Thousands of veterans are facing foreclosure as pandemic-era forbearances end. The new loan program is only available to eligible veterans
WASHINGTON – The Department of Veterans Affairs announced a last-resort program that provides 2.5% interest rate home loans to more than 40,000 veterans who are facing foreclosure.
Through the Veterans Affairs Servicing Purchase (VASP) program, the VA will purchase defaulted VA loans from mortgage servicers, modify the loans and place them in the VA-owned portfolio as direct loans. This allows the VA to work directly with eligible homeowner so the loans and the monthly payments can be adjusted. Borrowers – eligible veterans, active-duty service members and surviving spouses with VA-guaranteed home loans who are experiencing severe financial hardship – will have a fixed 2.5% interest rate.
The program comes after thousands of veteran homeowners were told to pay a lump sum to rectify their pandemic-era forbearances or refinance at higher interest rates. An NPR investigation found upwards of 6,000 borrowers with VA loans in the program are in foreclosure and 34,000 others are delinquent. In December, the VA called on mortgage servicers to pause foreclosures on VA-backed loans.
Consumer advocates at the National Consumer Law Center (NCLC) and the Center for Responsible Lending (CRL) expressed support for the new program and urged the VA to extend the foreclosure pause, currently set to expire on May 31, until the VASP program is widely available.
“The VASP program is badly needed as veteran borrowers have had no meaningful alternatives to foreclosure for over a year,” said Steve Sharpe, an NCLC senior attorney. “The VA must extend the foreclosure pause until VASP is implemented so that all eligible borrowers have fair access to the new program. We also urge VA to eliminate any rules that unnecessarily limit access to VASP for borrowers who previously received unaffordable loan modifications.”
The VA said mortgage servicers will identify qualified borrowers beginning May 31 and submit requests based on a review of all available home retention options and qualifying criteria. Veterans facing financial hardship should work with their mortgage servicers to explore available options, the VA said.
“When a veteran falls on hard times, we work with them and their loan servicers every step of the way to help prevent foreclosure — including offering repayment plans, loan modifications, and more,” said Under Secretary for Benefits Josh Jacobs. “But some veterans still need additional support after those steps, and that’s what VASP is all about. This program will help ensure that when a veteran goes into default, there is an additional affordable payment option that will work in a higher interest rate environment — so they can keep their homes.”
Because of certain persistent reputational challenges faced by the reverse mortgage industry, it can be challenging for borrowers to find objective informational sources about the product category.
That’s what drove a listener of the podcast “The Indicator from Planet Money,” a production of National Public Radio (NPR), to ask hosts Wailin Wong and Darian Woods about the product during a recent episode.
“I was wondering if you guys could explain reverse mortgages,” the listener asked the group. “I’m trying to understand all things housing with the market being so crazy these days.”
Wong and Woods introduced the segment by talking about notable reverse mortgage ad spokesmen like Tom Selleck and Henry Winkler, before offering an overview of the Home Equity Conversion Mortgage (HECM) product backed by the Federal Housing Administration (FHA).
“[A] reverse mortgage is a loan where you can borrow money against the value of your house,” Woods explained. “So, the house’s title is still in your name, but you’re receiving payments while you start to owe more and more to the lender.”
Woods went on to explain the factors that determine the loan’s proceeds, including interest rates, the home’s value and age of the primary borrower.
“But theoretically, a borrower could get anything from a few hundred dollars to a few thousand tax-free dollars a month while also not needing to pay their mortgage,” he said.
The pair then discussed the perceptions of the products, with Wong asking if it was “too good to be true.” Woods said that such a loan isn’t “free money,” but added that it could be a viable solution for the right borrower.
“It is definitely appealing to folks who are strapped for cash day to day, but their home is maybe the only big asset that they have. But we should mention reverse mortgages don’t have the best reputation,” he said.
