While the economy seems to have rebounded, the fact remains that many people in Louisville, and across the United States, do not have an emergency fund set up. In fact, according to a recent Bankrate survey, 57 percent of respondents would not be able to afford a $500 unexpected expense. The survey interviewed approximately 1,000 people at the beginning of this year.
While this may not seem like good news, it is an improvement from 2016. In 2016, 63 percent of respondents reported that they would not be able to afford a $500 unexpected expense.
As these numbers show, even though seven years have passed since the recession ended, wages have not yet fully recovered. The average American household's income is 2.4 percent lower than what it was in 1999, when wages were at their highest.
Moreover, the costs of necessary expenses, such as housing and childcare, have grown quicker than the current inflation rate. This means that many Americans are still feeling the pinch when it comes to finances.
Unfortunately, the recent Bankrate survey found that many people in America face unexpected expenses over the course of a year. About 50 percent of respondents reported that either they or a member of their family experienced a major expense in 2016.
And, according to the survey, when faced with such an expense, 21 percent of respondents stated they would have to pay for it with a credit card, 20 percent of respondents reported that they would have to go without other expenses. Another 11 percent reported they would have to borrow the money from relatives or friends.
Unexpected expenses can take many forms. An illness can mean a major medical bill. An unexpected car repair can mean a hefty payment to a mechanic. And, for those who own a home, a housing repair or broken appliance can lead to an unexpected expense.
Some people may be able to handle these costs, but for others, they can spell financial disaster. In addition, should a person have to deal with multiple unexpected expenses, it can negatively affect even the most financially responsible person.
When a person in Louisville finds that they are over their head in debt, they may want to consider filing for personal bankruptcy. Doing so can offer them a means for dealing with their debts, so they can have a fresh financial start.
Source: CBS, "A $500 surprise expense would put most Americans into debt," Aimee Picchi, Jan. 12, 2017