High unemployment rates are continuing to affect millions of individuals, and the long-term effects of joblessness have inhibited large improvements in the national poverty rate.
A new report from the U.S. Census Bureau reveals that the number of individuals living in poverty was 46.2 million in 2011, only a slight decline from 46.3 million in 2010, and the national poverty rate fell to 15 percent, compared with 15.1 percent in 2010. Labor market constraints have resulted in a decline in household income, which fell 1.5 percent to $50,054 in 2011.
“Poverty remains very problematic,” Harry Holzer, a public-policy professor at Georgetown University, told MarketWatch. “The data is not something to celebrate, but it’s nice that it didn’t go up.”
Declines in household income undoubtedly impact households’ ability to pay down debt balances and adequately fund their savings and retirement accounts. This scenario, coupled with rising prices for food, gasoline and medicine, can place a financial strain on families that is difficult to overcome without making large-scale changes to their money management goals. For consumers who are facing significant financial issues, consulting a professional, such as a credit counselor or financial adviser, may be in their best interest.
These services can guide families on the most effective ways to reduce debt and maximize their income to reach their goals. In addition, those who are facing significant housing issues, such as foreclosure or negative equity, may reach out to housing counselors for advice, such as mortgage modifications or refinancing.
Another issue households often face when they experience a decline in income is being forced to choose between certain types of insurance. In many cases, health insurance is often the first to go because premiums for the unemployed can be high. However, cancelling health insurance can leave families open to financial ruin in the event of a medical emergency. To help prevent this from occurring, families who are having trouble making ends meet should look into federal and state-sponsored plans that may offer income-based assistance.
While facing income declines forces households to make tough decisions about their financial priorities, it’s crucial that they understand all the options and resources available to them. Speaking with professionals and seeking out more affordable options may help continue to stretch their income and avoid financial insolvency.