Kristin Seefeldt

People who are financially strapped are more likely to make bad borrowing decisions, according to a January 15 article in The New York Times. And, ironically, individuals with histories of paying their debts on time may be unrealistically overconfident when it comes to taking on debts with sky-high interest rates. ISR researcher Kristin Seefeldt, whose ongoing study of 39 single mothers in the Detroit area was featured in the article, has found that managing debt becomes a necessity of daily life for most poor families. The women, Seefeldt reported, carried an average debt of $3,700, but some owed far more. To get by, they made tactical decisions about which bills were most important, ignoring some, delaying others for later, and making at least partial payments on the most critical. “You’re keeping the lights on, you’re not being evicted, the kids are not hungry, the family is protected,” she told The New York Times. “It allows you to say, ‘I’m doing what I’m doing, and I’m not out on the street.’”