The show then played audio from a segment on “The Daily Show” that aired last year, which took a flippant look at reverse mortgages without an abundance of factual rigor, saying that most reverse mortgages end “with you losing your house, or dying and losing your house, or dying and losing your house and saddling your kids with debt.”
Woods, however, was quick to specify the context.
“This is a bit of an exaggeration for comedic effect,” he said. “Debt doesn’t go across generations, but it is up to whoever managed the estate to figure out how to pay this debt back. And usually, it’s by selling the house.”
The pair then asked Cora Hume with the Consumer Financial Protection Bureau(CFPB) to weigh in. Hume said that reverse mortgages can be expensive compared to other home equity-tapping tools.
“A lot of older adults are very surprised about how quickly the amount they owe grows and how quickly their equity that they have in their home decreases,” Hume said on the show.
Woods also cited a 2023 CFPB report that said a majority of reverse mortgage direct-mail advertising is sent to “more financially vulnerable consumers, those of low or moderate income.”
Woods ended the segment by reiterating that reverse mortgages can work for people in the right situation, with Wong adding “people should do their homework” and “read the fine print.”
The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
American spending habits fluctuate by generation. In 2023, Gen Z spent most of their money on food and clothes while baby boomers prioritized healthcare.
American spending habits fluctuate based on factors like the economy, average cost of living and global events. Interestingly, spending trends don’t always move in predictable patterns—NPR reported elevated spending in 2023 despite rising inflation costs.
Here, we’ll review American spending habits to paint a clearer picture of our potential expenses in the near future. We’ll also share personal finance resources that can help you refine your budget and reach your savings goals.
Table of contents:
Overview of American spending habits
According to the Bureau of Labor Statistics (BLS), Americans spent an average of $72,967 in 2022. This number suggests a 9 percent increase in American spending habits from 2021 (wherein the average annual expenditure was $66,400) to 2022. How much we spend makes a lot more sense when we break down what exactly our money is going toward.
What do Americans spend the most money on?
Expenditure
Cost
Housing
$24,298
Transportation
$12,295
Food
$9,343
Personal Insurance and Pensions
$8,742
Healthcare
$5,850
Entertainment
$3,458
All Other Expenditures
$2,080
Cash Contributions
$2,755
Apparel and Services
$1,945
Education
$1,335
Personal Care Products and Services
$866
Source: Bureau of Labor Statistics
In 2022, the BLS noted a 7.5 percent increase in income to coincide with a 9 percent increase in expenditures. Among the different categories, spending on food increased by 12.7 percent from 2021 to 2022. Vehicle purchases and entertainment expenses dropped by 6.9 percent and 3.1 percent, respectively.
These numbers fluctuate depending on the circumstances of a particular household. For example, the BLS found that 39.4 percent of a one-person household’s expenses go toward housing costs, while 32.1 percent of a two-person household’s funds are spent on housing.
To better understand American spending habits, we can examine the average expenditures of various groups based on factors such as age and education.
Teen spending habits
According to the United States Census Bureau, more than 43 million teenagers live in America. Gaining a better understanding of teen spending habits is important, as teens spend about $63 billion each year.
More than 50 percent of young adults (16 to 24) were employed in 2023. Some of the top brands that teens spend their new income on include Chick-fil-A, Netflix and Snapchat. In 2024, the BLS anticipates that more teenagers will prioritize school attendance over traditional means of employment—which could affect where and how often they’re spending money.
College student spending habits
College student spending habits fluctuate as changes to the American education system become more widespread. Four years in college is no longer the norm—many students take anywhere between an extra semester to a few extra years to graduate. This extra time incurs additional costs (like tuition and rent) that impact spending habits.
In addition to money spent on tuition, college students are purchasing new tech, tickets to festivals and events and lots of food. Older students with more life experience also have to balance school expenses with other mandatory purchases like groceries for the household.
Gen Z spending habits
Generation Z includes anyone born between 1997 and 2012. Gen Z spending habits reportedly differ even more than their older millennial counterparts. This generation grew up completely immersed in the digital era and is very likely to shop online.
