Myvesta News Release

ROCKVILLE, Md. — Problem debtors increased their average total debt by 61 percent in the last year, according to a Myvesta survey of clients in financial crisis. The average total debt, including mortgages, auto loans, tax debt, credit card debt and all other personal debts, increased from $162,847 in 2001 to $262,825 in 2002.

Myvesta, a financial health center, conducted an internal survey of their clients' debts and found that the average amount of credit card debt increased 8 percent, from $48,194 in 2001 to $52,210 in 2002. "People assume it's the credit cards that get people in trouble," said Steve Rhode, president and co-founder of Myvesta. "We're seeing more and more people push their finances to the edge with bigger mortgages and other types of debt than ever before."

According to Myvesta's survey, the average mortgage debt of clients rose 32 percent, from $127,156 in 2001 to $168,129 in 2002. The amount of other debt, not including credit cards or auto loans, tripled to $44,985 in 2002 from just $14,792 in 2001.

"Low interest rates and the desire to purchase the largest house possible have put many people in a situation where they can barely afford their monthly mortgage payments," Rhode said. "Then add a home equity loan, student loan, medical bill or other kind of debt on top of that and it's no wonder that more people are finding themselves in way over their head."

According to Rhode, personal responsibility and realistic planning are key to avoiding financial problems. "Just because a lender approves you for a loan does not mean you can afford it. Nothing could be further from the truth. You, alone, are the only person who knows what you can afford," Rhode said.

Although the average credit card debt of Myvesta's clients rose slightly, the number of cards on which the debt is carried dropped from 11 cards in 2001 to eight cards in 2002.

"Consolidation among credit card companies combined with larger credit limits has reduced the number of cards that people have to carry in order to wrack up large balances," Rhode said.

"People are also tapping into the equity in their homes and borrowing against their retirement accounts to consolidate credit card debt. Overall that may reduce the number of credit cards a person carries, but that debt is just being traded from one form to another. You can't borrow your way out of debt, eventually you'll run out of lenders."

Rhode advises that anyone facing tough financial circumstances seek professional help as soon as they can.

"If you think you have money problems, you do," Rhode said. "The longer you wait to address your situation the worse off you are going to be. If you get professional help to deal with your financial issues early on, addressing the issues that got you in trouble in the first place, you can then move on into the future with confidence."

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Myvesta^SM is dedicated to helping people create healthy financial lives. The organization provides a wide range of materials to inspire and inform people so that they can break down their barriers to financial and personal success. For more information visit Myvesta.org online.