New York, NY -- (ReleaseWire) -- 10/04/2012 -- The New York Times reported recently that the average American household's net worth and personal income both declined sharply during the past four years. Home prices fell precipitously as well.
According to the Federal Reserve, average household net worth in the United States has declined by 7 percent since 2007. Meanwhile, per capita income has declined by 2.1 percent in real terms since 2008.
While disposable income rose by a modest .2 percent over that same period, that increase is likely due to the contemporaneous collapse in housing prices. The United States' housing stock lost a staggering 28 percent of its value since 2006, ruining millions of Americans' finances. Disposable incomes are higher than they were a few years ago only because average mortgage payments have fallen in tandem with home values.
These recent figures suggest that a long-running trend of declining middle-class buying power may be accelerating. A recent Pew Research Center survey showed that the middle class's share of total national income shrank from 62 percent to just 45 percent between 1971 and 2010. During that same period, the share claimed by upper-income earners increased from 29 percent to a staggering 46 percent.
In this cutthroat economic climate, young adults without a college degree are especially vulnerable. A 2011 Georgetown University study found that recent college graduates can expect to earn nearly double that of their non-degreed peers over the course of their lifetimes. Upon entering the workforce, many high school graduates are unable to find work outside of the low-paying service sector.
What's more, levels of educational attainment in the United States appear to be plateauing at the worst possible time. The proportion of Americans with higher-education degrees now lags that of nine other countries.
In South Korea, the global higher-education leader, more than 58 percent of adults hold a college degree. Just 40 percent of Americans have successfully completed college.
Due in part to growing competition from other countries, many economists expect American incomes to remain stagnant long after the economy recovers from its current funk.
Lower incomes and reduced earning power have already forced millions of Americans to use credit in unprecedented ways. If current trends continue, millions more may need to use risky forms of leverage in order to maintain their living standards.
For many borrowers, using credit to cover everyday expenses may be a mistake. Most commonly-available credit cards and revolving credit lines carry high interest rates that can quickly become unmanageable. Borrowers with poor credit may see their balances grow by 20 percent or more each year.
As their incomes continue to decline, many of these borrowers are facing increasingly tough choices. Tens of thousands of hard-working Americans have been forced to sell their homes and personal vehicles to cover their rising debt costs. Thousands more have thrown in the towel and filed for personal bankruptcy.
Fortunately, harried borrowers nearing the end of their collective rope have other debt relief options at their disposal. For instance, credit management plans often prove useful for households with moderate levels of debt. These tools along with improved financial literacy outline household incomes and expenditures in great deal and provide a clear path toward reconciling the two.
Consumers with bigger debt loads may require professional assistance. Thanks to National Debt Relief's groundbreaking work, thousands of individuals have found debt freedom with debt settlement and debt negotiation.
Unlike their competitors, these debt settlement firms negotiate directly with creditors to reduce their clients' principal balances. In addition, the debt settlement process usually wraps up within a few years and may cost less than bankruptcy or credit counseling. Call National Debt Relief today at 1-888-703-4948 or visit http://www.nationaldebtrelief.com/ to learn more.
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