Financial planners usually recommend that American workers consistently contribute a portion of their wages to savings and retirement plans. However, a recent survey suggests that many Americans might be operating on a very thin black line, without much financial cushion in the event of an emergency.
Specifically, a survey conducted by Bankrate.com questioned Americans about their credit card debt and savings. Almost 30 percent admitted to accruing more credit card charges than their savings. Another 17 percent reported that they did not have credit card debt, but still lacked emergency savings. Only 51 percent of those surveyed stated that they could pay off their credit card debt in the event of an emergency.
Do those survey results indicate a financial recovery? Although there are various signs of financial health in various industry sectors, it may be premature to view the crisis that began with the market crash in 2008 as over. Yet consumer spending is increasing, despite any uncertainties over the financial recovery. In the fourth quarter of 2013, consumer spending increased 3.3 percent, its highest pace since the final months of 2010.
A bankruptcy attorney knows that most consumers do not intentionally miss a credit card payment. Yet unplanned events sometimes create a financial crisis, especially for consumers with only a small savings reserve. Whether the life event is a divorce, a reduction in wages, or an accident or illness, a sudden spike in expenses can translate into months of struggling.
When unpaid credit card debt accumulates over several months, consumers may find themselves in a situation from which they can no longer recover. For such consumers, a bankruptcy attorney might help them achieve a fresh start.
Source: CBS News, “Close to half of Americans have more credit card debt than savings,” Constantine Von Hoffman, Feb. 18, 2014