re: How do people let themselves get into such dire straits financially?

Real easy.

#1 Most people live paycheck to paycheck. No one keeps savings anymore except for a retirement account.

#2 Most people are in more debt than they should be.

With those two things, being laid off pretty much ruins you.

Speaking from personal experience, I was laid off from my job of ten + years on base and it hit us pretty hard. When your bills don't go down but your income does, you're in trouble.

Now I had vacation an a 401k to help me limp along, and I couldn't even get unemployment until all my vacation was used up. And even though our bills exceeded our income, we still weren't eligible for food stamps.

That's been almost two years. I'm still not making what I was, and things are a lot tighter than they used to be.

Being unemployed and having mouths to feed really sucks.