Survey finds many area residents don’t have enough in financial savings to handle even a slight emergency
In the event of a medical emergency or a surprise home repair, many in the Baldwyn and Lee/Prentiss counties area would be ill-prepared to weather the financial storm. In fact, many in the community are one paycheck away from disaster.
So says data gathered from a recent online poll conducted by The Baldwyn News. The information also closely resembles a report in January from Bankrate.com, which showed that approximately 63 percent of Americans have less than $1,000 in savings, leaving them without enough cash on hand to handle events such as an emergency room visit or a car repair.
According to the data gathered in the TBN survey, approximately 52 percent of respondents have basically no savings at all, indicating they have $100 or less in reserves. Add in those who reported that they only have $100 to $1,000 in savings (14.28 percent), and this suggests almost three quarters of residents in the north Lee County/south Prentiss County area are in a dire situation with savings.
On a positive note, however, a third of area residents reported emergency savings, not including retirement plans, of more than $1,000.
Matching the national picture
The TBN poll was a blind survey, and the results likely have room for error statistically. However, the data suggests the region compares very similarly to the national average.
This was the first time The Baldwyn News has polled area residents on personal finance, so there is no historical data to compare, but the Bankrate poll showed the 63 percent figure for Americans in general is up slightly, from 62 percent the previous year.
So, why are area residents, and most Americans for that matter, unable to save more? Monthly bills that come close to or exceed income was the number one reason most TBN survey residents said they found it difficult or impossible to save more. Others cited the expenses of having children in college, loss of a job or experiencing a reduction in income as a reason. Several respondents also stated the increasing costs of goods, such as food and clothing, as a reason their paychecks seem to just not stretch as far as they used to.
Among the responses received were:
- “It takes everything you make to just pay bills – everything has gotten so high and wages haven’t kept up.”
- “Medical expenses prevent saving more. Cut back on non-necessities to build savings.”
- “Because I barely make enough to kept my head out of water with bills. Some weeks I only have two dollars left after I pay the bills for that week.”
- “Everything costs more and more. Food, clothing, utilities. We both work hourly jobs. Hours get cut and bills can’t get paid. So we live off credit cards, which in turn causes more bills. It’s a snowball effect.”
- “Kids in college. Living expenses- groceries, phone, electricity, etc… Not frivolous things.”
- “The outrageous rates of utilities for this area prevent us from being able to save more money.”
Additionally, several respondents noted that being buried in debt made life a struggle. Student loans were among the larger debts reported, including one person with $70,000 remaining to be paid for college. And, more than a few respondents reported personal debt of more than $100,000. The survey specifically ruled out mortgages, suggesting significant debt of another kind. One respondent reported medical debt totaling more than $20,000.
Handling an emergency
Living with the day-to-day stress of financial pressures can add enough woes to a person’s life. Throw in even the slightest emergency when a person doesn’t have sufficient savings, and it doesn’t take long for a small problem to become a major headache. So, how have, would, or do our friends and neighbors handle financial emergencies? Several respondents said they have sought the help of friends and family to help with paying for emergencies. Others said bank loans or credit cards had helped carry them through an event.
Among the responses received were:
- “We were able to sell some unused items to find the funds.”
- “Withdrew out of husband’s 401K retirement.”
- “I had to get help from family and take out a loan I really couldn’t afford but paying it back just so I don’t mess my credit up.”
- “We lived on one paycheck for about 6 months in 2008. We had savings, but we cut out cable, eating out and other non-essential things.”
- “My vehicle quit working and I was stuck for over 8 months until I got my taxes.”
The most worrisome response received was by far this one: “Let my insurance lapse. Didn’t eat a lot and did without heat or air.”
Major calamities are one thing. What are some of the other events of life that have set area residents back? Among the items cited by area residents are:
- Automobile repairs
- Home repairs
- Medical debt
According to the Bankrate survey, unemployment, student loan debt and medical debt are the chief financial challenges Americans face. Additionally, the Bankrate survey found that when “faced with an emergency, Americans say they would raise the money by reducing spending elsewhere (23%), borrowing from family and/or friends (15%) or using credit cards to bridge the gap (15%),” according to an article from Dow Jones’ Marketwatch.
Compounding the problem, Bankrate also found that more than 40 percent of Americans either experienced a major unexpected expense during the past 12 months or knew someone who had.
The problem of depleted savings has been growing worse for the past decade. According to the U.S. Federal Reserve, many households depleted their savings during the recent recession and haven’t recovered. The Fed survey found that of those who had savings prior to 2008, 57 percent had used some or all of their savings to get by in the economic downturn that followed.
The TBN survey was conducted from January 20-29, 2016.