A 2021 study by Elmira Djafarova and Tamar Bowes found that 41 percent of Gen Zers are impulse buyers. Quality and value are of the utmost importance to this generation. They may be quick to switch brands if they believe they’re getting better overall value from a different company.
Millennial spending habits
Millennials are generally defined as the generation born between 1981 and 1996. This group is known for making financial decisions that are strikingly different from those that came before them.
Millennial spending habits include increased online shopping, a preference for experiences over material things and an openness to generic brands if the choice saves money.
Baby boomer spending habits
Baby boomers are those born between 1946 and 1964. This group is filled with people who are close to or already in their retirement years. In contrast to their parents, who were born in the Great Depression, boomers expect to have a fun retirement.
They’re looking forward to experiencing new places and trying new things. However, many baby boomers are facing retirement issues due to a lack of savings and mounting debt. Despite it all, baby boomer spending habits indicate that this generation holds more than 50 percent of the wealth in the United States.
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Alexis Peacock
Supervising Attorney
Alexis Peacock was born in Santa Cruz, California and raised in Scottsdale, Arizona.
In 2013, she earned her Bachelor of Science in Criminal Justice and Criminology, graduating cum laude from Arizona State University. Ms. Peacock received her Juris Doctor from Arizona Summit Law School and graduated in 2016. Prior to joining Lexington Law Firm, Ms. Peacock worked in Criminal Defense as both a paralegal and practicing attorney. Ms. Peacock represented clients in criminal matters varying from minor traffic infractions to serious felony cases. Alexis is licensed to practice law in Arizona. She is located in the Phoenix office.
You’re probably seeing headlines almost daily screaming about layoffs, layoffs, layoffs. The ubiquity of those stories may make you worry about your own job stability.
There was a 10% increase in layoffs last year from the previous year — 19.8 million in 2023 compared with 17.6 million in 2022, according to an analysis of Bureau of Labor Statistics data.
But monthly layoffs throughout 2023 were actually slightly below pre-pandemic levels after a massive spike during the start of the pandemic, BLS data shows.
“I’m cautiously optimistic. I think there are some signs that we’ll still see robust demand for workers, be that through hiring or a relative absence of layoffs,” says Nick Bunker, economic research director for North America at the Indeed Hiring Lab, which tracks employment trends.
The current job market is incredibly resilient, and labor market indicators show that workers who are laid off aren’t likely to stay unemployed for long. The unemployment rate has stayed steady between 3.4% and 3.9% since December 2021. Unemployment claims, meanwhile, are largely in line with pre-pandemic claims, Department of Labor data shows. That goes for initial claims — by those unemployed for the first time — and for continued unemployment claims — those who have remained unemployed beyond an initial claim.
“I’m not particularly concerned,” says Elise Gould, an economist at the Economic Policy Institute, a Washington, D.C., think tank.
If economists aren’t panicked, it means you probably shouldn’t be either. Unless, of course, you’re in one of the sectors that’s seen an uptick.
Where are layoffs happening?
Gould and Bunker both say layoffs are largely siloed in the information sector, which includes both tech companies and media companies (hence all those layoff headlines). They say that shedding is likely to continue into 2024.
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In the scope of the entire labor market, tech and media remain the outliers when it comes to layoffs, Bunker says. “This time last year there were concerns about what’s happening to the tech or media industries or the broader information sector. And you could see from the data that layoffs did tick up, but that was not representative of what you saw in the rest of the market — it didn’t spread out.”
The transportation and warehousing industry has also seen a rise in layoffs since companies began downsizing after more rapid expansion during the pandemic. But employment in the sector is still well above pre-pandemic levels.
Among other sectors, a Feb. 1 report by Challenger, Gray and Christmas, an outplacement company, shows the financial industry has had the most job cuts so far in 2024 with a total of 23,238 in January. That’s the highest monthly layoffs among financial companies since September 2018.
