Wednesday, June 28, 2017 by Frances Bloomfield
If you have an emergency fund, then congratulations: You’re one of the few in this country who will get through the impending economic crisis. It seems that Americans have yet to fully absorb the harsh lessons taught by the Great Recession. Another major economic downturn is looming on the horizon, and millions are going to suffer from their lack of foresight.
Although the most recent Financial Security Index survey says otherwise, do not be deceived. Sure, a mere 24 percent of polled adults said that they had no money saved for emergencies, but pay attention to the other figures. A good 37 percent answered that their emergency savings would be enough to last them five months or less, while only 31 percent had funds that would get them through six months and more.
This means that a staggering 69 percent of American adults do not have sufficient emergency savings.
What will that 69 percent do when the economic crisis hits our country hard and the majority of them lose their jobs? They won’t have adequate funds to pay off their mounting expenses and bills. Mortgage defaults will rise and thousands of families will lose their homes. They’ll continue to rack up debts in order to make ends meet.
And believe you me, they don’t need any more debts. None of us do. U.S. consumers are already over 12 trillion dollars in debt. Break that down, and that amounts to about $40,000 for every single person in our nation, children included. (Related: Is this YOU? 1 in 4 Americans completely BROKE and in no position to help themselves when SHTF)
It certainly doesn’t help that many Americans just don’t get how to damaging credit card debts can truly be. Instead of settling their credit card bills in full, many opt to meet the minimum payment because that’s way easier. What may seem like a good choice at first will inevitably lead to something worse down the line. All debts pile up over time, and credit card debts are not exempted. They can and will cripple you financially if you let them grow, especially if the interest rates are high.
Adding to the problem is the fact that millions of Americans (75 percent of the population, to be exact) are living paycheck to paycheck.
Drowning in debt, only making do with what you have, and bereft of an adequate financial cushion to get you through six months without a hitch: if this is you, then you need to make the necessary changes, pronto.
Pay of all your pending debts, limit yourself to spending way less than what you make, and allocate the money you spend to the needs, not the wants. These will entail a lot of sacrifices, yes, but whoever said that it was going to be easy? Nothing worth having ever is, and financial security is just one of those essentials you need to really work for.
At the very least, you’ll be able to survive the next massive economic downturn.
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