MONEY Budgeting

Americans Spend More on Taxes Than Food, Clothing and Shelter Combined

hand pulling cash out of wallet
Getty Images

The surprising math on how we spend

Every year, the Tax Foundation compares the total amount of taxes paid in America and the amount of spending on the necessities of food, clothing, and shelter. In most recent years, the Tax Foundation has concluded that Americans spend more on taxes than on necessities — and 2015 is no different.

The Tax Foundation projections show a total of $4.85 trillion in taxes paid in 2015, divided between $3.28 trillion in federal taxes and $1.57 trillion collected at the state and local level. According to the Tax Foundation, total taxes are approximately 31% of the national income. Using data available from the Bureau of Economic Analysis (BEA), the Tax Foundation calculated approximately $4.3 trillion in spending for the basics with food at around $1.8 trillion, clothing at $0.3 trillion, and housing at $2.2 trillion.

Here’s the real question: Is this spending comparison indicative of a problem or of a correct and equitable tax structure? Should any of us be outraged? Probably not, although there are reasons for concern.

Certainly, the trend is not promising. The gap between taxes and spending on the essentials in 2012 was approximately $150 billion, rising to almost $300 billion in 2014 and around $550 billion in 2015. It’s hard to spin that as a positive development.

The Tax Foundation’s report also says nothing about equity of taxes and spending. Certainly, the Tax Foundation can leave the impression that taxes are too high for all Americans by using aggregate values. More progressive sites such as the Center on Budget and Priority Policies (CBPP) call these values misleading, pointing out that with our progressive tax system, poorer Americans clearly pay a greater share of their income for the essentials and less in taxes.

Meanwhile, the wealthy pay more in taxes and while they may make more discretionary purchases in food, clothing and shelter, it isn’t enough to make up the difference. Therefore the “average” (middle-class) American probably does not pay more in taxes than for the basics, and the lower income levels certainly do not.

This conclusion implies a higher amount of wealth transfer to help lower-income Americans with spending on their basics. Indeed, a graph created by the Tax Foundation shows a steady rise in transfer payments as a percentage of the cost of living, from 0.5% to nearly 35% in 2011. The Tax Foundation acknowledges some double-counting inflating the value, but the trend is still valid.

This illuminating graph and other explanations may be found in a 2012 article on the Tax Foundation website. For example, the amount spent on taxes was roughly equal to that spent on food, clothing and shelter from 1929 until the 1990’s, when the divergence began. Since then, taxes have increased disproportionately in a sawtooth pattern, with dips corresponding to economic crashes (2001 and 2007-2009).

If you have a budget — and you should have if you don’t — you can certainly figure out whether or not you paid more in taxes than you did in 2014, and can probably make a good estimate for 2015. What you do with that information is up to you.

You may well conclude that you pay too much in taxes, but use the exercise as an opportunity to analyze your spending on the basics. Are you getting the best value out of your dollar for your food, clothing, and housing payments? We’ll just ignore the subject of whether you’re getting your money’s worth out of your taxes. Save your outrage for that topic.

More From MoneyTips:

MONEY buying a home

Why You Still Can’t Afford to Buy a House

DreamPictures—Getty Images

Homeownership is at a 25-year low

Last month did not bring good news for those looking for evidence of a housing recovery. According to the Commerce Department, the seasonally adjusted home ownership rate for Q1 2015 sank to 63.8% — a number not seen since 1989. That represents a 1.2% decrease from Q1 of 2014, a 0.2% drop from Q4 2014, and the continuation of a general ten-year decline from a peak of over 69%. A few more months of this trend would put home ownership in historically low territory.

At the same time, household formation (those striking out on their own) increased by 1.7 million in Q4 of 2014 and another 1.5 million in 2015. Home prices are continuing to rise according to the S&P/Case-Shiller index, and the inventory level of unsold housing has dropped below five months according to the National Association of Realtors (NAR). Six months is a typical supply for a healthy housing market.

So, the number of households is increasing, the housing supply is low, and prices are rising — yet the number of homeowners keeps decreasing. How does this add up?

