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Half of Americans Tapped Out and Broke. Anyone Surprised?

The National Bureau of Economic Research recently released a paper that looked at the “financial fragility” of households. They determined fragility as the inability to come up with $2,000 in 30 days or less.

Approximately one quarter of Americans report that they would certainly not be able to come up with such funds, and an additional 19% would do so by relying at least in part on pawning or selling possessions or taking payday loans.

The survey asked a simple question, “If you were to face a $2,000 unexpected expense in the next month, how would you get the funds you need?” In the U.S., 24.9% of respondents reported being certainly able, 25.1% probably able, 22.2% probably unable and 27.9% certainly unable. The $2,000 figure “reflects the order of magnitude of the cost of an unanticipated major car repair, a large copayment on a medical expense, legal expenses, or a home repair,” the authors write. On a more concrete basis, the authors cite $2,000 as the cost of an auto transmission replacement and research that reported low-income families claim to need about $1,500 in savings for emergencies.

With more Americans living paycheck-to-paycheck it can be no surprise why it becomes hard and harder for them to recover from a financial surprise. Without reserves to call upon, the arrival of a $2,000 financial surprise is enough to break the back of the household budget.

I can’t emphasize enough the importance of a regular savings account or emergency fund in to save money in even while you may be trying to dig yourself out of debt.

Half of Americans Tapped Out and Broke. Anyone Surprised?
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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • Mike Reilly

    means comply or die… follow the rules

  • Scott Johnson

    Mike

    I am writing an article on MD. I will tie in State Regulatory and Federal Compliance which is already here.  Not sure your point on crime & time.. what do you mean?

  • Guest

    I was involved in debt settlement working for a good company who cared about the client. Due to the downturn my company suffered and I was laid off. I know there are several people that I worked with that really enjoyed the work and helping people and are planning to get involved in this business again in the future. Some I’m sure will start their own company and some will look for work with a new debt settlement company. Like Mike Reilly said in a post today “This truly is a great industry if you enjoy helping others” and for this reason the industry will rebound and it looks like that might be starting. My fingers are crossed for this, I will be back in this business as soon as I can.

  • Mike Reilly

    Scott, local regulatory and compliance requirements nothing outside the box, and today that’s what we all can expect at some point in time. Don’t do the crime if you can’t do the time!
    Thanks

  • Walter

    It was interesting to me to read Julian’s comments/question to Mike. Like he and his partners I am with a group who are poised and ready to enter the debt industry but have just been trying to figure out the right time. Like Julian we love that the industry can help so many people who are struggling, it would be great to have a job helping others. Also like Julian we are well financed, have low overhead, want to operate on a performance basis and have learned the basics of the industry through certification. We also have an attorney who will help us with legal compliance issues nationwide. We have been sitting on the fence watching sites and forums like this one and we know are not alone and that there are others watching and waiting to be involved in the future of debt relief. Comments like Julian’s are encouraging.

  • Walter

    It was interesting to me to read Julian’s comments/question to Mike. Like he and his partners I am with a group who are poised and ready to enter the debt industry but have just been trying to figure out the right time. Like Julian we love that the industry can help so many people who are struggling, it would be great to have a job helping others. Also like Julian we are well financed, have low overhead, want to operate on a performance basis and have learned the basics of the industry through certification. We also have an attorney who will help us with legal compliance issues nationwide. We have been sitting on the fence watching sites and forums like this one and we know are not alone and that there are others watching and waiting to be involved in the future of debt relief. Comments like Julian’s are encouraging.

  • Scott Johnson

    Here is a starting point for MD – Definitions

    (D) (1) “DEBT SETTLEMENT SERVICES” MEANS ANY SERVICE OR PROGRAM REPRESENTED, DIRECTLY OR BY IMPLICATION, TO RENEGOTIATE, SETTLE, REDUCE, OR IN ANY WAY ALTER THE TERMS OF PAYMENT OR OTHER TERMS OF A DEBT BETWEEN A CONSUMER AND ONE OR MORE UNSECURED CREDITORS OR DEBT COLLECTORS, INCLUDING A REDUCTION IN THE BALANCE, INTEREST RATE, OR FEES OWED BY A CONSUMER TO AN UNSECURED CREDITOR OR DEBT COLLECTOR.