Gould says layoffs like these aren’t necessarily signs of industrywide distress. Some reflect the churn that happens in the economy in any given month — jobs lost are offset by jobs added, she says. Throughout 2023, the amount of jobs added often exceeded expectations. That trend remained in January: The amount of jobs added was double what was projected.
“There’s a lot moving,” says Gould.
Some other areas with layoffs include the food industry, which announced 6,656 layoffs, the highest number since November 2012. The retail industry announced 5,364 cuts in January — a 4,776% increase from December. But take that big, scary percentage with a grain of salt: Layoffs happen every year in the retail industry after the holidays are over because companies hire a ton of temporary workers to meet demand.
Layoffs spiked among tech companies in 2023
Last year was not a good one for tech and neither was the one before that. Let’s face it — this year isn’t looking much better. In 2023, more than 1,190 tech companies laid off some 262,000 workers, according to layoffs.fyi, which tracks layoffs in the tech industry.
The biggest layoffs in 2023 were at big-name companies, including Amazon (27,410 workers) Meta, which owns Facebook and Instagram (21,000), Google (12,115) and Microsoft (11,158).
But so far in 2024, over 34,000 employees have been laid off among more than 140 tech companies, according to layoffs.fyi. Some of the big names this year include Snap, which owns SnapChat, Zoom, PayPal, Salesforce, Microsoft, eBay, TikTok, Wayfair, Google, Discord, Audible and Rent the Runway.
Job availability may also be dwindling. “Employers are still looking to hire at fairly robust rates across a variety of sectors,” says Bunker. “And that’s not the case for job titles related to the tech sector; they’re still pretty depressed there.”
The downsizing is likely due to some pullback from the hiring spree in the tech industry during the start of the pandemic, experts say. And layoffs in this sector, particularly for highly skilled tech professionals, don’t mean workers stay unemployed for long. They’re likely being gobbled up by other companies pretty quickly, Bunker and Gould say.
“For workers that have higher levels of education, oftentimes their unemployment rates are much lower,” Gould says. “Oftentimes they are able to get back on their feet. Obviously, that average story does not tell everybody’s experience, and there are people that will be worse off.”
Randi Weitzman, executive director of technology talent solutions at Robert Half, an international human resource consulting firm, says workers in tech positions have an in-demand skill set that every company needs.
“It’s not so much we’re seeing the demand in high tech, but in industries like health care, manufacturing, government, retail, hospitality and leisure. We also saw an uptick in professional services. But all of those industries need IT professionals to help them drive their companies,” Weitzman says.
Media layoffs soared as companies struggle to profit
For the media, 2023 was a proverbial bloodbath. The industry, as a whole, announced 20,324 cuts last year — the highest since 2020, according to a report by Challenger, Gray and Christmas, Inc. As a subset of media, news announced 2,681 cuts, which was more than layoffs in 2021 and 2022 combined, according to the report. Bloomberg estimated news media losses even higher — about 3,000.
“I think that is very much a structural story that’s more about long-term trends,” says Bunker.
“The issue for the media is internet.”
Media was once mostly funded by advertising — “they were sort of a one-stop shop for lots of advertisers,” Bunker says. But the advent of the internet changed advertising, and media paid the price. The other issue, Bunker says, is consumer expectations of the price they pay for information, that is, most people don’t want to pay for articles.
“It’s just more difficult for media to be profitable, and so you’ve had a pullback and a decline in employment in that sector of the economy,” Bunker says.
The past year saw cuts at Buzzfeed News (15%), Time Magazine (15%), NPR (10%), Business Insider (8%), Gannett (6%), Vox (11%), Conde Nast (5%), Vice Media (around 10%) and others. The Washington Post completed 240 buyouts last year to avoid laying off workers.
Since the start of 2024, even more news media organizations have announced staff reductions.
