Understanding the state of household finances in the U.S. can give debtors a benchmark to compare their circumstances to. The Federal Reserve recently published its “Report on the Economic Well-Being of U.S. Households in 2015,” which is based on the Survey of Household Economics and Decisionmaking (SHED). The SHED is only three years old and was last conducted in October and November of 2015, sampling about 8,500 people from a panel of 50,000 individuals over 18. Some of the targeted households were re-interviewed from the 2014 survey, others were new, and another category was an oversample of low-income households (less than $40,000). The response rates were just over 60 percent.
Among other things, the SHED asked questions about household incomes, spending, emergency savings, credit use, living arrangements, student debt, and retirement savings. In 2015, the SHED brought some good news: Respondents were 9 percentage points more likely to report improvements in their financial well-being than declines. Sixty-nine percent said they were at least “doing okay,” which is up from the prior two surveys. However, the remaining 31 percent were “just getting by” or worse. Moreover, the percent of adults expecting their income to rise this year fell from 29 percent to 23 percent in 2015.
One theme the SHED explores but doesn’t discuss in great detail is households’ sources of income. Among employed respondents 78 percent only worked one “formal job,” a term the SHED doesn’t clearly define. Half the remaining 11 percent either held more than one formal job or combined their formal jobs with some amount of informal work. It’s unclear how many adults obtained their income from informal jobs alone.
The preponderance of informal work is relevant because it raises the question of how volatile Americans’ incomes are, and whether they can repay their debts. Two-thirds of adults said their income was about the same month to month, yet 12 percent reported that their monthly incomes vary significantly, mainly due to the irregularity of their work schedules, and another 15 percent attributed income volatility to periods of unemployment. 42 percent of households pointed to volatile incomes and expenses as a reason they encountered difficulty paying their bills.
As for households’ resilience to emergencies, 18 percent reported some kind of financial hardship, down from 24 percent in 2014. Of these, 38 percent suffered a job loss, 36 percent dealt with a health emergency, and 30 percent had their hours cut. Four percent received foreclosure or eviction notices. To resolve a $400 difficulty if they couldn’t pay for it up front, 38 percent of households said they would use credit cards. Medical costs dominated expenses households could not afford to pay.
The “Report on the Economic Well-Being of U.S. Households in 2015” can be found here (pdf).
The SHED did not delve into the specifics of households’ debt balances, but the overall picture appears to be that their financial positions are improving. On the other hand, many households are deeply insecure because they rely on volatile informal incomes and they are underprepared for emergencies. If your household is facing circumstances like that, then it might be beneficial to discuss your situation with an experienced New York bankruptcy lawyer.
For answers to more questions about bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced fair debt collection practices act Bruce Weiner for a free initial consultation.
