10 States Where The Most People Live On The Edge Of Financial Ruin

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Photo: Flickr via ag2r

America’s image is that of a place where anyone can grow up to be president, and even a college dropout can found a multi-billion-dollar empire. But one need only look at our finances to see not everyone gets out of the gate on equal footing.  Overall, consumer household income has continually dropped over the the last decade, and at the same time, the costs of basic necessities like health insurance, housing, and education have continued to soar.

What has resulted is a deep divide between the rich and poor, and even more people  –– both low- and middle-income earners –– who find themselves unable to save for even short-term emergencies. 

A sobering new report by the Corporation for Enterprise Development (CFED) shows nearly half of U.S. households (132.1 million people) wouldn’t last three months if they ran into bumps in the road like unemployment, natural disasters, or a medical emergency.

In fact, more than 30 per cent don’t have a savings account at all, and another 8 per cent don’t even bank, period. 

Using the CFED’s detailed analysis of each state’s financial security, we honed in on the 10 places where Americans would be least likely to cope in the face of unexpected disasters.

10. Louisiana

Louisiana arguably has no shortage of consumers who are aware of the damage that unexpected disasters like hurricanes can cause. Yet the state ranks No. 10 for residents' ability to reach financial stability.

Nearly half of adults are considered liquid asset poor, and about 40 per cent have no savings account to rely on in times of need.

The average worker takes home about $45,000 in salary, but nearly one-third of jobs on the market are considered low-wage by the CFED.

Consumers carry about $7,400 in credit card debt, and more than two-thirds have subprime borrower status, which only ups the risk factor with unfavorable interest rates and fees.

The state is also home to nearly 20 per cent of uninsured consumers, 7 per cent of whom are low-income children.

9. Arizona

Despite the fact that Arizona has one of the higher savings account usage rates on this list, the state still has more than 45 per cent of residents living in liquid asset poverty.

There are nearly 20 per cent of consumers who are uninsured, the vast majority of whom are low-income children (17.4 per cent).

Even educated adults carry quite a load of debt ---- $19,950 for a four-year college degree ---- while the average credit debt burden is $12,000 for all adults.

The average take-home pay, $44,626, is hardly enough to match that kind of debt, let alone potentially disastrous emergencies. About a quarter of jobs are considered low-wage.

8. New Mexico

In New Mexico, more than two-thirds of households have a savings account, but about half are still considered liquid asset poor.

That could have much to do with debt burdens. The average consumer carries $8,055 in credit card debt, but 62 per cent of adults have subprime credit, which means they're subjected to high interest rates that can make it even tougher to pay down those debts.

What's more, about one-third of jobs in the state are considered 'low-wage,' and 24 per cent of adults are either unemployed or underemployed.

The state has a 23 per cent rate of uninsured consumers, about half of whom are low-income children.

7. Tennessee

Tennessee's unemployment rate (9.2 per cent) isn't the highest among the financially insecure states on this list, but the $46,000 that most of its workers take home each year clearly isn't enough to cover basic necessities like insurance and college education.

About 17 per cent of the state's residents are uninsured (8.1 per cent of low-income children), and just 24 per cent boast a four-year degree.

In place of savings (40 per cent have no savings account), the average resident carries $9,100 in credit debt.

6. North Carolina

Most financial security measures might look at income:debt ratio and call it a day, but the rate of residents who are insured can be a telling sign of trouble as well.

In North Carolina, nearly 19 per cent are without insurance, including 10.4 per cent of low-income children. And given the fact that just 66 per cent hold a savings account, chances are medical emergencies would be tough to cover for the average family.

The average salary is $45,300, but half the state's residents are still considered liquid asset poor.

5. Arkansas

Arkansans have at least one thing going for them ---- a relatively low amount of credit card debt. The average adult carries just over $6,376 on plastic, but with an average take-home pay of $41,747, chances are they struggle to make payments.

More than half the state is considered liquid asset poor, and less than half have a savings account at all.

And though one-in-five residents have a four-year degree, their efforts cost them $23,000 on average.

4. Florida

Sunshine it may have, but one thing Florida definitely lacks is residents with financial security.

More than half the state is considered liquid asset poor, and one-third of households scrape by without a savings account to tap in times of need.

To cope, the average resident carries nearly $12,000 in credit card debt, and those who invest in college degrees walk away with another $23,000 in loan debt. The state also fared the worst in credit delinquency rates for borrowers (about 7 per cent).

3. Mississippi

While the Southeast steeled itself against a chain of tornadoes and severe thunderstorms last week, chances are Mississippians had more to worry about than most.

Only 51 per cent of the state's residents have a savings account, and unless that means the other half are stuffing wads of cash under their mattresses, chances are they wouldn't be ready for that kind of potential damage.

Nearly 58 per cent are considered liquid asset poor, which is likely only made worse by a high unemployment rate (10.5 per cent) and low take-home pay ($39,300 on average).

On the positive side, Mississippi is among 46 states that have added a personal finance literacy course to their K-12 curriculum. Though with the average college student graduating with $23,000 in debt, chances are no class could prepare them to take on that kind of debt load.

2. Georgia

Southern states are among the most cash-strapped in the nation, and Georgia ranks lowest for financial security.

More than 55 per cent of the state's residents aren't prepared for financial emergencies, and fewer than two-thirds actually have savings accounts.

And while they're toiling away for an average salary of $47,500, Georgians are carrying more than $32,000 in credit card and student loan debt combined.

Maybe that's why just 27 per cent of the state bothered to obtain a Bachelor's degree?

1. Nevada

More than half of Nevada's population would struggle to make ends meet if faced with a financially-draining emergency.

The average resident is carrying a whopping $10,670 in credit card debt, and just 68.5 per cent of households even have a savings account. And 25 per cent of people live without insurance ---- nearly all of whom are low-income children (23.1 per cent).

According to CFED, Nevada was one of two states to end funding for public health programs in 2011 that would have expanded public health insurance to adults with incomes up to 200 per cent of the poverty line.

Add to those findings the state's staggering 13.1 per cent unemployment rate, and the fact that the average college alumnus leaves with nearly $20,000 in loan debt, and it's easily one of the worst environments for building a financially secure future.

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