How Close Are You to the Financial Edge
April was financial literacy month. Did you learn anything?
The anecdotal evidence doesn't look good. Americans are falling deeper into debt, and they are increasingly waiting too long to seek help, said
He ought to know. His group, based in
People calling in recent months typically are so deeply in debt that only a fraction can budget their way out of bankruptcy. A year ago, he estimates, less than 10 percent of credit counseling clients ended up in bankruptcy. Today, he said, it's closer to 30 percent.
Statistics provided by the court system underscore the point. Nationally, bankruptcy filings have more than doubled since 2006 and are heading back into the record territory not seen since 2005, when the nation's bankruptcy laws were overhauled.
"Even though the economy is getting better, people go into denial about their own situation," Jones said. "We end up able to help fewer people because they're coming to us in worse shape."
How close are you to the financial edge? To help you find out, here's a 10-question multiple-choice quiz, developed with some guidance from the
1. The amount I have socked away in savings to handle emergencies could pay all of my living expenses for up to: A) three months; B) six months; C) 8 months or more; D) about an hour and a half, if I cut back.
2. My spouse and I fight about money: A) frequently; B) sometimes; C) never; D) through court-appointed lawyers.
3. Payments on my consumer debts -- auto loans, student loans, credit cards and home equity lines of credit -- amount to less than: A) about 20 percent of take-home pay; B) 15 percent of take-home pay; C) 10 percent or less of take-home pay; D) considerably more than 20 percent of my monthly paychecks.
4. When it comes to saving for retirement, I'm socking away: A) 6 percent or a little less of income to get the company match; B) 10 percent of my income; C) the maximum allowed by the company plan; D) whatever's in the couch cushions. Seriously, who can afford to save for retirement?
5. My housing costs, including property tax (when applicable) and insurance, amount to less than: A) 30 percent of my take-home pay; B) 25 percent of take-home pay; C) 20 percent or less of take-home pay; D) more than 30 percent of take-home pay.
6. I make more than the minimum required payments on my credit cards: A) sometimes; B) most of the time; C) always -- I pay off the full balance each month; D) never. If they demand
7. I spend less than I make: A) unless there's a sale; B) except in cases when I'm investing in something long-term, like education or a car that gets me to work; C) always; D) when I manage to work enough overtime.
8. My finances: A) are an occasional source of concern; B) are largely in control; C) are never a cause of worry; D) give me cold sweats.
9. I have enough insurance to cover medical costs: A) as long as they're not catastrophic; B) for both me and my family; C) and I have money set aside to cover co-payments and deductibles; D) only if I never get sick.
10. I know my net worth and: A) though it's not what I want it to be, I'm working on it; B) it's good and growing; C) I'm the typical millionaire next door; D) it tells me I'm insolvent.
Scoring: Give yourself 5 points for each A answer; 2 points for each B; 1 point for each C; and 10 points for each D answer. Total your points and assess your score.
76-100: Danger zone: You are in the economic red zone. Get yourself to a credit counselor pronto. If you need help finding one, go to www.nfcc.org or www.aiccca.org. Both are national credit counseling associations that allow you to find a counselor in your neighborhood by hitting the "find a counselor" buttons on their home pages.
51-75: Teetering: You may be making your payments now, but you're on the razor's edge of trouble. It's time to get serious about budgeting and saving. If you can't do it alone, get help.
26-50: Healthy and happy: You've got adequate savings and good habits. Keep it up and you'll be comfortably rich in no time, if you're not already.
0-25: Go ahead and gloat: You are in an enviable spot, likely to be able to handle any economic emergency that comes your way. But you already knew that, didn't you?
Available at Amazon.com:
- Retirement Savings Strategies for Late Starters
- New Hope for Debtors Struggling With Student Loans
- Debating the Pros and Cons of a Flat Tax
- Rules To Improve Credit History and Raise Credit Score
- Closing Credit Card Accounts May or May Not Damage Credit Score
- There Is No 'Typical' Budget
- How Close Are You to the Financial Edge
- How Close Are You to the Financial Edge
- To Lease a Car or Buy a Car
- Utility Stocks: Trade Flash for Dependable Payouts
- 7 Ways to Avoid a Crummy Real Estate Agent
- Flat Tax Is Class Warfare
- Eliminate Tax Brackets and Complicated Forms With Flat Tax
- 10 Problems With the Income Tax
- Save Time Filing Your Taxes
- How to Be a Savvy Cheapskate
- Do You Live in a Frugal State
- How to Keep Your Nest Egg Intact After a Layoff
- Student Loan Crunch May Be Easing
- Don't Neglect Long-Term Care in Retirement Planning
- Disney Interactive Exhibit Teaches Basic Financial Concepts
- These Financial Blogs Are Worth Your Time
- Avoid Tax Trap When Converting Traditional IRA to Roth IRA
- Why Consumers Are Shunning Credit Cards
- How the Health Care Bill Impacts Retirees
- Keeping Adult Children on Your Insurance Policy
- iPad Launch: Perils of the iPad
- How to Avoid the Marriage Tax
- The Challenge of Deducting Medical Expenses
- Health Care Reform Overhaul: What Happens When
- Older Americans Comment on Health Care Reform
- Big Changes Coming to Student Loans
- Many Americans Still Clueless About Retirement Saving
- Affording a Stay-at-home Mom?
- New Tax Provisions Make Filing More Complicated This Year
- Make More Money & Live Your Passion: Become a Cre8tor
- Keep Close Eye on Bank, Mutual Fund, Credit Card Fees
- Jobs With the Best Retirement Benefits
- Consumers who go green may qualify for federal credits and deductions
- Banking Laws Leave Business Customers Vulnerable to Internet Fraud
- Gen Y to Banks: Do Better
- Deducting Hobby Expenses: Think Business
- Sadly Bad Advise Abounds on Roth IRA Conversions
- Identity Theft May Be Prelude to More Serious Crime
- Automatic Saving Painless Way to Build Emergency & Retirement Funds
- Not All 401k Plans Created Equal
- Time to Prepare Your Will
- Bigger Tax Break for Writing Off Costs of College
- The Secret to Being Poor
- Roth Conversion Can Be Good Move, But Consider These Caveats
- 8 Factors that Determine Your Final 401(k) Balance
- How to Tell if You Are Saving Enough for Retirement
Personal Finance - How Close Are You to the Financial Edge
(c) 2010 Humberto Cruz