Many of our clients have been responsible with their finances all of their lives, but they had an unexpected negative event occur in their life that devastated them financially. The most common examples of negative events that lead to a bankruptcy filing are loss of a job, divorce and a serious illness or injury resulting in costly medical bills. In most cases, people who cannot make ends meet begin to rely on their credit cards to pay for their basic necessities.
A common viewpoint espoused by some people seeking to explain why certain consumers in New Jersey and elsewhere face a significant level of credit card debt goes something like this:
Those people simply don't manage money as well as do others with lower debt levels. They lack restraint and make more impulsive purchases. They're into instant gratification. They need a basic course on money management.
Using credit cards and promptly paying off monthly balances is often touted as a smart and easy way to boost one's credit score. But life isn't that simple. A spouse may lose his or her job, a child's illness may require an unplanned trip to the ER or a furnace could break down in the middle of January. Many middle-class American families simply don't have sufficient savings to account for these types of unexpected financial hits.
When contemplating retirement, many New Jersey residents likely look forward to traveling, playing golf and spending winters in a more temperate climate. Retirement has long been considered a time when, after years spent working, individuals are finally able to relax and take time to enjoy their golden years. However, for a growing number of Americans the financial security previously enjoyed by retirees of past generations appears to be less certain or attainable.
Many New Jersey residents who are now in their 30s and 40s grew up in families that were considered to be middle to upper class. As such, many likely enjoyed taking family vacations, owned one or more cars and were able to attend and pay for college without accruing massive amounts of debt. Today, however, many of these same individuals are facing a very different reality as they attempt to provide the same standard of living they enjoyed to their own children.