The people of New Mexico are among the national leaders in a financial category you don’t want any part of: spending more money than you make!

Consumers in a whopping 13 U.S. states owe more money on average than they make on an annual basis, according to date recently compiled by PeerFinance101.

New Mexico is third nationally in that category with residents there spending 119% of their annual household incomes. On average, consumers in the Land of Enchantment have $55,500 in debt, excluding mortgages. The average income in the state is $51,945, meaning the average resident ends every year $3,555 in the hole.

While some of New Mexico’s negative debt-to-income ratio can be chalked up to frivolous spending, another chunk of it undoubtedly has come from income failing to keep pace with the cost of living.

Throw in the COVID-19 pandemic of 2020 that crippled the economy and it’s easy to see why so many New Mexicans have found themselves deep in debt. Unemployment numbers in New Mexico surged to double-digit levels by April of 2020, spiked at 12.5% by July and were still at 8.2% by the end of the year.

Fortunately for those in financial peril, there are several private and governmental agencies that can help New Mexico residents needing assistance.

Debt Relief Options for New Mexico residents

An excellent option for consumers struggling with their finances is InCharge Debt Solutions and its debt management program. InCharge’s certified credit counselors work with credit card companies to consolidate credit card debt, reduce interest rates and come up with an affordable monthly payment plan that suits your financial situation.

On average, interest rates charged to consumers by the credit card companies in 2021 is 16.5%. People struggling to pay their card bills off monthly often have their interest rates raised to as much as 25% or more. InCharge will work with credit card companies to try and get those interest rates down to around 8%.

InCharge’s ultimate goal is to help customers rid themselves of credit card debt in 3-5 years. However, understand this going in: Consumers should use a detailed spending budget — and strictly follow it — so that their credit card debts can be eliminated in the 3-to-5 year period.

In addition to managing the plan, InCharge takes your monthly payment and distributes it to creditors in amounts previously agreed upon on. Consumers can apply for a debt management plan over the phone or online.

Need more good news about this type of debt consolidation plan? Your credit score is not a factor in enrolling. Even people with low credit scores can still qualify for debt management plans.

Here are some of the other debt-relief programs that are available to those New Mexico citizens facing financial issues:

  • Debt Settlement  This plan, often used for relief from credit card debt, personal loans and medical bills, can be of tremendous assistance because it allows you to pay less than the amount owed. Creditors must agree to a payment amount that settles the debt. While this is often the best option to help consumers rid themselves of debt, it can also result in financial issues in the future. Debt settlement goes on your credit report for the next seven years and will have a negative effect on your chances of getting a loan for major purchases.
  • Debt Consolidation Loan – If you have an excellent credit score, you could be eligible to get a low-interest debt consolidation loan. If your credit score has fallen slightly but is still at an acceptable level by banks, you could use this loan to pay off the credit card debt. You still have to pay off the consolidation loan, but at least you won’t be so harshly penalized by high interest rates.
  • Bankruptcy  This option will allow you to eliminate your credit card debt, but it should only be used when all of the other options have been exhausted. While bankruptcy might have short-term benefits, the long-term impact is the damage that it will do to your credit score for the next 7-10 years. That negative impact on your credit score likely could hamper your chances of getting a loan to buy a home or a new vehicle over the next decade. Before choosing bankruptcy as an option for short-term relief, be sure to examine the effects it will have on your future credit.
  • Do it yourself plans If you are the type of person who considers themselves adventurous and prefers do-it-yourself options, you should consider a DIY-style debt management program. That option might allow you to craft a plan that most closely matches up to your personal finance needs.

New Mexico Debt Resources

New Mexico residents who are struggling to find work or to pay for housing or other their monthly bills can get financial assistance through a variety of federal and state assistance programs. Here are some of the services that are offered to  New Mexico residents in need of food, shelter, legal aid, child care and other necessities:

  • Temporary Assistance for Needy Families in New Mexico (TANF): This plan, known as NMWorks, is in place to assist needy families attain self sufficiency. To be eligible for this plan you must be a U.S. citizen, legal alien or a qualified alien resident of New Mexico. Also, it is put in place for unemployed residents who are pregnant or have a child younger than 18 years old.
  • Rental Assistance Programs: The New Mexico Housing Trust Fund was established to provide flexible funding and short-term rental assistance to eligible tenants of income-restricted properties. Some of the factors that determine eligibility of the funding put in place because of the COVID-19 pandemic are job loss, reduction in compensation and closure of your place of employment.
  • Migrant and Immigrant Programs: The New Mexico Public Education Department will ensure that schools provide the necessary educational programs and support system for migratory families by addressing their specific educational needs. The College Assistance Migrant Program (CAMP) also assists students who are migratory or seasonal farmworkers and are enrolled in their first year of undergraduate studies at an institution of higher learning.
  • Food Assistance for Impoverished New Mexico residents: The Supplemental Nutrition Assistance Program (SNAP) is the largest food-aid program in America and it helps families buy food in many places where they have shopped previously. Those who qualify for this program will receive funds to buy food on EBT cards.
  • Help For Seniors in New Mexico: New Mexico’s Aging and Long-Term Services Department provides services that include emergency placement and short-term help for food and housing. The goal is to help adults remaining at home to age with dignity.
  • Rent Vouchers in New Mexico: This state and federally funded program will give eligible residents a monthly subsidy payment to be used on shelter and housing. HUD also offers vouchers to tenants needing funds for security deposits required to qualify for housing.
  • Day Care Expense Programs: The Child Care Assistance Program helps pay for the cost of child care for families working or in school who are at or below 200% of the federal poverty level (currently at $52,400 for a family of four). The subsidies vary based on the age of the child, the type of child care, the location of the care and the particular program needed.
  • Legal Aid for New Mexico residents: New Mexico Legal Aid has partnered with the New Mexico Crime Victims Reparation Commission to offer advocacy and legal assistance to crime victims throughout the state. Assistance is available for those who are victims of battery, robbery, burglary, ID theft, child abuse, sex abuse and other matters.

