Forget deleveraging: Nearly half of all American families carry a credit-card debt load that exceeds their stash of emergency cash.
As 2013 unfolds, Americans are also feeling more insecure about their finances. Worries about job security, savings, debt and overall financial health are on the rise, according to new research by the personal finance website Bankrate.com.
In February, the company’s Financial Security Index slid further into the troubled territory below 100 (which signals deteriorating financial security), dipping to 96.8 from 98.6 in January.
“Despite all the talk about consumers paying down debt and boosting savings, very few people have moved the needle of one relative to the other,” said Greg McBride, senior financial analyst at Bankrate.com.
Rainy-day funds aren’t the only area where Americans fall far short as savers. Squeezed by stagnant wages (which fell 3.2 percent in January, largely due to tax hikes), fallout from the housing crash, rising food prices and high unemployment, Americans are not socking away enough cash for retirement.
In a new survey from a group of organizations, including the Consumer Federation of America and the Employee Benefit Research Institute, less than half of the respondents who were not retired expect to have enough money saved to enjoy a desirable standard of living in retirement.
Lack of retirement savings is a ticking time bomb for both baby boomers and Generation Xers. Skimpy emergency savings and heavy debt loads, however, are already sending local families to bankruptcy court after a sudden financial shock.
That was the case for a Westchester family of four who recently turned to attorney Linda Tirelli for help. After 25 years of steady employment, the father lost his job in 2012.
The family turned to credit cards to pay its bills, expecting to repay the debt after the breadwinner found work again. He did get a new job, but at salary that was 20 percent less. The cut proved too severe for the family to climb out of debt without reorganizing in bankruptcy court.
Families must find ways to overcome the biggest hurdle to savings: the belief that it can’t be done, said Nancy Register, associate director at the Consumer Federation. She suggests tapping that coffee can full of spare change that many families keep. It can be hiding as much as $90 — enough to start a savings account.
Debt trumps savings
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Debt trumps savings
