Paycheck to Paycheck is No Way to Live

According to a recent story in the New York Post, half of the working families in the United States are living pay check to pay check.  Living this way may work for a while or even a long time; however, the problem it presents is the inability to effectively cope with an unexpected crisis.

50% of People Unprepared for a Financial Crisis

According to the news article, fifty percent of people are “woefully unprepared” for a financial crisis. Nearly twenty percent of Americans have nothing set aside to meet an unexpected financial crisis. Almost a third of Americans have less than $500.00 set aside for a crisis. The article references a survey by MetLife, the insurance company, which found that 49% of their employees are “concerned, anxious or fearful about their current financial well-being.”

One reason for this situation might be that Americans have nearly the same level of household debt they had during the recent “Great Recession” of a few years back. However, less of this debt is housing related and is more likely to be auto and student loans. Total household debt is expected to reach $12.68 trillion this year.

One type of unexpected financial crisis that can wreak havoc on your family finances is illness. The article cites the case of Wanda Battle, a career registered nurse, who had incurred $100,000.00 in medical expenses. She was able to get this amount reduced to $32,000.00; however, she still faced a payment of $650.00 per month from another medical bill.

The ability to withstand an unexpected financial crisis is a key to overall economic well being. When these events occur, many draw down savings or borrow more money. Some do both. But additional borrowing can just make things worse. In many instances, the income necessary to repay the money borrowed to get through a crisis isn’t in the budget. Then what? More borrowing?

If living pay check to pay check sounds all too familiar, there are options. The most readily available of these options is to closely and carefully review your monthly income and monthly living expenses and debt payments. Can you cut back on some expenses? How about a part-time job to help increase your income? What will you do if an unexpected financial crisis strikes?

Many of our clients are individuals who been living this way and have been confronted with an unexpected financial crisis. Sometimes, we consult with prospective clients who want to be proactive before an unexpected crisis strikes. Either way, you may get relief from a heavy debt load (and a lot of stress relief too!) by considering a debt consolidation plan under Chapter 13. This usually involves proposing an affordable plan of repayment over a period of time not exceeding five (5) years. Such a plan must be approved by a bankruptcy judge and it also protects you from all of your creditors. If this sounds like a good idea to you, our attorneys are just a phone call away. We can help you review all of your options and discuss these options with you. This will enable you to make an informed and intelligent decision about what is best for you.