The survey paints a portrait of U.S. consumers learning to cut back on their spending (73 percent of respondents) switching to bargain retailers such as Target or Wal-Mart (61 percent) and creating a budget (39 percent) to ensure their spending stays on track. These behaviors, coupled with the respondents’ proactive approach to mortgage payments, paint a picture of a positive money management behavior.
Mortgage Payments: Key to Money Management
A key survey finding is Americans’ understanding of the impact their mortgage has on their financial well-being: 45 percent of consumers with a modified mortgage understand that scheduling regular payments will help keep them current on their monthly payments. Almost one-third of consumers believe modifying their mortgage will improve their debt situation. However, approximately half of American consumers with a mortgage do not fully understand the requirements to qualify for a loan modification or refinance a mortgage, demonstrating a need for more education in this area.
“The resilience of the U.S. consumer is clearly captured in the latest Money Mindset Index,” said David Shapiro, senior vice president, Western Union Global Business Payments. “With Americans understanding how to better manage their mortgage and spending, they are positioning their households to survive and thrive in this economy.”
“Loan modifications, which can offer decreased interest rates and revised monthly payment amounts, are ways to get finances under control,” Shapiro continued. “These strategies, combined with consumers’ focus on smarter spending, demonstrate Americans’ determination to take hold of their finances.”
Thirty-four percent of consumers have contacted their mortgage companies about loan modifications, and nine percent have actually modified their loan agreements in the last six months. If modifications aren’t right for a consumer’s financial situation, there still are proactive steps to take:
Mortgage Management Tips from Western Union
- Build home equity. Take the money you save and pay more on the loan principal to decrease the amount you owe and increase your equity in the house.
- Use any extra money you have to pay down additional debt. At least your mortgage debt is “good debt.” You generally can deduct the interest you pay on mortgages if you itemize your taxes. If you’re saving money on a reduced mortgage payment, apply it to your car or credit card debt, two examples of “bad debt.”
- Build your emergency funds. If you have a little left over each month, even $20, have it automatically deposited into a savings account. You should have enough money in a ready-cash account to cover six to eight months of your expenses.