It appears that too many of these new households still cannot afford to buy a house, at least not the ones that are available to them. They are forced to rent instead, and as a result, that market is also out of balance. Diana Olick of CNBC reports that rental vacancies are hitting historic lows. The current market could be considered a “pre-recovery” stage, if you will — millennials and those knocked down by the housing crisis have recovered to the point where they can enter the rental market, but not to the point where they can afford to buy a home even with the currently low fixed interest rates.

There is a cascade effect going on in the housing market that will take some time to remedy. Those who want to upgrade their homes are having difficulty gathering down payments and qualifying for loans, thanks to wages that are still stagnant and credit that is still relatively tight. Thus, the supply of starter homes is low, making first-time ownership difficult for those who have recovered enough to qualify. Some signs of wage pressures and loosening credit are present, but not enough to fuel a true recovery.

In terms of numbers, the calculation methods may make the situation look worse than it really is. Since the overall number of households is increasing and the majority of these are renting, the number of homeowners relative to the total is shrinking. It is not as though large numbers of people are losing their homes, as was the case during the housing crisis.

Many economists expect the decline in home ownership to begin stabilizing finally and to stay stagnant until the true recovery phase can kick in. A combination of rising wages, job increases, government approaches to make credit more affordable to first-time homebuyers, and the general decline of underwater homes through home appreciation should lead to a housing upturn. Of course, the question on everyone’s mind is: how long will it take to reach full recovery and convert renters into first-time homebuyers?

Nobody has that answer, and the housing market has defied most predictions of recovery over the last few years with frustratingly mixed progress. However, we can predict one thing with certainty. If the housing outlook is still struggling at this time next year, politicians and policymakers up for re-election will panic and start to take action, most of which will probably be misguided. Let’s hope the market intervenes before the politicians can act.

More From MoneyTips:

TIME housing

Report Finds Airbnb May Contribute to San Francisco’s Housing Woes

San Francisco Golden Gate Bridge
Getty Images

Fights over privacy and business continue to plague the popular home-sharing platform in the City by the Bay

A report released on Thursday found that about 15% of San Francisco’s vacant housing may have been removed from the market so it could be rented out on sharing economy platform Airbnb. This comes at a time when the company is waging legal battles in several cities—and when renting out one’s home for less than 30 days has just been banned in Santa Monica, Calif.

San Francisco Board Supervisor David Campos held a news conference Thursday, asserting that the report proves Airbnb is a “significant contributor to the housing shortage” that is pushing low- and middle-income families out of the city. While no one denies that the City by the Bay is in the midst of a housing crisis, the company and at least one economist believe that the report and that politician overstate the role that Airbnb plays.

The study was conducted by the city’s independent budget and legislative analyst’s office, at the progressive lawmaker’s request. Campos has proposed legislation that would change a new law that legalized short-term rentals in San Francisco. Residents at the moment are allowed to host Airbnb guests in their units for unlimited days per year and to rent them out 90 days per year when they’re not present. Campos’ proposal would limit all rentals, hosted or un-hosted, to 90 days per year.

“The Mission is a community in crisis,” Campos said of the neighborhood that has become ground zero for working-class activists protesting gentrification fueled by booming tech companies. “This practice is exacerbating an already terrible situation.”

Airbnb countered, as local loyalists have in city council hearings, that those struggling to make ends meet can benefit from the added income that sharing a home affords. “Home sharing is an economic lifeline for thousands of San Franciscans who depend on the extra income to stay in their homes,” Airbnb spokesperson Christopher Nulty said in a statement, responding to the report. “Supervisor Campos’ proposal would make it even harder for middle class families to stay in San Francisco and pay the bills.”

The report’s author admits that the attempts to quantify Airbnb’s impact are a best guess, relying on webscrapes and assumptions about residents’ behavior. Airbnb continues to guard data about their users and financial situation that would allow for more precision. Though the company is submitting monthly anonymized data to the city to prove that hosts are remitting hotel taxes, officials have said they need more data in order to effectively enforce limits on rentals.

