One in four. That’s how many Americans are one accident, one illness or one bit of financial bad luck away from disaster. That bad news comes in spite of an economy that, by all the usual metrics, is doing pretty well. And yet the economic improvements are not translating into meaningful economic change for millions of individual Americans.
The root reason behind the near financial hardship of so many has been basically intact for more than a generation. The cost of the things you can’t live without is rising faster than real wages adjusted for inflation. Like a relentless tide, that simple but ceaseless math pushes people toward the financial brink.
The bad news, according to a recent BankRate survey, nearly one in four Americans have credit card debts that exceed their savings.
Not All Bad News
In 2013 only fifty-five percent of Americans had enough savings to cover their credit card bills, which means forty-five percent were on the edge. Last year that figure was thirty-seven percent. Earlier this year the number was twenty-nine percent and in the most recent survey, it was twenty-five percent. While bad, at least the numbers are slowly moving in the right direction.
Painfully Slow Progress
Local community organizations that run remedial personal finance classes are typically swamped. Given how far we are into this recovery, things should be better but the recovery is uneven. American net worth is at an all time high but the way it’s distributed a few Americans are doing fabulously well while everyone else continues to struggle, even in times of plenty.
Some Age Groups Worse Off
Statistically, if you’re eighteen to twenty nine or over sixty five, you’re doing pretty well. If you’re anywhere in the middle, not so good. For Americans in the thirty to forty nine age group, the years child-raising expenses are at their peak, nearly forty percent have more credit card bills than savings.
Housing Costs, Rent
Still the big dent in American wallets is the cost of owning a house or paying rent. On average between thirty and forty percent of their income goes to a combination of mortgage payment or rent and utilities. With nearly forty percent of your household budget allotted every month, that doesn’t leave a lot of room for extras. For those looking to save money and get their finances in shape, finding a way to lower the cost of keeping a roof over your head can make both the fastest and biggest improvement in your finances.
The other way to improve your situation is to increase your income but doing so may mean moving to one of the coasts. Job growth continues to be strong in urban areas on the east and west coast. Southern California, the New York/Boston area and Miami are tops for jobs. North Dakota, Louisiana and Texas, all be hit by the oil price crash, may experience either weak or negative job growth.