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The worst thing about the bankruptcy system here is that it is taken advantage of for people to avoid business debts. Builders are notorious for declaring themselves bankrupt while their assets are in their partner's names. They then continue to live in their waterfront mansion and live it up overseas while avoiding their responsibilities.
There are significant numbers of seniors with a mortgage. As incomes often dwindle after retirement bankruptcy or a reverse mortgage can be a result
Provided they can cash flow it, it shouldn't be a problem, on paper. The big problem seems to be that, especially with a mortgage, people keep up pre-retirement spending levels on a reduced income. That leads to trouble.
Lack of planning. By 55 you should be pretty much debt free. House paid off or almost, no other debts that aren't paid monthly. If you don't plan, then losing your job at 55 will be a big hardship. Try and find a comparable job at that age when every company is downsizing older and more costly employees. If you are debt free you can get by with a job that is just a job, paying little but enough to pay monthly bills. When people get in the situation where they are living paycheck to paycheck and spending all or more life happens and you end up in trouble. Can't afford that phone service and cable package? Downgrade the phone service to a phone for just making and receiving calls and texts (Tracfone for instance) get rid of the tv portion of your package and go free tv over the internet and antenna. Reduce extraneous spending. Many people, however, fail in this and continue to spend and rack up debt so when they have an illness they can't pay because they failed to get insurance or proper supplemental insurance in a failed attempt to save on the wrong things. So basically, blaming it on medical costs is just an outcome, not the cause. The cause was lack of planning from earlier in their life. The so called donut hole should never bankrupt you if you planned accordingly. Don't go for the cheapest plan when you can't afford the risks. The amount of insurance you take is dependent on the risk you can afford not on what you want to spend on that insurance.
This is really an FYIGM outlook.
People are not realizing the lack of income for average folks. I've said this repeatedly - this board skews very affluent, often coastal with many hundreds of thousands in home equity alone, without any idea of what flyover country, much less a median income flyover person, is capable of.
Median household income in my hometown is just mid $30k range. Median family income is in the $40k-$45k range.
Keep in mind half the folks in town are basically below that figure. What do those people do? I live in a fairly inexpensive area, but aside from housing, taxes, and maybe gas, things here cost about the same as they do anywhere except expensive coastal markets.
What do you expect a family with a $45k income to save? There's not much left after basic subsistence. It's not all about consumer spending and debt.
My parents taught us NOTHING. Everything I learned about personal finance coming up was taught in 9th grade -- how to write a check. Nothing about budgeting, saving, 401k, retirement, or life insurance.
As kids, we were expected (and prepped) to go to work, not college. Having grown up without a lot of extras, once I turned 18 and credit card applications magically began showing up in my mailbox, I thought I'd hit the lottery. I knew nothing about FICO scores, credit utilization (you mean I have a $2500 limit, but I can't USE it all???), high interest rates, etc. I learned all of that the hard way and spent the better part of 10-15 years digging my way out of those poor decisions.
Should I have taken it upon myself at 18yo to learn the nuances of personal finance? YES.
Did I? NO.
Are there others like me out there? YES.
Agreed. Anything related to personal finance is barely taught in school. If it's not taught at home or the parents are lousy at it, it's basically "school of hard knocks." That can take years to unwind.
My parents are good people, but we're always lousy at managing their money. I've had problems out of my Jeep the last couple of months. $900 in struts and shock work. Now a P0306 code which indicates a "misfire in an engine cylinder." That might be spark plugs and a fuel injector, or it might be more serious. Dad's advice was just "trade it." I don't have the cash to do that now.
I love these posts, as if saving 35% of your income is possible for everyone with just a little "discipline".
I managed in 2001 when I was making<$1k/month.
(Enlisted, granted sometimes I had housing (grunt, so often slept outside) and sometimes had food provided....
Agreed. Anything related to personal finance is barely taught in school. If it's not taught at home or the parents are lousy at it, it's basically "school of hard knocks." That can take years to unwind.
My parents are good people, but we're always lousy at managing their money. I've had problems out of my Jeep the last couple of months. $900 in struts and shock work. Now a P0306 code which indicates a "misfire in an engine cylinder." That might be spark plugs and a fuel injector, or it might be more serious. Dad's advice was just "trade it." I don't have the cash to do that now.
Not to sidetrack the thread, but my parents never wanted BETTER for us. Their attitude was always "if it's good enough for us, it's good enough for you." I can't imagine giving my kids that kind of mindset. I'm screaming at the top of my lungs to them: YES YES, GO OUT AND DO SO MUCH BETTER THAN WE DID!!
As a kid and young adult, I thought my upbringing was rock solid. I was in my 40s/50s when I realized that it was time to take off the rose-colored glasses and call it like it was.
I think a major medical situation would add to the problem. But today's lifestyle is so much grander than it used to be. When I think of how we grew up, solid middle class, and what we didn't have that is considered a necessity these days... I just shake my head.
We still don't have smart phones. You wouldn't believe the push back from just about everybody we get for that. We kept our lifestyle simple while we paid off a mortgage and got completely out of debt. Recently we had big dental bills and appliance failures but were able to fund these things. And we don't have pensions either. For one thing, I wouldn't give up my medigap policy and drug policy and regular medicare for one of those advantage plans for anything. We are pretty much covered for disasters, at least a whole lot better than we could be if we went for the cheap plan. I've seen what a person with a chronic illness can need, and no it's not smart to not be prepared for that.
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