“I think the bigger picture questions to focus on are: How can cities pass effective legislation in the absence of accurate data about Airbnb?” Karen Chapple, professor of city and regional planning at the University of California—Berkeley, writes in an email. “Would it not be in Airbnb’s interest to share its data openly and collaborate with cities in designing and implementing fair laws?”

Arun Sundararajan, an economist who reviewed the report, believes that Airbnb and its data are something of a red herring. While the site may lead to some units being taken off the market and to disturbances among neighbors who don’t like sharing their buildings with tourists, he says the housing options provided by Airbnb are likely drawing more tourists—and more revenue—to the city. The responsibility of Airbnb in yielding the current lack of housing in the city is “sort of like a rounding error when you compare it to the population growth in San Francisco and the number of units that are rent-controlled.”

As Airbnb stands firm on protecting users’ data and refusing to fork over the names and addresses for every booking, Nulty points out that these short-term rentals are contributing around $469 million in revenue to the local economy and that more than 80% of users in San Francisco share only the home in which they live.

“Any sort of creative disruption tends to have winners and losers,” Sundararajan says. “I just don’t see a scenario in this case where the losses are going to outweigh the wins.”

TIME Innovation

How a Little Bribery Could Be a Good Thing

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

These are today's best ideas

1. A little bribery might actually be a good thing.

By Jan Hanousek and Anna Kochanova at the Centre for Economic Policy Research

2. Remember the rover that was supposed to last three months on Mars? It just logged day 4,000.

By A. J. S. Rayl at the Planetary Society

3. What if there was a step between renting and owning?

By Brett Theodos and Rob Pitingolo at the Urban Institute

4. Here’s the unexpected reason college tuition has skyrocketed.

By Paul F. Campos in the New York Times

5. Are small businesses being overlooked in the fight against poverty?

By Randall Kempner in the Guardian

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email ideas@time.com.

MONEY Financial Planning

10 Ways Our Grandparents Were Smarter About Money

grandfather with son
Sam Edwards—Getty Images

Pay cash, take care of your stuff, and always save for a rainy day.

Depending on your age and circumstances, it’s likely your grandparents’ relationship with money was forged by some different (and probably tougher) financial times. My own grandparents have been gone for decades now, but their lifestyles were studies in frugality and sharp financial management that I remember to this day. In honor of all the grandmas and grandpas out there, here are ten financial lessons we’ve learned from our grandparents:

1. Pay Cash

My grandmother never owned a credit card. She paid cash for everything and tracked every nickel in little paper passbooks. We found dozens of them when she died. She was meticulous. She was frugal. And she was always in the black.

2. Take Care of Your Stuff

Today, we live in a throw-away culture where it’s easy and relatively cheap to replace most things we own. Not so for our grandparents. Every item was considered an investment, and therefore, everything was diligently cleaned, waxed, oiled, painted, patched, and repaired. Their stuff lasted forever — and that saved money.

3. Have Practical Skills

Doesn’t it seem like our grandparents’ generation was filled with renaissance men and women? My grandfather farmed, raised livestock, built his own house, repaired machinery, and — I kid you not — divined for water using the twigs of a willow tree. With that level of skill, I wonder if he ever needed to hire anyone to do anything. Today, developing frugal skills is still a great way to build self-reliance and save money.

4. Get Creative

Folks who grew up during the Great Depression had to channel their inner creativity to survive. Their ingenuity helped them feed their families, earn an income, keep their kids clothed, and maybe stash a few bucks on the side. It’s the same today; discovering ways to boost creativity can still positively impact our budgets and keep us engaged and inspired.

5. It’s Better to Own

With few exceptions, it’s better to own than rent, especially during tough economic times. Access to money-producing assets (land, a house, a paid-off car, and the like) helped many generations survive and build wealth.

