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Debt Management
14-06-2006
Debt management varies by class
Bernanke says poor in need of advisement
By Jeannine Aversa Associated Press
WASHINGTON - Most American households are doing a good job managing
their finances, although lower-income families face challenges,
Federal Reserve Chairman Ben Bernanke said Tuesday.
Bernanke made his observations as families are coping with higher
borrowing costs and lofty energy prices. And they must deal with an
increasingly complex array of financial products that sometimes can
seem bewildering when it comes to making smart financial decisions.
"U.S. households overall have been managing their personal finances
well," Bernanke said. "On average, debt burdens appear to be at
manageable levels and delinquency rates on consumer loans and home
mortgages have been low," he noted.
Household net worth, which climbed to $53 trillion in the first
quarter of this year, is at a fairly high level, Bernanke said.
Bernanke's remarks came at a conference here for local elected
officials, education administrators, municipal representatives and
others. The conference explored a wide range of issues - from health
care to voting rights.
On Wall Street, worries about higher interest rates sent stocks
tumbling. The Dow Jones industrials closed down 86.44 points.
While most households are juggling their financial obligations well,
families with lower incomes can face some difficulties, Bernanke
pointed out.
"These families generally have less of a cushion to absorb
unanticipated expenses or to deal with adverse circumstances, such as
the loss of employment or a serious health problem," Bernanke said.
Households at the lowest income rung had a median net worth of only
$7,500 in 2004, well below the median of $93,000 for all other
respondents in a recent Federal Reserve survey on consumer finances.
Median net worth is the middle point, where half are higher and half
are lower.
Low-income families were significantly less likely to have a checking
or savings accounts.
Almost 25 percent of these low-income families were "unbanked"
compared with less than 10 percent of families with higher incomes.
Low-income families also were less able than others to manage their
debts, Bernanke said.
Bernanke said that financial education, programs that encourage
savings and investment, community economic development initiatives and
other things can help families of modest means build their assets and
improve their economic well-being.
Source: www.pasadenastarnews.com
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