    (2) “DEBT SETTLEMENT SERVICES” DOES
    NOT INCLUDE DEBT MANAGEMENT SERVICES.

    http://mlis.state.md.us/2011rs

    Steve also has some trial memberships subscriptions for his readers to the compliance software at

    https://usdr.us/company_crm/in

  • Scott Johnson

    Here is a starting point for MD – Definitions

    (D) (1) “DEBT SETTLEMENT SERVICES” MEANS ANY SERVICE OR PROGRAM REPRESENTED, DIRECTLY OR BY IMPLICATION, TO RENEGOTIATE, SETTLE, REDUCE, OR IN ANY WAY ALTER THE TERMS OF PAYMENT OR OTHER TERMS OF A DEBT BETWEEN A CONSUMER AND ONE OR MORE UNSECURED CREDITORS OR DEBT COLLECTORS, INCLUDING A REDUCTION IN THE BALANCE, INTEREST RATE, OR FEES OWED BY A CONSUMER TO AN UNSECURED CREDITOR OR DEBT COLLECTOR.

    (2) “DEBT SETTLEMENT SERVICES” DOES
    NOT INCLUDE DEBT MANAGEMENT SERVICES.

    http://mlis.state.md.us/2011rs/chapters_noln/Ch_280_sb0741E.pdf

    Steve also has some trial memberships subscriptions for his readers to the compliance software at

    https://usdr.us/company_crm/index.php?op=existing_laws

    • Mike Reilly

      Scott, local regulatory and compliance requirements nothing outside the box, and today that’s what we all can expect at some point in time. Don’t do the crime if you can’t do the time!
      Thanks

      • Scott Johnson

        Mike

        I am writing an article on MD. I will tie in State Regulatory and Federal Compliance which is already here.  Not sure your point on crime & time.. what do you mean?

      • Mike Reilly

        means comply or die… follow the rules

  • Steve Rhode

    I have not looked but do you know what the new requirements are in MD under the new law?

  • Scott Johnson

    MIke

    In the bill tracking section you can find the effective date of ( MD SB 741) 1 october 2011
    It was signed by the Govenor on 10 May 2011.

  • Julian

    Thank You Mike, much appreciated.

  • Mike Reilly

    Julian, in the words of Nike “Just do it” I did a quick check with a software platform I am evaluating and as suspected you’re good to go in MD. I will share this platform with you once I have had time to thoroughly go through it.

    Best success to you and your partners.

  • Julian

    Thanks Mike, we are located in Maryland but plan to do business in other states as well. We will consult with an attorney who specializes in this industry on this issue. Thanks for the other advice and after spending time here we do understand what you are saying. As I mentioned in my earlier comment to you we have been anxcious to begin this business for quite a while and we do see a great future helping people become debt free. The industry has been going through positive changes (we think) with the new regulations (bad players leaving) and we are sure there is a bright future for good companies in the industry moving forward. We want to do it right and are thinking that now would be a good time to begin the process and start building our business. We think that there are others like us waiting to enter the arena and we would like to be ahead of the curve getting started. Your thoughts from the inside will be very important to us.

    Thanks again for taking the time.

    Julian

  • Mike Reilly

    Julian, nice to meet you, thanks for the kind words. This truly is a great industry if you enjoy helping others. In order for me to answer your question (as if it were my decision to make) tell me what state you’re located in and other states, if any, you plan to service. Education is key but, start with the basics first (local regulatory and compliance requirements) then expand. We started Emerge in the winter of 09, in NY and 95-98% of our business is from NY.
     
    Some quick words to ponder; not everyone here is interested in you entering this industry and many will try to discourage you, in most cases indirectly. Beware of Greeks bearing gifts, for some, this site can quickly become a Trojan horse, watch the gate carefully, and stay true and in-line with your values.

  • Steve Rhode

    If you are just getting into the debt relief space it would be a wise idea to consider coming to our debt relief master class in July to meet regulators and experts in compliance issues. The class is free.

    Now may be the right time for a new company to get into debt relief that carries no overhead legacy costs, has no demand to make sales, and is keenly aware of the issues that lead to risk.

    Best of luck on your adventures.

  • Julian

    Mike, I have read several of your comments here over the last few months and have to say I find you very up front about the true state of affairs for companies doing business in the debt settlement industry today, way to go! My partners and I have been wishing to start a debt settlement business for many months and have been putting it off while the industry goes through this adjustment period following the FTC TSR ammendment. I can’t help thinking that now might be the right time to get started and begin building our business.
     