6. Save for A Rainy Day

No offense Suze Orman, but our grandparents and great grandparents invented the emergency fund. The idea of saving up for a rainy day is just smart financial strategy. Because our grandparents lived through some very lean years, they never allowed themselves to be lulled into thinking that today’s prosperity guarantees tomorrow’s.

7. Get Dirty

Our grandparents taught us that, if we’re lucky enough to have a little plot of land, we better put it to work by planting a garden. Gardens stretch our grocery budgets, promote healthier eating, and get us moving in the great out-of-doors. Few activities pack such a holistic health punch. (See also: 4 Things a Vegetable Garden Needs)

8. Live Together

No…not in that way. In earlier generations, it was more common for households to include mom and dad, their kids, and grandma and grandpa. More people living under one roof through these multi-generational arrangements meant more child care resources, more household help, and more sources of income.

9. Keep Your Wants Under Control

Slowly creeping wants can easily choke our budgets. Our grandparents were able to afford what they needed by keeping their wants modest and entirely flexible.

10. Small Luxuries Are Still Luxuries

Even our grandparents’ generation knew it: little luxuries now and then are good for the soul. But pampering doesn’t have to cost a fortune. An afternoon off, a leisurely meal out, a mid-day nap all sound quaint by today’s standards. But with the right frame of mind, they can still feel indulgent and be entirely therapeutic.

The weird thing is, we are (or will soon be) the grandparents of tomorrow. The economic times we’ve recently weathered have already left their mark on how we spend, save, and invest.

More from Wise Bread:

 

MONEY everyday money

The New College Grad’s Guide to Money

So long, college! Hello, adult life! Here's a quick and painless lesson in real-world finances for the class of 2015.

Person putting coin in mortarboard
John Kuczala—Getty Images

Graduates of the class of 2015, it’s time to further your education. Yes, you just spent four years amassing a crazy amount of knowledge. But despite all you’ve learned, you possibly still have an incomplete in one subject: money. Suddenly you’re at a financial turning point, facing challenges like finding a place to live and starting a new job. At the same time, your college friends have scattered across the country, the clock is ticking on your student loan grace period, and you are feeling broke, really broke.

Don’t worry. The basic money skills you need to get on your feet are easy to master. And by doing so right out of the college gates, you’ll have more opportunities off in the future—and greater peace of mind right away. So, drawing from the advice of recent graduates and experts familiar with your challenge, MONEY offers you this cheat sheet for launching your post-college financial life.

  • BUDGETING

    Money

    Make Technology Your Friend

    Remember life before college? Seasonal wardrobe updates, lots of dinners out, new cellphones on a regular basis? Well, Mom and Dad worked a good 20 years or so before they could afford that lifestyle, so don’t expect to carry on as you did when you lived at home.

    If you play it right, though, you can enjoy a taste of what’s important to you, with enough left over to start building a cushier future.

    The plan: Automate. Direct deposit and auto-deduction make it easy to set aside money before you can spend it. To make sure you have enough for large, regular monthly outlays like rent, savings, and student loans—more about those expenses later—set up your pay-check for split deposits. Put money for big necessities in one account, cash for everything else in another.

    Then it’s just a question of making those remaining funds last until your next paycheck. To do that, you don’t need a life of self-denial; just think about spending in terms of tradeoffs: Would I rather buy x now or y later?

    Handy tool: The Mint app tracks your cash and can build a budget from your past spending.

    One grad’s story: When Sean Starling, a 2013 Morehouse College graduate, started his first job out of school, he thought he was set. “I was like, ‘I’m making money now, and I can spend whatever I want,'” says Starling, 25. Repeatedly running out of cash—and failing to save enough—changed his mind. He used Mint to track his spending, then moved to Excel for more detail. With his budget now under control, Starling, a cost analyst, is repaying student debt and saving up for his September wedding. “Whether you use a piggy bank or Mint or an Excel spreadsheet,” he says, “find a way to make the savings process your own.”

  • HOUSING

    Money

    Share and Save

    Most likely, you’ll share your first home post-college with a roommate or two. And there’s a good chance their names will be Mom and Dad. Whomever you’re living with, make it a time for saving money.

