Majority of Americans are One Paycheck Away From Bankruptcy

"Bankrupt - Santa Monica Blvd. - Los Angeles" by theamericanroadside is licensed under CC BY-NC-ND 2.0

As Christmas and the holidays approach, money troubles should be the last thing on everyone’s mind. It’s a time for family, fun and faith. Sadly, however, many Americans are struggling with their finances in very serious ways.

Poll: Over 60 Percent of Americans are One Paycheck Away from Going Broke

The recent survey from Highland Solutions polling firm revealed that 63% of respondents say they are currently living paycheck-to-paycheck. The poll asked more than 2,000 Americans about their finances and its results show that the financial impact of COVID-19 has been massive.

Many said they are buying and spending less because they are worried about the future and 64% are going out to eat less and ordering less takeout because of money worries. Some are doing OK, with 21% responding that they’ve actually been doing more spending in the pandemic, but the majority said they are buying much less and worried about their financial situation.

“Homeless Couple with Dog in San Francisco” by Franco Folini is licensed under CC BY-SA 2.0

COVID-19 restrictions have forced many small businesses, restaurants and other places of work to shut their doors and fire workers, leading to a very dark outlook. Many of those in the poll said they do not have stable income and are extremely worried about the future and how to make ends meet.

Taking on More Debt to Pay the Bills

One of the results of this financial insecurity and anxiety is that many more people are taking out loans and getting new credit cards, with around 33% of poll respondents saying they got a new card during the pandemic and 25% saying they’ve racked up $10,000 or more in debt during COVID.

Savings are a thing of the past for increasing numbers of millions of Americans, with 47% out of any savings at all and 82% admitting they would have no way to pay for a sudden $500 emergency expense — even by credit card — if it came up.

Poll Reveals More of the Financial Meltdown

The Highland poll also revealed more about just how scary the outlook is for many individuals and families in this nation, with 74% saying it will take up to two years for them to climb out of the hole they are in financially.

The coronavirus shutdown caused a major shock to small businesses and entrepreneurs who had invested in their enterprises. As the National Academy of Science noted in an analysis, already by March and April the pandemic had “caused massive dislocation among small businesses” and the aid provided through the Coronavirus Aid, Relief, and Economic Security (CARES) Act was still not going to be sufficient for many businesses to stay afloat long-term.

As the study noted, “impacts also varied across industries, with retail, arts and entertainment, personal services, food services, and hospitality businesses all reporting employment declines exceeding 50%; in contrast, finance, professional services, and real estate-related businesses experienced less disruption, as these industries were better able to move to remote production.”

Even more worrying, the Academy of Sciences found that many businesses were financially weak.

“The median firm with monthly expenses over $10,000 had only enough cash on hand to last roughly 2 weeks. Three-quarters of respondents only had enough cash on hand to last 2 months or less.”

It’s clear that the American economy is in more serious trouble than the mainstream news would like to admit. Despite Silicon Valley billionaires, Wal-Mart, Jeff Bezos and Bill Gates doing wonderfully as everyone else suffers, the majority of everyday people are having trouble putting food on the table and paying their electricity bills.

Many Americans are also at risk of homelessness and hunger, with around 17% of citizens at risk of not having enough to eat this holiday season. When politicians like Nancy Pelosi could have helped last year, they instead sat on their hands in order to play political games and hold up crucial coronavirus relief for individuals and small businesses.