    A performance based business model suits us fine, we will have very low overhead, are well financed and we plan to for sure a least get a good grounding by learning the basics of the business through certification and also want to be sure that we operate compliantly once accepting clients so will look for education on this.
     
    We love the “win-win-win” aspect of this business for debtor, creditor and debt settlement company.
     
    I would love your opinion on the timing question of when to get started.
     
    Thanks.
     
    Julian

  • Mike Reilly

    Well there you have it, $2000 dollars is all it takes, the price of a major auto repair and bingo…it could break the backs of nearly 50% of the population…. we’re back in business. I guess some would say we’re in the valley! For the sake of american familes I hope the unemployment numbers improve sooner than later. For the sake of debt relief a retraction is good if you can ride it out.

  • Mike Reilly

    Well there you have it, $2000 dollars is all it takes, the price of a major auto repair and bingo…it could break the backs of nearly 50% of the population…. we’re back in business. I guess some would say we’re in the valley! For the sake of american familes I hope the unemployment numbers improve sooner than later. For the sake of debt relief a retraction is good if you can ride it out.

    • Julian

      Mike, I have read several of your comments here over the last few months and have to say I find you very up front about the true state of affairs for companies doing business in the debt settlement industry today, way to go! My partners and I have been wishing to start a debt settlement business for many months and have been putting it off while the industry goes through this adjustment period following the FTC TSR ammendment. I can’t help thinking that now might be the right time to get started and begin building our business.
       
      A performance based business model suits us fine, we will have very low overhead, are well financed and we plan to for sure a least get a good grounding by learning the basics of the business through certification and also want to be sure that we operate compliantly once accepting clients so will look for education on this.
       
      We love the “win-win-win” aspect of this business for debtor, creditor and debt settlement company.
       
      I would love your opinion on the timing question of when to get started.
       
      Thanks.
       
      Julian

      • http://GetOutOfDebt.org Steve Rhode

        If you are just getting into the debt relief space it would be a wise idea to consider coming to our debt relief master class in July to meet regulators and experts in compliance issues. The class is free.

        Now may be the right time for a new company to get into debt relief that carries no overhead legacy costs, has no demand to make sales, and is keenly aware of the issues that lead to risk.

        Best of luck on your adventures.

      • Mike Reilly

        Julian, nice to meet you, thanks for the kind words. This truly is a great industry if you enjoy helping others. In order for me to answer your question (as if it were my decision to make) tell me what state you’re located in and other states, if any, you plan to service. Education is key but, start with the basics first (local regulatory and compliance requirements) then expand. We started Emerge in the winter of 09, in NY and 95-98% of our business is from NY.
         
        Some quick words to ponder; not everyone here is interested in you entering this industry and many will try to discourage you, in most cases indirectly. Beware of Greeks bearing gifts, for some, this site can quickly become a Trojan horse, watch the gate carefully, and stay true and in-line with your values.

      • Julian

        Thanks Mike, we are located in Maryland but plan to do business in other states as well. We will consult with an attorney who specializes in this industry on this issue. Thanks for the other advice and after spending time here we do understand what you are saying. As I mentioned in my earlier comment to you we have been anxcious to begin this business for quite a while and we do see a great future helping people become debt free. The industry has been going through positive changes (we think) with the new regulations (bad players leaving) and we are sure there is a bright future for good companies in the industry moving forward. We want to do it right and are thinking that now would be a good time to begin the process and start building our business. We think that there are others like us waiting to enter the arena and we would like to be ahead of the curve getting started. Your thoughts from the inside will be very important to us.

        Thanks again for taking the time.

        Julian

      • Mike Reilly

        Julian, in the words of Nike “Just do it” I did a quick check with a software platform I am evaluating and as suspected you’re good to go in MD. I will share this platform with you once I have had time to thoroughly go through it.

        Best success to you and your partners.

      • Julian

        Thank You Mike, much appreciated.

      • Scott Johnson

        MIke

        In the bill tracking section you can find the effective date of ( MD SB 741) 1 october 2011
        It was signed by the Govenor on 10 May 2011.

      • http://GetOutOfDebt.org Steve Rhode

        I have not looked but do you know what the new requirements are in MD under the new law?

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