    The plan: Moving out of your childhood home? Aim to spend no more than one-quarter of your income on rent, advises Ben Barzideh, a financial planner with Piershale Financial Group in Crystal Lake, Ill.

    Moving back in with the folks? Be sure to wash your dishes. But you’ll really warm their hearts if you take advantage of your rent-free digs and set aside at least 25% of your salary—the money you might have paid for rent—to start a getaway fund.

    Handy tools: Splitwise makes it easy for roommates to figure out who owes whom for different housing expenses. “It’s super-fast and streamlined,” says Zach Feldman, a 24-year-old New York University graduate living in Brooklyn. “It takes maybe 10 minutes out of the month to get my bills done.” The Venmo payment app makes it simple to settle up and verify that everyone has paid up.

    One grad’s story: Kristine Nicolaysen-Dowhan, 24, moved in with her mom and stepdad in Grosse Ile, Mich., after graduating from the University of Michigan in 2012. Her first paycheck went toward clothes for work; her second paid off debt. Within four months Dowhan was saving a whopping 75% of her salary. “The rest I just had as fun money,” she says.

  • CREDIT CARDS

    Money

    Handle With Care

    Credit cards are great—in moderation. They’re useful as backup in emergencies, and paying on time helps build your credit score—good for lower rates on future home and car loans. (Employers and landlords also use your score to gauge your reliability.) The downside: Plastic makes it easy to spend money you don’t have, at a high cost.

    The plan: Get a card—just one—and use it sparingly. (Starling reserves his card for emergencies and online purchases.) Activate text alerts in your account for upcoming bills. To help your score, pay on time and keep charges to one-fourth of your credit limit. And pay each month’s bill in full; if your card charges interest of, say, 20%, keeping a balance for a year means that every $100 you spend will cost you an extra $20.

    Handy tool: MONEY’s credit card guide points you to the best available cash-back credit cards—good if you pay your full bill each month—and the best card for first-time card users.

  • STUDENT LOANS

    Money

    Pick a Plan

    You can’t wriggle out of repaying student debt, but you can choose how you pay. Instead of a standard 10-year plan, you have other options: lower initial payments or more time to repay, in return for higher interest costs. You have six months after graduation to choose a plan (which you can change later).

    The plan: Run numbers to see what you can manage. On the average federal loan balance of $27,000 for a four-year public college, you’d pay $272 monthly under the standard plan; under another one that bases payments on your income, a person making $35,000 would begin paying just $146 but owe $3,100 more in total interest. Automatically deduct payments from your bank account; paying on time helps your credit score. At tax time, deduct your interest payments, up to $2,500, on your return (the deduction is phased out for singles making more than $80,000). Tax savings: up to $625.

    Handy tools: Get a list of your federal loans at nslds.ed.gov. Use the government’s Repayment Estimator to ballpark payments under different plans.

  • YOUR JOB

    Money

    Don’t Say Yes So Soon

    Relax. Based on horror stories of recent years, maybe you’ve decided you’re lucky to get a job, any job, at any salary. But you may have more bargaining power than you think. In the best market for new grads since the financial crisis, nearly two-thirds of employers—an all-time high—plan to raise starting salaries over last year, reports the National Association of Colleges and Employers.

    That positions you well for a salary negotiation, which can pay big dividends over time. A bump in pay of $5,000 by the time you’re 25 years old translates into a $634,000 boost in lifetime earnings, according to a study out of Temple and George Mason universities.

    The plan: Don’t accept an offer right away. Salary.com says 84% of employers expect applicants to negotiate their salary. And compensation data provider PayScale found that 75% of workers asking for more money got at least some of their request.

    When you do ask, tie your case (politely) to other offers you may have or to experience you bring—say, a previous internship—that will help you hit the ground running.

    Handy tools: PayScale, Salary.com, and Glassdoor will give you a realistic sense of salary ranges, taking into account factors such as company size and location.