New Mexico Debt Statistics

New Mexico’s economy was hit particularly hard by the COVID-19 pandemic and IbisWorld.com reports that the state had the nation’s 10th largest negative impact from the virus. Some 521,499 New Mexicans — or 58% of the state’s workforce — were employed in sectors with high or medium-high levels of exposure to the virus.

Here is a look at some of the large amounts of debt that New Mexicans are carrying into 2021 following an extremely difficult year.

  • Mortgage Debt: New Mexicans have $163,384 in mortgage debt, up 1.3% from the $161,271 that they owed in 2019, according to Experian. The 2020 figure ranks 30th nationally in terms of the highest amount of mortgage debt.
  • Auto loan debt: Without a doubt, citizens in New Mexico love their fully-equipped, new pickup trucks and their fancy SUVS and aren’t afraid to go into debt to own one. The state ranks third in the nation with an average of $23,461 in vehicle loan debt, according to data compiled by Experian. New Mexico’s total trails only Wyoming ($24,368) and Texas ($24,103) for the most average vehicle loan debt.
  • Credit card debt: New Mexicans have, on average, $8,323 in credit card debt — the 17th highest average credit card debt in the United States. Factoring in the interest rates being charged on minimum monthly payments, New Mexicans owe approximately $10,327 on their credit cards.
  • Household debt: The numbers unfortunately are pretty bleak in New Mexico in terms of the average household debt per resident. West Virginia (127%) and Missouri (126%) are the only two states ahead of New Mexico (119%) in terms of their citizens spending far more than they are making in a year. On average, New Mexicans are $55,500 in debt (excluding their home mortgages).
  • Student Loan debt: The average student loan debt per borrower in New Mexico is $20,497. That’s the second-lowest amount of student debt per borrower in the nation behind only Utah’s $16,633 per borrower. New Mexico ranks 15th nationally in terms of the total amount of money owed in student debt.
  • Credit scores: On average, New Mexicans have a credit score of 694 — the ninth-lowest number in the nation, according to CNBC. That number is well below the national average of 710 — one that 33 states were able to eclipse in 2020.
  • Identity theft: A total of 2,088 New Mexicans were victims of identity theft, according to the most recent data. Only 100 out of every 100,000 residents were victims of ID theft — the 29th-highest total in America. To put that in perspective, 427 out of every 100,000 people in Georgia were victims of identity theft.
  • Bankruptcy and foreclosures: There were 2,365 total bankruptcy filings in New Mexico in 2020 — down 21% from a year prior. That bankruptcy plunge, which was brought on by protections put in place by the federal government, ranked as the 12th-largest year-over-year improvement in the nation. And the improved numbers are holding despite many of the protections on bankruptcies expiring. Through February of 2021 there had been just 242 bankruptcies in New Mexico — down a whopping 49% over the figures from the first two months of 2020. Similarly, the number of foreclosures dropped in 2020 in New Mexico. As for the first two months of 2021, 1 in every 18,556 properties have been foreclosed upon thus far.

Sources

N.A. (ND) New Mexico Household Income. Retrieved from https://www.deptofnumbers.com/income/new-mexico/

N.A. (ND) Economic News. Retrieved from https://www.dws.state.nm.us/en-us/Researchers/Publications/Economic-News

N.A. (ND) New Mexico — State Economic Profile, Statistics, economic information and rankings for the Land of Enchantment. Retrieved from https://www.ibisworld.com/united-states/economic-profiles/new-mexico/

Lembo Stolba, S. (2021, February 15) Mortgage Debt Sees Record Growth Despite Pandemic. Retrieved from https://www.experian.com/blogs/ask-experian/how-much-americans-owe-on-their-mortgages-in-every-state/

Lembo Stolba, S. (2019, August 12) Top 10 States with the Highest Average Auto Loan Debt. Retrieved from https://www.experian.com/blogs/ask-experian/research/states-with-the-highest-average-auto-loan-debt/#s2

Irby, L. and Potters, C. (2021, March 1) Average American Credit Card Debt by State. Retrieved from https://www.thebalance.com/the-average-credit-card-debt-by-state-4582582

N.A. (ND) How Much Do People in Your State Owe? Retrieved from https://peerfinance101.com/wp-content/uploads/2017/10/average-debt-by-state-america.jpg

N.A. (2021, February 26) Student Loan Debt by State — A Complete Rundown. Retrieved from https://balancingeverything.com/student-loan-debt-by-state/

White, A. (2021, February 3) Minnesota residents have the highest average credit score — here’s how other states compare. Retrieved from https://www.cnbc.com/select/average-credit-score-by-state/

Daly, L, (2020, April 13) Identity Theft and Credit Card Fraud Statistics for 2020. Retrieved from https://www.fool.com/the-ascent/research/identity-theft-credit-card-fraud-statistics/

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N.A. (ND) New Mexico Real Estate Trends and market Info. Retrieved from https://www.realtytrac.com/statsandtrends/foreclosuretrends/nm/