t have to cut back everywhere, but consider some places you can cut back. Financial planners call this discretionary spending and say it is key during a tougher economic climate.
Brian Stanley, an associate at KeyBank Capital Markets, advised trading down when thinking about what goods and services you’re purchasing. He said to buy smaller, less expensive brands.
3. Wait on buying a house. Stanely said don’t jump into the housing market for the foreseeable future. Current mortgage rates in New York are 7.14% for a 30-year fixed-year mortgage and 6.55% for a 15-year fixed mortgage, according to Bankrate.com.
Stanley said consumers can find good deals in rentals, and that trading down in living situations can be very beneficial.
4. Think about refinancing. In some cases, Forbes Editor Jordan Tarver said that consolidating debts into one place, rather than keeping multiple credit cards or multiple accounts, will allow a consumer to pay them off at a lower interest rate.
