Many of us did absolutely nothing to improve our debit or credit profiles in 2014, and a lot of us say we have no plans to do so in 2015.
That's the top-line takeaway from a recent poll conducted for mortgage resource site HSH.com that concluded a lot of us are slackers when it comes to managing money and financial planning.
HSH asked us consumers basic financial questions such as, did we refinance a mortgage in 2014 to take advantage of historic low rates?
Did we save money for retirement? Did we prepay part of a mortgage? Did we pay off credit card debt? Did we take steps to improve our credit score?
All of those steps have significant bottom-line impacts.
Improve a credit score, and that translates into sweeter loans and credit card offers, at lower interest rates.
Pay off credit card debt — with most cards charging over 10% interest, some over 20% — and that may be the fastest route to better financial health.
Throw down even an extra $25 or $100 on the monthly mortgage payment, and that cuts interest charges over the many years that loan will run.
Refinance, say, an 8% mortgage at 4.75%, and that's literally thousands of dollars saved in a year for many homebuyers.
Fund a retirement, and that may deliver current tax savings; it certainly will provide a boon in your golden years.
And yet, we told HSH, many of us are not doing these things. They are the financial equivalent of flossing our teeth. Nobody says flossing is pointless, but how many of us do it every day?
Exactly how badly are we doing? According to HSH, these are the percentage of people that have a mortgage balance and said they took the following actions in 2014:
- Refinance a mortgage: 15.27%
- Save money for retirement: 26.6%
- Prepay a mortgage: 3.04%
- Pay off credit card debt: 23.92%
- Improve credit score: 24.24%
- Refinance a mortgage: 8.97%
- Save money for retirement: 32.74%
- Prepay a mortgage: 11.64%
- Pay off credit card debt: 29.85%
- Improve credit score: 27.75%
ShutterstockMany Americans didn't refinance mortgages in 2014, and don't plan to in 2015."The results surprised me," said HSH vice president Keith Gumbinger, who frankly thought a lot more of us would have refinanced mortgages in 2014 or planned to do so in 2015. He was also puzzled by how few consumers put extra cash into their mortgages.
But there also may be a darker side to the poll's story. Maybe a lot of us are not taking positive financial steps, because we cannot.
"It's also reflective of the situation of the middle class," Gumbinger said. "There has been weak income growth over the past six or seven years. The results may be indicative of the weak state of the recovery."
That is, a return to real prosperity — extra cash in our pockets — has eluded many Americans, and doing things like prepaying mortgages and paying off credit card debt necessarily involves having more cash on hand than we need to get by.
Gumbinger also acknowledged that perhaps the many forms and many weeks that are involved in refinancing a mortgage — as lenders comply with federal desires to verify every loan applicant in detail — may also have discouraged some would-be refinancers from undertaking that process.
Either way, Gumbinger said the data are clear: when it comes to our personal finances and the actions we are taking, a lot of us just are slackers.
