Debt is an unfortunate fact of life for many people. Millions of families across the [..]
Insufficient Savings the Biggest Hurdle to Financial Wellness
Whether it’s a broken-down car, an unexpected illness or injury, or a suddenly leaky roof, nearly everyone experiences unplanned emergency expenses at some point during their lives. But why are some people able to adapt to these expenses, while for others they signal the first step on the road to financial crisis?
The secret is in savings. People who put money away each month to build up a cash reserve are much more likely to be able to weather unexpected expenses. Those who don’t often find themselves turning to debt to make up the financial shortfall, even relying on credit cards to pay for basic living expenses. Each month, the hole gets deeper as the interest charges add up.
Of course, saving up a cash reserve is much easier said than done. In this weak economy, many people are finding it extremely difficult to wind up with anything left over at the end of the month. A recent study performed by the Consumer Federation of America and the Consumer Planner Board of Standards shows that 38 percent of American households are living paycheck to paycheck. Because they are so concerned with making ends meet, these households are rarely able to set aside anything for a rainy day.
Liquid Asset Poverty is a Pressing Problem
Even worse, a new report by the Corporation for Enterprise Development (CFED) shows that nearly 44 percent of all American households are teetering on the “edge of financial collapse.” These households do not have sufficient savings to cover three months of basic living expenses at the federal poverty level if they suddenly lost their income because of a job loss or medical emergency. A family of four would need about $5,760 in savings to meet this threshold.
“Liquid asset poverty” isn’t a problem that is confined to the working class. Many of the households deemed at risk of crisis earned solidly middle-class incomes of between $55,465 and $90,000 per year.
In addition, the study noted that more than a quarter of all American households face “net worth poverty.” These households have debt loads that exceed whatever assets they do have.
New Jersey households are about on par with the national average when it comes to liquid asset poverty. The CFED found that 44.6 percent of households in the state have insufficient cash reserves.
Filing for Bankruptcy in New Jersey
If an unexpected financial hardship does hit, households in New Jersey have a number of options to remedy the problem. Perhaps the most effective method for dealing with overwhelming financial problems is filing for bankruptcy. A successful bankruptcy will discharge most debts — including medical bills and credit card debt — allowing the debtor to get a fresh start.
Contact the NJ Bankruptcy Law Firm of Brenner Spiller & Archer, LLP
If you or a loved one is struggling financially, know that help is out there. Contact our Camden County bankruptcy attorneys online or call 856-963-5000 to schedule a free initial consultation to discuss your situation.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.