Budgeting & Budgets Debt Articles

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.

Sincerly,
Steve

You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.





About the author

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.

29 Comments

  • 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?

  • 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.

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