Living Paycheck to Paycheck


Living paycheck to paycheck with the housing albatross – Survey finds one in three Americans unable to make their mortgage or rent payment beyond one month if they lost their job.  61 percent unable to make payments beyond five months.

One of the unnerving revelations brought about by the current recession is how many Americans are living precariously close to the economic edge.  The Band-Aid of credit cards, home equity loans, and other vehicles of debt masked the problem for many years.  Debt was rolled over on a continuous basis and as long as the debt bubble expanded the process seemed limitless.  Yet the bursting of the debt bubble largely brought on by the collapse of the housing market is revealing the true state of the economy.  A sobering new survey finds that one in three Americans would not be able to make their mortgage or rent payment beyond one month if they lost their job.  For most Americans this means $1,000 to $1,500 a month.  This also ties in to the grim reality that one in three Americans has no savings to their name.  The housing market has been mired with problems for nearly half a decade now.  This clouds the perception of future home buyers going forward.  Because of this buffet of problems the U.S. housing market will forever be changed.


Living one paycheck away from being homeless

It really is an incredible fact that over 30 percent of Americans are one paycheck away from being homeless:

“(DSNews) One in three Americans would be unable to make their mortgage or rent payment beyond one month if they lost their job, according to the results of a national survey taken in mid-September.”

This survey was only conducted a couple of weeks ago and continues to show the disappearing middle class in America.  This data simply reinforces the problems housing will have moving forward.  The mantra of “real estate only goes up” is forever shattered for the current generation.  And even the few with solid incomes would be homeless if they lost their jobs:

“Despite being more affluent, the poll found that even those with higher annual household incomes indicate they are not guaranteed to make their next housing payment if they lost their source of income.

Ten percent of survey respondents earning $100K or more a year say they would immediately miss a payment.

The survey was conducted on behalf of a financial consortium comprised of the Certified Financial Planner Board of Standards, Financial Planning Association, Foundation for Financial Planning, and the U.S. Conference of Mayors.”

This shows a dramatic comfort with debt and how much we have come to rely on debt instead of actual generated income.  As the recession rolled along many did find themselves unable to deal with the weak economy and households with “doubled-up” status grew by millions:

doubling up households

What I see above is simply more pent up demand for rentals.  It is unlikely that those living in this situation will go straight into being homeowners after moving back home.  When things improve, however long that may be, these individuals are likely to run out first and pickup a rental.  Will they purchase homes?  Hard to say given the negative stigma now being branded on the housing market.

Read the rest at My Budget 360