Total consumer debt rose 7.6 percent in the past year, totaling $3,898 trillion in 2018. This high debt forces some people to make sacrifices to make ends meet. We found in a previous survey that one in three Americans take out short-term loans to cover debt, even though it leads to more debt and interest payments in the long run.
Since we know the extremes people will go to, we surveyed 1,000 Americans to see what non-essential expenses they might be willing to give up. While respondents were quick to give up fun activities and products for convenient expenses like food delivery and subscription services, travel actually topped the list.
Below, we’ll dive into the data to uncover why subscription services take precedence over traveling and eating out.
The votes are in and travel is the first to go for Americans in debt. Americans likely prioritize travel last since associated costs, like flights and accommodations, can quickly add up.
A 2019 Bankrate study found that, of the Americans who weren’t planning a summer vacation, 60 percent of them said it was because they couldn’t afford it. That same study also found that Americans expect to spend an average of $1,979 on their vacations.
Unfortunately, limiting travel and vacation time throughout the year takes a bigger toll on people than they realize—even if they save money in the short term. Psychology Today cites the following mental health benefits for travelers:
Relieving stress is a major factor that should pique Americans’ interests. A 2019 study by Syracuse University found that vacations and time away from work can reduce metabolic symptoms, therefore reducing the risk of cardiovascular disease.
Additionally, a study by the European Society of Cardiology found that those who had shorter vacations slept less compared to those who took longer vacations. The resulting stressful lifestyles of those with shorter vacations negated the effects of the health benefits participants received during the study.
These are all signs that Americans should think twice about the long-term consequences they’ll likely face when making choices for the short term, like skipping out on travel and vacation to save some money.
Young Americans ages 18 to 34 all agree that travel should be first to go. This is surprising as millennials are known for their love of travel.
A 2018 study by travel technology company Travelport found that more than one in three millennials planned to spend over $5,000 on future vacations. The same study also found that Americans with more education and income are more likely to take vacations.
This possibly suggests that travel is a distant dream for millennials with high debt and/or lower income.
Nothing seems to beat subscription services for Americans, even when they are on a budget. Lexington Law found that one in four Americans prefer streaming subscriptions more than any other type. This includes Netflix and other popular options like Spotify and Hulu. The price of these services can range from $6 to $45 or more a month.
Other types of subscription services, like box subscriptions and premium access accounts, can also end up costing a lot. A recent Finder study discovered that, although Americans tend to order subscription boxes the least in comparison to other conveniences like rideshare services and home services, they still pay a combined $37 billion alone on these boxes.
Could you guess how much you pay for subscriptions alone? Most people can’t.
A recent study found that 84 percent of people underestimate how much they spend each month on recurring monthly expenses. Chief Science Officer of Syntonic, Alain Smason, Ph.D., said that people psychologically choose subscription services (and similar payment plans) for reasons like avoiding the pain of paying a large sum up front.
Whether it’s because it’s seemingly the cheapest or most convenient type of expense, Americans need to think twice about how much subscription services actually suck out of their budgets.
Americans prioritize fashion over going out to have fun. Clothing affects our daily lives more than going out to have fun, and it comes into play more than most people might think.
A 2019 paper on the psychology of clothing explains that our clothing choices affect how we perceive ourselves. Overall, the study found that clothing and appearance communicate a lot to other people and affect how we socialize.
Clothing may also be a higher priority because it’s more affordable compared to “going out.” Fast fashion, in particular, makes trendy clothes accessible and affordable, though it may end up costing more in the long term.
Source: EPA
Fast fashion is normally made from cheaper fabrics that quickly wear out. This prompts shoppers to toss their clothes more often than if they shopped for higher-quality pieces. As a result, Americans buy more clothes to replace old pieces and the cycle continues. The Ellen Macarthur Foundation looked at the textile industry in 2017 and found the following:
Americans should take account of how much cheap fashion choices are costing them. Investing in higher-quality, longer-lasting clothes could be the best financial choice for some, but may not be accessible to everyone.
Electronics also fell into the top three things Americans choose to give up when in debt.
Source: Hyla Mobile as reported by the Wall Street Journal
Remember when everyone rushed to get the latest iPhone? Nowadays, people are waiting much longer to upgrade.
A 2018 study by NPD found that the average smartphone upgrade cycle in the U.S. is 32 months, up from 25 months in 2017. NPD attributes this lag to tightened upgrade policies. More carriers require customers to fully pay-off their devices before they can trade them in.
Others attribute the slowdown to consumers having fewer reasons to upgrade their phones. Consumers aren’t interested in getting new phones if their current phone still works and the new devices available don’t offer much additional value.
The lesson here? Most Americans are content with slightly outdated technology, especially if it saves them money.
It’s important to prioritize your well-being, even when facing stressful situations like paying down debt. A healthy lifestyle can keep you sharp and more prepared to face these difficulties than if you are burnt out or sleep-deprived. Reaching out for help from friends, family and finance professionals can also alleviate the stress of tackling debt.
It’s also important to consider alternative options like debt consolidation if you find your debt is overwhelming. If you’re in the middle of tackling debt but find that your credit report isn’t reflecting those changes, you should learn more about our credit repair services to see how we can help you challenge errors on credit reports.
Methodology
This study was conducted using Google Surveys. The sample consists of no less than 1,000 completed answers. Post-stratification weighting has been applied to ensure accurate and reliable representation of the total U.S. population ages 18 and older. The survey ran online during July 2019.
Learn more about Google Surveys’ methodology.
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