If you watch Spike’s Life or Debt with Victor Antonio, you’ll see how some American families are truly living on the precipice of financial disaster. On the show, many haven’t paid the mortgage in months, others are drowning in credit card debt, and almost everyone has virtually no savings for when disaster strikes. These aren’t rare cases—it’s the norm. And a new survey shows that two-thirds of Americans, rich and reasonably well off, would struggle to cover a $1,000 emergency expense (via AP):
Two-thirds of Americans would have difficulty coming up with the money to cover a $1,000 emergency, according to an exclusive poll released Thursday, a signal that despite years after the Great Recession, Americans' finances remain precarious as ever.These difficulties span all incomes, according to the poll conducted by The Associated Press-NORC Center for Public Affairs Research. Three-quarters of people in households making less than $50,000 a year and two-thirds of those making between $50,000 and $100,000 would have difficulty coming up with $1,000 to cover an unexpected bill.
Even for the country's wealthiest 20 percent — households making more than $100,000 a year — 38 percent say they would have at least some difficulty coming up with $1,000.
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Despite an absence of savings, two-thirds of Americans said they feel positive about their finances , according to survey data released Wednesday by AP-NORC, a sign that they're managing day-to-day expenses fine. The challenge for many often comes from economic forces beyond their control such as a dip in the stock market that threatens their job or an unexpected medical bill.
When faced with an unexpected $1,000 bill, a majority of Americans said they wouldn't be especially likely to pay with money on hand, the AP-NORC survey found. A third said they would have to borrow from a bank or from friends and family, or put the bill on a credit card. Thirteen percent would skip paying other bills, and 11 percent said they would likely not pay the bill at all.
Those numbers suggest most American families do not have at least $1,000 stashed away in a savings account, much less under their mattresses, to cover an emergency.
During a lecture at the Navy War College in 2011, commentator George Will noted that most baby-boomers are retiring with less than $50,000 in savings or investments. Overall, one in three Americans have saved nothing for retirement, while 56 percent said that they have less than $10,000. Hence, why the fight to reform entitlements is such a steep climb. Yet, much like the government, it shows that many are not practicing fiscal restraint. Some, undoubtedly, are not doing this by choice, but while we have these debates over Obamacare, Second Amendment rights, pro-life issues, the size and scope of government etc,-- maybe it’s time to have a conversation about saving for financial disaster.