Americans’ Financial Health Not Very Good in January
Posted on Fri, Feb 15, 2013 @ 10:04 AM
According to the Consumer Reports Index, financial difficulties increased for middle-income households in January. The Index measures the following areas:
- Employment
- Retail
- Sentiment
- Stress
- Trouble Tracker (financial difficulties)
The Consumer Reports Index is a monthly telephone poll of a nationally represented sample of Americans. An interview of 1,011 survey takers was conducted between January 24 and January 27.
The survey revealed that the Trouble Tracker (financial difficulties) rose from 32.7% to 37.5% for middle-class Americans. The two areas with the greatest increase were missed payments on major bills (except mortgages) and the inability to afford medical expenses or medications. The Trouble Tracker was up 7.2% in the Western Region of the country and up 5.5% in the Northeastern Region. It was down 8.8% in the Southern Region but remained unchanged (-4.2%) in the North Central Region.
Other interesting findings of the survey include:
- 4.4% of respondents found a job in January while 5.5% lost a job in January
- Consumer sentiment declined from 51.2% to 48.9% with weakening confidence among lower and middle-income Americans
- Consumer stress remained unchanged at 55.9% from the previous month
8 Signs That You Are Not in Good Financial Health (And Could Be Headed for Bankruptcy)
1. You have no emergency fund
According to a 2012 report by the National Foundation for Credit Counseling, 2 out of every 5 adults said they were saving less than the previous year and 39% didn’t have any non-retirement savings. In instances where you lose your job or have a major medical expense, you’ll want to have cash reserves to cover at least 3 months of expenses (ideally, 6 months).
2. You have no health insurance or you have inadequate coverage
According to an article in the American Journal of Medicine, over 60% of bankruptcies were due to medical expenses. A catastrophic medical emergency can wipe out all your assets.
3. You use credit cards to purchase more than you can pay off each month or you have maxed out all your credit cards
Credit card debt is expensive with high interest rates. This is especially true if you continue to carry a high credit card balance. If you only pay the minimum payment each month, it may take you 20-30 years to completely pay off the credit card debt.
4. You are paying more for your home than you can afford
It’s a problem if your mortgage payment takes a huge bite out of your monthly income. You can also get into financial trouble taking out too many home equity loans in order to pay other bills.
5. You buy items you don’t really need
If you have doubts about purchasing an item, especially a big-ticket item, then you probably shouldn’t buy it. Also, if you find yourself rationalizing unnecessary purchases, you could be living beyond your means and find yourself deeper in debt.
6. You are having trouble making payments on your home or car
If you are facing a foreclosure on your home or a repossession of your car because you have failed to make payments, you are in deep financial trouble. As a rough estimate, your mortgage payment should not exceed one week’s salary.
7. You have too much student loan debt
It’s very difficult to have a student loan forgiven or discharged in bankruptcy. So this debt will continue to balloon if you are unable to make required payments, making it impossible to ever repay it in full.
8. You have co-signed loans for people with bad financial habits
If you co-sign for someone who subsequently fails to pay on the loan, the creditor will come after you and you will be held responsible for paying back the loan.
Saving Your Financial Future
If your debts become unmanageable, bankruptcy may be your only solution. We offer resources to help you understand the bankruptcy process as well as provide U.S. Trustee-approved required credit counseling and debtor education courses. These courses will help you get your finances in order so you can avoid getting into financial trouble in the future.
An experienced bankruptcy attorney can best advise you of all your financial options. Find an attorney in your area by using our free Attorney Locator.