Last month, Medill Reports Chicago covered a surprising source of bankruptcies in Illinois: expensive parking tickets. The report is a good reminder that while medical debt, credit card debt, and mortgage debt are common, the financial factors that can lead to bankruptcy are sometimes less obvious. Our Roseville bankruptcy lawyers explore some lesser-known sources of debt and spending in California.
What Are the Largest Sources of Debt in California?
You’ll get different responses to the question, “What is the biggest source of debt?” depending on who and when you ask – and which state you’re referring to.
In October 2016, the website GOBankingRates, which “collects interest rate information from thousands of U.S. banks, credit unions and lenders,” published the results of a 3,000-person survey, which revealed that among those in debt, the largest sources of debt were mortgage loans, student loans, credit card debt, and medical debt, in that order. In the GOBankingRates survey, California was among 42 states to cite mortgage loans as its primary source of debt.
Student loan debt is one area where Californians may be faring somewhat better than residents of other states, with The Davis Enterprise reporting that, in 2013, “California students graduated with an average debt of $20,269, the third lowest amount among the states.” On the other hand, medical debt has taken an especially heavy financial toll on California, whose residents are burdened by the nation’s third highest rate of debt from medical bills, according to a NerdWallet study based on data from the Centers for Medicare and Medicaid Services “and other federal agencies collected between 2010 and 2013.”
As for credit cards, a ValuePenguin analysis based on data from the Federal Reserve and U.S. Census Bureau revealed that the average credit card debt in California in 2016 was $5,769, tying California with Oregon as the state with the seventeenth highest amount of credit card debt. (For context, Alaska had the highest credit card debt at $7,706, while Iowa had the lowest at $4,734.)
While you’ll encounter some variations and counterpoints in the data depending on its date and source – Debt.org, for instance, claims the average credit card debt in California is actually $5,196 – none of these findings are particularly surprising, as mortgage debt, student loan debt, medical bills, and credit cards are all well known as major sources of debt and financial hardship, not only in California and throughout the United States. What’s more surprising – and equally important to keep an eye on – is how smaller, less glaring expenditures can accumulate over time, potentially creating financial strain.
So, what are Californians in the Roseville area spending most of their money on?
BLS Statistics Show Average Expenditures in the Sacramento, CA Area
Some of the answers can be found in data collected by the Bureau of Labor Statistics (BLS), which periodically conducts a survey called the Consumer Expenditure Survey (CE or CEX) in order to collect information about income and expenditures in different parts of the country.
CE data exists not only for broad regions for the country, but also specific metropolitan areas, including Sacramento. According to BLS data on Sacramento, as of December 2016, Sacramento had a higher unemployment rate than the national average: 4.9 compared to 4.5. However, among the employed, average weekly wages were higher than the national average: $1,045 compared to $989.
Average annual expenditures in Sacramento added up to a costly $61,244 in 2015, but where was that money going? While housing-related expenses accounted for the bulk of that figure at $20,716 – just over a third of total expenditures in 2015 – food and transportation costs were also considerable. Residents in the Sacramento area spent $7,776 on food and $9,640 on transportation during 2015.
More specific data is available for nearby San Francisco, which is only about 85 miles away from Sacramento. For example, CE data on San Francisco revealed that, out of the money residents spent on food, only about half was spent on food at home, which means all those fast food, restaurant, and convenience store purchases are adding up to thousands of dollars each year. The San Francisco CE data also revealed that San Francisco-area Californians spent more than $2,600 on clothing and “services,” plus a hefty $3,318 on entertainment, like toys, video games, and DVDs. And when it came to transportation costs, people who rode public transportation saved big, spending just $1,603 while drivers spent more than $2,200 on gas and motor oil alone.
Sacramento Bankruptcy Lawyers for Chapter 7 and Chapter 13
Taken alone, expenditures like gasoline, entertainment products, dining out, and clothing probably aren’t going to send anyone into bankruptcy. But together, these expenses can add up to thousands upon thousands of dollars over the course of a single year – and for someone who is struggling to remain financially solvent, these combined costs might push him or her toward filing for Chapter 7 or Chapter 13.
Bankruptcy can help eliminate or reduce debt, protect you from creditor harassment, and even save your home from foreclosure, if you file under Chapter 13 at a strategic time. If you’ve been struggling to keep up with your financial obligations and feel like you are being overwhelmed by ever-increasing debt, bankruptcy may be an appropriate legal option. To talk about filing for Chapter 7 or Chapter 13 in Sacramento, Roseville, or Folsom with a Sacramento Chapter 7 lawyer or Sacramento Chapter 13 attorney, call The Bankruptcy Group at (800) 920-5351 today.