Some 40 percent of Americans would struggle to pay for an unforeseen $400 emergency expense, says a new report by the Federal Reserve. Clearly, things have become so unequal in the United States. It begs the question, if people can’t afford $400 for a medical emergency or a small car repair, how can we expect them to save money for their retirement?
Despite a significant downtick in the overall unemployment, from 4.3 percent in 2017 to 3.9 percent in 2018, people still have to sell something to cover this unexpected expense. The figure comes from the Fed’s survey in which 12,000 adults were asked about their financial status and well-being.
61 percent of adults said they would cover it using their savings, cash, or credit card. Rest of the adults said they would borrow from friends, family, or they would carry a balance on their credit cards.
44 percent of Americans make less than $40,000 a year, and none of them are not doing okay financially. However, there has been a huge difference across various communities with almost half the population in rural areas believe that their local economy is doing great as compared to two-thirds of the population living in the cities.
According to the Survey of Consumer Finances, which asks respondents for their bank account balance, the percentage of people who do not have $400 in their savings account is close to 20 percent. This is quite contradictory – people who do have that money in their savings struggle to come up with that money.
People blame debt for not being able to afford an unexpected expense. Companies like Americor Funding provide debt consolidation programs at meager rates. Keep note that debt relief programs are not for everyone. Following are some indicators that you have to make calls to debt counselors or credit agencies and have them as a guide with debt consolidation:
• When you can no longer monitor the amount you owe, and also to whom you owe money to.
• When your application for an increase in borrowing limit is rejected. This is outside of the regular borrowing limit increases that your credit card company gives as a reward for faithful patrons who use their cards responsibly.
• When you need to get cash advances because you are out of money. Crisis situations are understandable, however, you have to be very careful when taking cash advances.
• If you are getting a loan to cover another loan, or making use of one credit card to pay for another. These are certain indicators that you will no longer be making decisions that may be regarded as financially responsible.