“It hit me hard. Real hard. I had to dip into savings. I had to dip into my 401(k),” said Matt Burns, an Austin, Texas, resident who was furloughed from his job at a company that produces corporate events.
“Those bills, they come like clockwork,” Mr. Burns, 41, said. “I pay $600 a month in child support, and I’m still paying rent and utilities and all.” He estimated that he had drawn down roughly $10,000, first depleting the few thousand dollars he had in savings before using the CARES Act provision to withdraw from his 401(k).
Now, his work has picked back up, but Mr. Burns frets that he is missing out on the meteoric rise the stock market has undergone since its trough in the spring of 2020. “I do need to get my nest egg back,” he said.
A survey conducted in May by Bankrate.com found that the pandemic had prompted more people to prioritize saving for emergencies — but the loss of income many have experienced over the past year makes the leap from intention to action a yawning chasm. For young adults already on the financial brink, any stumble can be enough to send them tumbling into debt.
“The biggest thing with young people is a lot of them were never really taught about saving and budgeting and building their credit, which is so important,” said Christina Pawlak, a credit counselor at Consumer Credit Counseling Service of Maryland and Delaware. “They have no emergency savings and put everything on credit cards they are unable to pay, which is destroying their credit.”
One of Ms. Pawlak’s clients is Cristal Duarte, a 31-year-old resident of the Bronx who juggles a full-time and two part-time jobs.
Ms. Duarte said she considers herself fiscally responsible, but costs related to her father’s death from an aggressive cancer two years ago and his wish to be buried in his native Dominican Republic plunged her into nearly $30,000 of credit card debt. Just staying ahead of the interest charges became a struggle, with some of her cards carrying annual rates as high as 29 percent. “They ruined me in interest,” she said.