On Jan. 17, Conde Nast announced it was laying off staff and folding Pitchfork into the GQ umbrella. On Jan. 19, Sports Illustrated announced it would be giving its entire staff the boot within 90 days. On Jan. 23, the Los Angeles Times announced it was cutting 115 reporters — about 20% of its staff. Back in June, it slashed its workforce by 13%. The paper was reportedly losing somewhere between $30 million to $40 million a year.
Layoffs aren’t just hitting news outlets. Streaming services have disrupted traditional television. On Feb. 13, the TV network giant Paramount announced it was laying off 3% of its staff.
Mass layoffs across the labor market aren’t likely in 2024
Despite some worrisome trends in the information sector, widespread layoffs throughout the labor market still aren’t likely to happen anytime soon under current conditions, experts say.
“The outlook for layoffs is a function of what you think a broader economic outlook is, and we’ve gotten very strong economic growth data as of late,” says Bunker.
While the labor market is tight, and the industries with layoffs are generally contained, it doesn’t mean we won’t see more employment churn coming this year. CEOs aren’t feeling the need to hoard labor as much as they once did: A quarterly survey of CEO confidence released on Feb. 8 by The Conference Board, a think tank, shows 23% of CEOs expect to lay off workers in the next 12 months, up from 13% from the previous quarter.
Los Angeles Times: Photo by Mario Tama/Getty Images News via Getty Images
Google: Photo by Michael M. Santiago/Getty Images News via Getty Images
Microsoft: Photo by Tim Heitman/Getty Images News for BIG3 via Getty Images
TikTok: Photo by Dan Kitwood/Getty Images News via Getty Images
Paramount Studios: Photo by Mario Tama/Getty Images News via Getty Images
Data from research organizations and aging advocacy groups is clear: More older Americans want to age in place in their own homes, as opposed to living in dedicated care facilities.
To get a better grasp on this preference, Chicago-based National Public Radio (NPR) affiliate station WBEZ recently featured a dedicated aging-in-place segment. WBEZ spoke with experts and community members about why more older Americans are opting to remain in their homes as they grow older.
The preference to age in place is rooted in emotion and familiarity that’s likely to be lost by moving to another environment, according to Margaret LaRaviere, deputy commissioner of senior services with the Chicago Department of Family Support Services.
“Studies have found and supported that if you ask the senior where they would like to be, they want to age within [their homes and] communities,” she said. “[They want to be among] neighbors that they’ve known for years [and in] areas that are familiar to them. When you look at aging outside the home in a senior retirement facility, it can range anywhere from $4,000 to $12,000 [per month].”
These costs only increase if, for example, a resident of a senior housing facility needs memory care support to deal with cognitive challenges, like dementia or Alzheimer’s disease, LaRaviere said. This pushes dedicated care facilities out of financial reach for many American seniors and their families, she added.
Mary Mitchell, a columnist and the director of culture and community engagement for the Chicago Sun-Times, recently wrote a column about aging-in-place dynamics in the Chicago community. She described her own aging-in-place experience in a recent column as well as on the radio segment.
“I made the move because [a] three-story house was too much for me to handle,” she said. “[It was] a lot of house and a lot of stairs to climb from basement to attic, so that’s one reason I just needed to make a change. But the thing that was also on my mind when I moved out of that house was that this house is perfect for a young family.”
This made her believe that it was time to “move on,” but the journey was a very emotional one for her.
“I packed up knowing that I was putting stuff in storage, I was giving stuff away [and] I was moving into a smaller space,” she said. “And it was very important for me to really embrace this as my forever place, and I have no intention of moving from there to another place.”
But data can only go so far when taking stock of seniors’ preferences, and Mitchell explained the emotional dynamics of such a choice more deeply.
“I was sad; it was like a part of me,” she said. “This was my home for 30 years. I knew every nook and cranny and every window, [and it] was a lovely community. I knew my neighbors, I knew the people who work at the stores and all of that. It’s familiarity, and I think as I get older, I crave familiar places and familiar spaces.”