47% of Americans – $400.00
In The Secret Shame of Middle-Class Americans, published in the May issue of The Atlantic (available at www.theatlantic.com), author Neil Garber leads his story with a recent Federal Reserve Board survey that indicates that 47 percent of Americans would have to borrow money to pay for a $400 emergency. On this astonishing fact he says, “Who knew? – Well, I knew. I knew because I am in that 47 percent.” Mr. Garber goes on to explain that while he’s had what most consider a successful career as a writer, earning a solid middle to upper class income and appearing to be successful – his financial life is a disaster. This article nails the problem faced by nearly ½ of our populace. We continue to be cash strapped –– functioning week to week on available credit. The difference today – compared to 2008, before the Great Recession – is that we are more aware how dangerous the situation is, and thus there is greater discontent. Garber aptly puts it:
Many of us, it turns out, are living in a more or less continual state of financial peril. So if you really want to know why there is such deep economic discontent in America today, even when many indicators say the country is heading in the right direction, ask a member of that 47 percent. Ask me.
Garber lays out the truth – financial distress is everywhere. I often say, in the grocery store, if you look to your left and to your right – two of the three people are in some form of financial distress. It’s not just the lower class, it’s not just the middle class, it’s 47% of everyone except the top 1%. You can debate endlessly who is responsible for the cause – the banks, the government or the individual who seeks to live beyond his or her means – but to me, that is academic. I prefer to focus on the solution – and that is to eliminate the debt so that the dollars being paid monthly on the credit card debt are redirected to savings. When that happens, you are no longer part of the 47%. Instead, you have righted the ship and set sail in the right direction.