According to a recent Forbes Advisor survey, 70% of Americans are using their savings to cover expenses. With inflation hitting a 40 year high, people are less able to pay their monthly expenses, forcing over 2/3 of Americans to resort to using their savings that they had built upon during the pandemic.
As to how much of their savings they have had to utilize, the survey found that 8% had completely drained their savings, while 23% had depleted a “substantial” amount of what they had saved, and 36% had pulled a “small” amount from their savings.
Here’s the thing: inflation isn’t expected to recede anytime soon, and most economists expect to get worse before it gets better. That means 8% of consumers have run out of time, and 23% are about to lose their ability to pay their monthly bills. The personal savings rate fell to 4.4%, down from 6% at the beginning of the year according to the U.S. Department of Commerce. Lastly, in real terms, U.S. wages have dropped 3% this year alone, as rising wages haven’t kept up with inflation.
It’s becoming clear that people are going to run out of money, as well as their ability to stay caught up on their monthly bills. Add to this the fact that consumer debt reached $4.57 trillion in April, 2022-the highest level ever recorded-and an increase of $35 billion since there beginning of the year.
This all means that the long-predicted tsunami of bankruptcies is finally coming.
If you find yourself using your savings to pay your monthly expenses-or can’t pay your monthly expenses already, contact us to find out what your options are.
It’s better to address these issues now instead of waiting and hoping they’ll go away.
We at the Law Office of Scott Bell look forward to hearing from you.