Although the economy appears to be booming and unemployment is at an all-time low, not everyone is feeling the economic gains. In fact, 40 percent of Americans would find it difficult to meet an unexpected $400 emergency expense and would have to borrow the funds or sell personal belongings to be able to make such payments. Seventeen percent cannot pay monthly bills in full. Twenty-five percent of American are eschewing medical care because they cannot afford the cost. Many workers employed in the retail and food industry find themselves without health insurance or retirement plans

In a booming economy, many Americans are living on the financial edge. The joyful headlines don’t always meet reality. According to the Urban Institute, 4 in10 of middle-class Americans struggle to pay for basics such as rent or food.

Conversely, three-quarters of Americans indicate that they are financially comfortable. College graduates and whites are more likely to be doing better. The question is, how will those struggling now fare during an economic downturn?

One of the problems is that Americans have become comfortable with debt. The average credit card debt is $6,506. Almost a quarter of these debts are to pay for basic necessities, not luxuries. Over 10 percent of Americans pay their medical expenses with a credit card.

While unemployment is at a record low, living expenses have soared. College tuition has doubled in a decade. Housing expenses have quadrupled. People with what used to be a comfortable income are now barely eking by. Most American have savings under $1,000. Seventy percent of employed Americans would have a problem if their paycheck arrived a week late.

In addition, more Americans are spending on non-essentials, which they consider “must haves.” Clothing, eating out, vacations, and other luxuries make up a huge portion of “must have” expenses, approximately $483 each month. Certainly, the definition of essential expenses and discretionary expenses has changed over the past two decades.

Paying only the minimum credit card debt can turn into the most expensive luxury of all. The current interest rates are around 1.73 percent. As they accrue, credit card debts can easily become unmanageable.

If a person with a credit card balance of $6,354 pays only the monthly minimum of $190, this debt will linger for 17 years and almost double with accumulated interest costs. In such a situation, it could be worth it to get a new credit card such as AMEX, which offers free APR for over a year.

 Another, obvious solution is to cut back on spending. Differentiate clearly between needed expenses and discretionary luxuries. Is that $5.00 cup of coffee really a necessity? Or get part-time work until your debt has been paid down. A combination of these two will reap the best and fastest results. In addition, allocate a certain amount to savings, regardless of how small. It will add up quickly. Consider whether giving your favorite coffee shop $5.00 is more important than giving yourself that money. To put is simply, creating a budget and sticking to it is the most efficient way to lower your debt.

Americans are living with more debt than ever. It will get worse during economic bad times. The time to eliminate debt is now.