Credit Card Nation: How we went from record savings to record debt in just two years

Stephanie Roth, 41, realized how badly her financial situation had deteriorated when she signed up to take the meal to a Valentine’s Day party at her daycare.

“I was always a mom who would sign up for major things like sandwiches,” she says. “You know, big, expensive stuff.”

Change of fate

Before the pandemic, Roth was in a good financial situation. He can take sandwiches, sodas, and cupcakes. But last month, he realized that was no longer the case.

“I actually looked at the list thinking, ‘What isn’t inflation messing with?’ And I signed up for the bananas, because they still cost 59 cents a pound.”

Roth has three children, ages 2, 4 and 6 and lives in Lebanon, Tennessee, just outside of Nashville.

She has a full-time job as an administrative medical assistant, helping adults with disabilities find services. He was never really in debt and was always good with money. But during the pandemic, Roth went through a divorce and his finances and lifestyle took a drastic turn.

Roth took full custody of his children and became the main support for his children. That is a salary stretch of about $40,000 a year. Especially considering the cost of childcare. “It’s like $1,500 a month,” he said. “That’s half my salary there.”

A little here, a little there

Between parenting and rising prices for gas, food, and clothing, Roth feels like his paycheck is gone before he can bring him home… or more than he’s spending.

“The cell phone bill was due and I had no money in my checking account,” he recalls. “So I have to pay with my credit card.”

Roth began leaning on his credit cards to pick up extra expenses that his salary couldn’t cover. The balance begins to grow. At the same time, its credit card companies are raising interest rates: from about 15% in 2019, to over 22%.

Great Money Reset

Millennials like Roth have seen their debt rise nearly 30% since before the pandemic, to an estimated $3.8 trillion. The strange thing about this is that in 2021, that debt has fallen to a record low.

“We’re seeing Americans across all income streams saving a lot of money. I mean a Lots money,” said Jill Schlesinger, CBS news business analyst and author of The Great Money Reset.

Schlesinger said the stimulus checks, lockdowns and pay increases left people in very strong financial shape, with the highest personal savings rates on record. “But then 2022 kicks in and inflation doesn’t come down,” Schlesinger said. “And then we saw a lot of people blowing away those pandemic-era savings, left with nothing.”

Schlesinger said rising prices for basic necessities, such as food, gas and clothing, have put millions of Americans in real financial pain. “For a lot of people, it’s not, ‘I’m going out and buying something fancy,'” she says. “Things are more expensive and just to keep up with where you were last year, you have to pay a lot more.”

I’ll be 300 when it pays off.

Stephanie Roth notices her debt ballooning, along with her minimum payments. Plus, unexpected expenses start to swell, like when her daughter fell and needed two stitches to her chin in the emergency room. The price is $800.

Roth’s credit card debt seems to have exploded, going from a few thousand dollars to over $10,000 and is now around $25,000.

“Sometimes it feels really heavy, like it’s being crushed,” says Roth. “I just thought, ‘I have to pay this back and I don’t know how that’s going to happen. If I just make the minimum payment, I’ll be like 300 when it pays off.'”

Credit card country

Credit card debt in the US has been increasing at one of the fastest rates in history. We collectively owe nearly $1 trillion dollars on our cards, an all-time high. In January alone, credit card debt jumped more than 11%. And with rising interest rates, coping with debt is getting harder.

Now millions of Americans, like Roth, are falling behind financially. And help can be hard to come by. Roth tried to tap into government aid and services, such as free Pre-K for his daughter and SNAP meal allowance, that would help his financial situation.

But in each case, Roth found himself making too much money to qualify. “I only make enough to not be poor enough to qualify for service,” Roth said with a laugh. “I didn’t know how, because I was like, ‘Man, I’m so poor. You don’t even know.'”

Mum sandwiches and cupcakes

Roths try every month to pay a little more than the minimum payment, but often it just doesn’t happen. At the same time, she was worried that her children were missing out on a lot.

“That’s probably my biggest focus is making sure that they have fun, memorable moments,” he said. “A moment that can give them joy… because this is a special time in their lives and it’s very difficult. We’ve all been through a lot in the last year or two.”

Roth dreams of having enough extra cash to take his kids out for ice cream or to a Build-A-Bear store.

And once again being the mom who signed up to bring sandwiches and cupcakes to a Valentine’s Day party at daycare, not bananas.

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