    One grad’s story: When Kirk Leonard, 24, a 2013 graduate of Lamar University in Beaumont, Texas, was offered a job as an office manager at a local dialysis facility, he laid out the case for his future boss as to why he deserved higher pay: Having worked for the company before, he knew its operations. And he could start right away—saving the company the time and hassle of a job search. The payoff: a salary 10% higher than the original offer.

  • HEALTH INSURANCE

    Money

    Get Covered

    Another reason to worry less this year: Thanks to Obamacare, it’s easier and cheaper than ever to get health insurance to cover major medical expenses. Any plan you sign up for should include a free annual checkup and access to prescriptions for birth control.

    The plan: The cheapest route is probably to stay on (or return to) a parent’s plan—open to you until you turn 26. You may not want to, though, if you live far from your parents; finding in-network doctors and hospitals might be difficult, says Carrie McLean of eHealth.com.

    Insured through work? Since being young means you’re (probably) healthy, you might pick the company plan you’re offered with the lowest upfront cost and highest deductible (the amount you pay before insurance starts kicking in). But, warns Karen Pollitz of the Kaiser Family Foundation, be sure you can quickly scare up the deductible, which can be as much as $6,600 this year; a broken leg, for example, can easily cost thousands.

    On your own? Hit the government exchange. Plan labels range from Bronze to Platinum, based on premiums and out-of-pocket contributions. You’re likely eligible for subsidies if you make less than $46,680 in 2015. The silver plan is a good pick, since a break on out-of-pocket costs (if you earn less than $29,175 this year) is available only with that choice.

    Handy tools: To buy through the government exchange, start at healthcare.gov/lower-costs and see if you qualify for discounts. Making less than $16,105 this year? Check the map at kff.org/medicaid to see if your state offers a free plan.

     

  • EMERGENCIES

    Money

    Stash a Little Cash

    Stuff happens—stuff that costs money. Your car might break down… or a friend might invite you to his spur-of-the-moment Vegas wedding. Be ready without having to fall back on a credit card you can’t pay off.

    The plan: An emergency fund of about $1,000 is enough for you, says Barzideh. Set a little money aside from any graduation checks you might receive, and add $50 or so a month into a bank account—one that’s separate from your day-to-day account, so you won’t be tempted to raid it for everyday needs.

    Handy tool: Keep your money in an online bank like Ally.com. There’s no minimum balance or monthly fee; the interest rate is now 0.99%.

  • SAVINGS

    Money

    Get Richer Now

    You too can be a millionaire later in life. The earlier you start saving, the easier it is, and the more freedom you’ll have later on. “You don’t know what choices you’ll be considering in 20 or 30 years, but you do want to have choices,” says Brenda Cude, a professor of financial planning at the University of Georgia.

    The plan: The best place to save long term is in a 401(k) retirement savings plan, offered by employers of nearly 80% of workers. You aren’t taxed on the money you put in that 401(k), and it grows tax-free over the years (you’ll pay taxes on withdrawals). Most employers will match a portion of your contributions, typically 50¢ for every dollar on the first 6% of pay. Start small, putting aside $50 or $100 a month.

    If you don’t have a 401(k), you can put up to $5,500 this year in an individual retirement account called a Roth IRA, where your investments will grow tax-free. (You can open one up through any major fund company, such as Vanguard, Fidelity, or T. Rowe Price.) You get no upfront tax break, but you won’t be taxed when you take money out. And that’s good, since your tax rate will probably be higher later on than it is now.

    Wherever you save, the best starter investment is a mutual fund called a target-date fund. It will give you, in a single investment, a package of stocks and bonds that’s right for your age.

MONEY Credit Scores

The One Graph That Explains Why a Good FICO Score Matters for Homebuyers

young couple outside of home
Ann Marie Kurtz—Getty Images

An analysis from an economic policy group estimates that tight credit standards may have prevented 4 million consumers from getting mortgages since 2009.

