California has been one of the states most affected by the pandemic. With job openings increasing in various sectors, the state’s average credit card debt has also risen. In 2020, Californians had an average debt of $5,120, but by 2021 that number had increased to $6,960. With the cost of living continuing to rise, it has become increasingly difficult for residents to pay off their debts.
California Consumer Debt
According to the latest Household Debt report from the Federal Reserve, the following is a breakdown of the average consumer debt in California by type.
Total household debt: $72,530
- Mortgage: $58,060
- Student Loans: $4,640
- Credit card debt: $5,120
- Auto loans: $4,710
The number of Californians filing for bankruptcy has been on the rise over the past few years. Californians filed for bankruptcy at an alarming rate of 69,432 cases just last year.
California’s employment and income
Although some states have right-to-work laws in place, this is not the case in California. Here, union dues are mandatory for employment, even if the employee is not part of a union.
California’s unemployment rate is 7.6 percent, which is down 8.4 percentage points from the peak of 16 percent in April 2020. Only Nevada has a higher unemployment rate, at 7.7 percent.
California’s leisure and hospitality sectors are growing rapidly, with 558,500 new jobs created between April and July of 2021. The state’s most in-demand occupations include registered nurses, heavy and tractor-trailer truck drivers, retail salespersons, and waiters and waitresses.
California Banking and Taxes
Income tax rates in the state of California range from as low as 1% to a maximum of 13.3%. In addition to this, the state sales tax is 6%. Local governments in California are also able to collect a local sales tax of up to 3.5%. This means that, when combined with the state sales tax, the highest rate possible is 10.
Although banking is more popular in California than in other parts of America, a significant portion of residents still does not have a checking or savings account. 5.6% of Californians lack access to these basic financial services.
Housing Market in California
The cost of living in Californian is significantly higher than the national average, with a per capita income of $71,480 compared to $59,729. However, wages are also higher in the state, with a minimum wage of $13 per hour compared to the federal minimum wage of $7.25. And the median household income in the Golden State is an impressive $75,235.
As California’s housing crisis continues to worsen, the challenges are becoming statewide. Cities like Sacramento and Fresno are seeing increases in average rental prices every year. This is putting a strain on residents who are already struggling to make ends meet.
The median price of an existing single-family home in California is expected to reach $795,600 in 2021, an increase of 20.7% from the 2020 median price of $659,000. This represents a $136,000 increase from the 2019 median price. There is a homestead exemption available in the state of California, which can range from $300,000 to $600,000.
- In California, only eight percent of residents are homeowners.
- The average monthly mortgage payment is $2,282.
- The average rent payment is $1,503.
If you’re struggling to pay your rent in California, there’s help available. The state offers an emergency rental assistance program for those who need it.
When it comes to retirement savings, Californians fall short. On average, residents have only $428,437 saved up, when they really should have $1.5 million put away to retire comfortably in this state.
The number of people living in the state of California has increased by almost 15% in recent years. This trend is expected to continue, with the 65 and older population projected to grow by 3% in 2019 alone. Many retirees are choosing to downsize and relocate to states with a lower cost of living, such as Florida, Texas, or Arizona. Social Security benefits are a crucial source of income for retirees, with about 22% relying on them for 90% or more of their total income.
California Insurance Premiums
California is not a no-fault state, so driving here can be expensive. The average annual premium for auto insurance is $1,966, and drivers still have the right to sue for additional damages.
The average premium for homeowner’s insurance is $1,031 annually. In contrast, the average health insurance premium is much higher at $7,056 per year. This is significantly above the national average.
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