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Moving Away from the Edge of Financial Ruin

John_TheLine_at_food_pantry_500px

Single father John Lohmeier shops at a food pantry in the Chicago, Ill., suburbs. Lohmeier talks about losing his six-figure salary and needing assistance in the documentary. (Screen shot from The Line)

By Sarah Godfrey

In the documentary The Line, a look at poverty in America, Illinois single father John Lohmeier shares his story of losing his job and six-figure salary and becoming someone struggling to make ends meet. "For the first time, I've gone from being somebody who could help to being somebody who needs help," Lohmeier says. 

It seems the line between those who are able to offer assistance and those who need it is becoming increasingly fluid. Case in point: according to a recent report, nearly half of all Americans lack a basic personal safety net to prepare them for emergencies or future needs.

The Corporation for Enterprise Development (CFED) study found that 43.9 percent of U.S. households—some poor, some making more than $90,000 per year—don't have enough savings to last three months at a poverty-level income. For those who don't understand the importance of federal safety net programs, or can't imagine being in a position to need SNAP (formerly food stamps), WIC, or other forms of assistance, the study should serve as a powerful wake-up call.

From CFED:

Having emergency savings can help families better weather an economic setback. Research has found that households with assets are much less likely to suffer serious hardships in the event of an economic emergency, such as a job loss. Families without emergency savings, on the other hand, are much more vulnerable to economic catastrophe, such as foreclosure, homelessness and dependence on public assistance. 

The good news is that saving money, even in relatively small amounts, can help put families on better financial footing. And saving money and getting rid of debt isn't something that is only accessible to wealthy and middle-class families. The importance asset building in fighting poverty was explored in the 2010 Hunger Report piece "Incentives to Build Savings." As the Hunger Report points out, it is harder for poor people to save money, it’s a misperception that they don’t or won’t save:

Research shows that people with incomes well below the poverty line are able to save. A national research study known as the American Dream Demonstration tested the effectiveness of asset-development programs for poor people. People were saving to build assets such as homeownership, education, or starting a business.

Unfortunately, snips to our social safety net make saving money even more difficult. Andrea Levere, president of CFED, told Salon that the study's findings were “particularly disturbing given the ongoing budget talks in Congress that will likely result in further reductions in the social safety net and other programs that help low- and moderate-income people get on their feet and start planning and saving for a better future.”

In other words, it is crucial that we continue to work to protect vital safety net programs and to ensure that Congress, in balancing the federal budget, doesn’t make it impossible for poor working families to balance their household budgets.

Sarah Godfrey is Bread for the World's associate online editor.

 

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