When it comes to buying a home, there’s a lot more to the process than just finding an affordable home for sale and having enough money for a down payment. Most people need loans to finance such a large purchase, but even as the housing market has rebounded from the foreclosure crisis and low property values of 2010, mortgages remain very difficult to acquire. A report from the Urban Institute, a Washington-based economic-policy research group, concludes that 1.25 million more mortgages could have been made in 2013 on the basis of conservative lending standards practiced in 2001, years before the housing bubble began to inflate.

Whether or not a lender approves a borrower for a mortgage depends on several factors, like income and outstanding debt, but looking at the credit scores of mortgage borrowers during the last several years shows just how tight the market has been post-recession. Here’s how it breaks down.

Urban-Institute-FICO-Score-distribution

The Urban Institute estimates that the stringent credit score standards for mortgage origination resulted in 4 million mortgages that could have been made (but weren’t) between 2009 and 2013. From 2001 to 2013, consumers with a FICO credit score higher than 720 made up an increasingly large portion of borrowers, from 44% of loans in 2001 to 62% in 2013. Consumers with scores lower than 660 made up 11% of borrowers in 2013, but they represented 28% of home loans in 2001.

The study authors note that their calculations do not account for a potential decline in sales because consumers may not see homeownership as attractive as it had been before the crisis.

“Even so, it is inconceivable that a decline in demand could explain a 76% drop in borrowers with FICO scores below 660, but only a 9% drop in borrowers with scores above 720,” the report says.

On top of that, the authors found that tightened credit standards disproportionately affected Hispanic and African-American consumers. In comparison to loan originations made in 2001, new mortgages among white borrowers declined 31% by the 2009-2013 period, 38% for Hispanic borrowers and 50% for African-American borrowers. Loans to Asian families increased by 8%.

Millions of Americans are still feeling the impact of the economic downturn on their credit scores, because negative information like foreclosure, bankruptcy and collection accounts remain on credit reports for several years. Rebuilding the credit and assets necessary to buy a home takes time, particularly in such a tight lending climate, but by regularly checking your credit — which you can do for free on Credit.com — and focusing on things like keeping debt levels low and making loan payments on time, you can start making your way toward a better credit standing.

More from Credit.com

This article originally appeared on Credit.com.

TIME Innovation

Five Best Ideas of the Day: March 30

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

1. Blue-collar jobs are coming back, and pay well. But women are missing out.

By Mitchell Hartman in Marketplace

2. Ikea is known for affordable, flat-pack furniture. Now they’re selling the U.N. flat-pack refugee housing.

By Amar Toor in the Verge

3. With an eye on the White House, politicians won’t admit it, but the ethanol mandate is terrible policy.

By Josiah Neeley in the American Conservative

4. With billions in profits, tech giants must lead the charge against inequality in Silicon Valley.

By John D. Sutter in CNN

5. Can better customer service make primary medical care affordable and sustainable?

By Margot Sanger-Katz in the Upshot

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email ideas@time.com.

TIME cities

Salt Lake City and Austin Ranked Best for Job Creation in U.S.

New York City is dead last among the top 50 metro areas

Salt Lake City, Utah, and Austin, Texas, topped the rankings for job creation across all U.S. cities in 2014, according to a poll by research-based consulting company Gallup. They are followed by San Francisco, whose Bay Area is home to tech giants like Apple, Google and Facebook, while another Texas city, Houston, and Orlando, Fla., round off the top five.

The nation’s financial powerhouse New York City, meanwhile, ranked dead last among the top 50 metro areas, joined by San Diego, Calif., and Hartford, Conn., in the bottom three.

The poll was done through a telephone survey of over 200,000 randomly selected participants across the country, who were divided into Metropolitan Statistical Areas that were then assigned a “Job Creation Index” score. Among the top 50, these scores ranged from 37 for Utah and Austin to 20 for Hartford, San Diego and New York.

While U.S. job creation on the whole has been improving since the 2009 recession, the trend among the cities with high job creation appears to be an increasing demand in the technology sector. Housing and construction jobs are also growing in the top two cities to meet the increasing demands placed on them by the work force, Gallup said.

Your browser is out of date. Please update your browser at http://update.microsoft.com