The increasing number of people filing for bankruptcy points to deep running problems that relate to money and spending habits. Other than poor money habits, the rising costs of living cause drive many people to file for bankruptcy.
No one ever thinks they would one day be so broke that they would file for bankruptcy, explains a bankruptcy lawyer. In fact, most people think they have their finances under control. Unfortunately, recent statistics paint a picture that contradicts these opinions. Barski Law Firm PLC shares some insights on this hot topic.
More than 800,000 people filed for bankruptcy in 2015 and they owed $113 billion. Surprisingly, the median income of filers was $34,392 and their expenses came in at $30,972. Such figures pointing to a problem bigger than just having a low monthly income is driving bankruptcy in the country.
Poor spending habits
Everywhere you turn, you are likely to be bombarded with tasteful and colorful advertisements and marketing campaigns. Looking at the retail sales figures, marketers are doing a good job. Standing at $5.7 trillion in 2017, retails sales have seen a steady increase from the $4.4 trillion recorded a decade earlier.
It’s no secret that Americans love to shop, and this forms the genesis of your money woes. Impulse shopping and chasing after the latest fad on the market are responsible for huge credit card debts. This leads to hefty penalties and high interest rates each month the debt remains unpaid. What started out as a manageable debt ends up becoming unbearable as time passes.
The increased cost of living
Couple poor financial management skills with skyrocketing standards of living and you have a disaster on your hands. Recent reports indicate that most people don’t have enough cash reserves to meet a $400 emergency without resorting to borrowing. The rising cost of education, medical care, and housing only makes things worse.
These high costs take up a big chunk of people’s incomes, leaving them without any savings left. In fact, there are many people filing for bankruptcy due to unmanageable medical bills after a family member suffers from an illness.
While filing for bankruptcy boils down to money problems, not all cases result from poor money handling skills. Other factors such as the rising cost of living often play a considerable role.