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PPS’s new blog, The Secret Shame of the Middle-Class American

Patient payment solutions strives to help people get the medical care they want and require. Our blog is going to be our outlet to help people. Starting off we want tot recognize and article from the May 2016 issue of The Atlantic. The Secret Shame of Middle-Class Americans, by Neal Gabler details how many “middle-class” Americans do not have even $400 in their emergency fund. Now couple this with the rising cost of healthcare and we can see quickly how there are some serious issues. When the recipients of the survey done by the federal reserve board asked how they would fund a $400 dollar emergency 47 percent said they would either borrow or sell something to find the money.   The full text can be found here. We will provide some highlights below…


Since 2013, the federal reserve board has conducted a survey to “monitor the financial and economic status of American consumers.” Most of the data in the latest survey, frankly, are less than earth-shattering: 49 percent of part-time workers would prefer to work more hours at their current wage; 29 percent of Americans expect to earn a higher income in the coming year; 43 percent of homeowners who have owned their home for at least a year believe its value has increased. But the answer to one question was astonishing. The Fed asked respondents how they would pay for a $400 emergency. The answer: 47 percent of respondents said that either they would cover the expense by borrowing or selling something, or they would not be able to come up with the $400 at all. Four hundred dollars!

A 2014 Bankrate survey, echoing the Fed’s data, found that only 38 percent of Americans would cover a $1,000 emergency-room visit or $500 car repair with money they’d saved. Two reports published last year by the Pew Charitable Trusts found, respectively, that 55 percent of households didn’t have enough liquid savings to replace a month’s worth of lost income, and that of the 56 percent of people who said they’d worried about their finances in the previous year, 71 percent were concerned about having enough money to cover everyday expenses. A similar study conducted by Annamaria Lusardi of George Washington University, Peter Tufano of Oxford, and Daniel Schneider, then of Princeton, asked individuals whether they could “come up with” $2,000 within 30 days for an unanticipated expense. They found that slightly more than one-quarter could not, and another 19 percent could do so only if they pawned possessions or took out payday loans. The conclusion: Nearly half of American adults are “financially fragile” and “living very close to the financial edge.” Yet another analysis, this one led by Jacob Hacker of Yale, measured the number of households that had lost a quarter or more of their “available income” in a given year—income minus medical expenses and interest on debt—and found that in each year from 2001 to 2012, at least one in five had suffered such a loss and couldn’t compensate by digging into savings.

…came the biggest shock, though one not unanticipated: college. Because I made too much money for the girls to get more than meager scholarships, but too little money to afford to pay for their educations in full, and because—another choice—we believed they had earned the right to attend good universities, universities of their choice, we found ourselves in a financial vortex. (I am not saying that universities are extortionists, but … universities are extortionists. One daughter’s college told me that because I could pay my mortgage, I could afford her tuition.) In the end, my parents wound up covering most of the cost of the girls’ educations. We couldn’t have done it any other way. Although I don’t have any regrets about that choice—one daughter went to Stanford, was a Rhodes Scholar, and is now at Harvard Medical School; the other went to Emory, joined WorldTeach and then AmeriCorps, got a master’s degree from the University of Texas, and became a licensed clinical social worker specializing in traumatized children—paying that tariff meant there would be no inheritance when my parents passed on. It meant that we had depleted not only our own small savings, but my parents’ as well.

Many Americans still remain optimistic—at least publicly. In a 2014 Pew survey revealing that 55 percent of Americans spend as much as they make each month, or more, nearly the exact same percentage say they have favorable financial circumstances, which may just mean some of them are too frightened to admit they don’t. Or perhaps they are just too financially illiterate to understand the severity of their predicament. Many of the scholars I have talked with are optimistic too. “People have this ingenuity to solve so many problems,” Annamaria Lusardi told me. “I think we are finally getting it that the brain does not work around money naturally,” Brad Klontz said, believing that Americans are realizing they have to take more control of their financial lives.

Many thanks to The Atlantic and Neal Gabler for shedding some light on the topic.

Full text of the article is found at https://www.theatlantic.com/magazine/archive/2016/05/my-secret-shame/476415/