Even five years of economic recovery have failed to lift many families out of bleak financial circumstances. A recent Federal Reserve Board report indicates that 57 percent of those who had savings prior to 2008 used up some or all of it following the recession.
A recent report by bankrate.com indicated that 1 in 4 families had no savings at all. Life becomes even more challenging when there is an economic emergency, whether in the form of a faltering automobile or medical issue. According to the Federal Reserve’s report, only 48 percent of respondents would be able to cover an emergency expense of $400 without having to sell something or borrow. About 17 percent said that they would use a credit card and pay back the expense over time.
Ten percent said that they would sell something. Four percent said that they would use a payday loan or some similarly structured mechanism. Eleven percent would borrow from a friend or family member. Nineteen percent say that they simply would have no way to deal with an emergency expense of $400. Additionally, about 43% of families indicate that they would not be able to afford a major medical expense out of pocket.
