It happens with no warning. You suddenly find yourself with an unexpected expense like car trouble or a vet bill and your budget takes a nosedive.
According to the Bankrate survey 4 out of 10 respondents or their immediate family ran into a major unexpected expense last year.
The most disturbing thing about the survey, 67 percent of Americans can’t raise 500 dollars for unexpected expenses.
“As far as liquidity it makes sense to me that if there was an emergency the majority of Americans could not come up with 500 bucks,” said financial advisor Richard Rosso.
Rosso puts some of the blame on the recession.
“Median incomes haven’t recovered from the great recession,” Rosso said. “They’re just getting back to where they were in the year 2000.”
Another thing making it difficult for families to save money Rosso says is credit card debt.
“Credit card debt is roughly 15 thousand dollars outstanding debt for the average household,” said Rosso.
Using credit cards or title type loans for unexpected expenses Rosso says only makes things worse.
As far as he’s concerned saving money for unexpected emergencies is more important that saving money for retirement.
“I tell people that’s an ultimate priority to have a buffer of some kind,” Rosso said. “People feel emotionally more stable they feel more secure when they have that buffer.”
The survey says cutting back on certain household expenses can help you put money back for unexpected expenses. Things like eating out less and lowering your cable and cell phone bills might help you save for that inevitable rainy day.