20% of the Population has Been Hit by a Major Economic Loss

Friday, July 23, 2010

20% of the Population has Been Hit by a Major Economic Loss

From CNNMoney.com: 20% of American's hit by major economic loss

The new Economic Security Index defines people as economically insecure when their situation meets two criteria. First, within a year's time they have lost 25% or more of their available gross income.

Available gross income is the money they have left over after paying for medical costs and debt. Second, they don't have enough in an emergency fund or other liquid reserves to make up the difference.

A large loss in income can occur for any of several reasons. The loss of a job is the most obvious. But even if one remains employed, income can vary because of a change in hours or wages, or because of a spike in medical expenses or debt payments.

This is definitely a case for having an emergency fund, but my income began falling drastically beginning in late 2006 and by 2008 I had lost 60% of my income by the time I hit an all time low. The past couple of years has shown an improvement in sales and my income is going back up, but according to the report, it can typically take between six to eight years to restore one's available income to its previous level. I guess I have four to six years to go before thing get back to normal. Ouch! But at least by that time I will be debt.

[This post is written and copyrighted by Financial Elite (http://financialelite.blogspot.com/ ).]

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