Almost 80% Of Americans Live Paycheck To Paycheck

We are now in day 34 of the partial government shutdown, the longest in US history. While most Americans have seen little or no disruption in their daily lives as a result of the shutdown, many of the 800,000+ government workers who have been furloughed find themselves in a financial crisis.

The reason: Almost 80% of Americans live paycheck to paycheck, and almost 60% have less than $1,000 in savings, according to a recent survey by GoBankingRates.com. Only 21% had savings of $10,000 or more. Let that sink in.

Even worse, the survey found that 42% of Americans will die broke. I had not heard that figure before. The 42% even includes those who have $10,000 in savings, since that won’t cover even one year’s worth of living expenses if they lose their job.

The Labor Department estimates that adults age 65 and older spend an average of $46,000 a year. That number may sound high, but as we’ll see below Americans are loading up their credit cards as never before.

Ten years after the financial crisis, the economic recovery has left millions behind with little to no savings, and the government shutdown serves as a preview for what will happen when we hit the next recession.

Within just a few weeks of the government shutdown, it was clear that many furloughed workers were struggling. Now that we’re over a month in, we hear stories about people turning to food banks to feed their families. We hear stories about people who are in dire straits because they can’t pay their mortgages and can’t get loans.

Living paycheck to paycheck with no savings only works if people keep their jobs and interest rates stay low. But interest rates won’t stay low; in fact, they’re already rising. Interest rates on bank-issued credit cards are now nearly as high as they were in 2000.

According to the Federal Reserve, more than 40% of all US households carry credit card debt, with the average American household carrying a balance of $5,700. For only indebted households, which excludes people who pay their balances in full every month, the average credit card debt is $9,333. The average US household had total outstanding debt of $135,768 including mortgages, credit cards and other debt.

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