Author Topic: Half of US doesn't have $2,000 for an emergency  (Read 11849 times)

Offline bigbear

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Half of US doesn't have $2,000 for an emergency
« on: June 14, 2011, 08:58:33 AM »
http://money.cnn.com/2011/05/24/news/economy/americans_lack_emergency_funds/index.htm

Not surprising really. 

But what happens when the value of the dollar tumbles to half it's current value?  Does that number go to 66% to maintain the same purchasing power (ie, needing $4,000 in savings)?

The scenario that was set up included 'unanticipated' expenses such home or car repairs or medical expenses...  Seriously, stuff breaks and accidents happen. 

Offline TraceA

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Re: Half of US doesn't have $2,000 for an emergency
« Reply #1 on: June 14, 2011, 09:18:55 AM »
Not long ago I would have been one of the people who would have had to depend on credit for my emergency fund. 

I'm very happy to say--with Jack's teachings & my wife's budgeting--we are now among the 50% who do have that emergency fund set aside & immediately available!  At the same time we're still aggressively working on our debt snowball & preps!

Offline Silver surfer

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Re: Half of US doesn't have $2,000 for an emergency
« Reply #2 on: June 14, 2011, 07:46:13 PM »
Very true.A great many families are ill prepared for a minor emergency.So what happens when a major emergency happens?They lose everything. Fortunately,my family as well are one of the 50% who are satisfactorily prepared for such an event. Good rule of thumb. If you know people who aren't satisfactorily prepared,DON'T let them know YOU are! If they don't flat out break in and rob you blind,you can bet the farm that you'll be the first one they come to when something happens.

Offline TexDaddy

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Re: Half of US doesn't have $2,000 for an emergency
« Reply #3 on: June 14, 2011, 08:06:21 PM »
Actually, if this means that half do, I am encouraged.

OldManSchmidt

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Re: Half of US doesn't have $2,000 for an emergency
« Reply #4 on: June 14, 2011, 10:20:20 PM »
Yeah!  I'm one of that poor half.  Being as that's the way it is, we compensate in other ways.  Having $2000 cash isn't the only way to be prepared to deal with problems.

Offline bigbear

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Re: Half of US doesn't have $2,000 for an emergency
« Reply #5 on: June 15, 2011, 02:39:14 PM »
Schmidt - good point.  It's not really about the $ amount, but it's about what you get in exchange for that $ amount.  If you can get the same stuff/services by other means (self/barter), then it's the same.

Offline Nadja*isk*en*isk*ie

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Re: Half of US doesn't have $2,000 for an emergency
« Reply #6 on: July 15, 2011, 03:12:04 AM »
I would suggest that half of the world does not have $2000 ------------------->.     (full stop).

Offline Mord

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Re: Half of US doesn't have $2,000 for an emergency
« Reply #7 on: July 20, 2011, 01:53:03 AM »
It's amazing how easy it would be for most people in the US to have 2k set aside for emergencies if people we're taught to save money in school.  It will be interesting in 25 years to see if this generation learns from the pain of the depression we're in and teaches their kids to save.

Offline SteveandTracyinKY

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Re: Half of US doesn't have $2,000 for an emergency
« Reply #8 on: July 20, 2011, 02:06:24 AM »
We are still in the poor half, but were working on it. I agree about kids need to be taught to save money in school. I never even thought about having a savings account for an emergency until I started listening to TSP.

Offline ncjeeper

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Re: Half of US doesn't have $2,000 for an emergency
« Reply #9 on: July 20, 2011, 10:05:01 AM »
The government doesnt want you to save your money. The feds want you to spend it. Hence the ridiculously low rates paid on savings and money market accounts. Then on top of that you get taxed for the little interest you might earn.

Offline Outdoorfury

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Re: Half of US doesn't have $2,000 for an emergency
« Reply #10 on: July 20, 2011, 12:35:57 PM »
Very true.A great many families are ill prepared for a minor emergency.So what happens when a major emergency happens?They lose everything. Fortunately,my family as well are one of the 50% who are satisfactorily prepared for such an event. Good rule of thumb. If you know people who aren't satisfactorily prepared,DON'T let them know YOU are! If they don't flat out break in and rob you blind,you can bet the farm that you'll be the first one they come to when something happens.

Very well noted; however, i took a different stance. I have felt the call to urge people to prepare for life as I could not live with myself if I did not try. I have been given the response of "when it happens we will come to your house". I told them for their health, that would be a mistake. They looked at me kind of hurt, as they are my friends, but what can i say other than "i told you so".

On that note i am now stopping trying to assist sheelple. Too little response, but those who are on board or getting there i am doing everything i can for. Community will be the saving grace in down times, not isolation.

Offline bigbear

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Re: Half of US doesn't have $2,000 for an emergency
« Reply #11 on: July 21, 2011, 08:17:55 AM »
... if people we're taught to save money in school.  It will be interesting in 25 years to see if this generation learns from the pain of the depression we're in and teaches their kids to save.

You're right, people should learn to save (delay gratification).  The only point I'd change is that schools aren't the responsible ones.  PARENTS should be responsible for what their children learn!  We need to get out of the 'it's the schools responsibility' mentality.

Offline willille

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Re: Half of US doesn't have $2,000 for an emergency
« Reply #12 on: July 21, 2011, 02:53:55 PM »
There is a problem with saving though. Not many things that you can do with your money will let it keep up with inflation. The average individual is not an investment guru so a lot of times their interest also ends up being taxed. Everything the government is trying to do to keep this economy going causes the average man's savings to be worth less every day. A lot of people running the government and their friends the banksters get richer every day while the average citizen falls farther back all the time. If you want to save your money like you should this government is not your friend.

endurance

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Re: Half of US doesn't have $2,000 for an emergency
« Reply #13 on: July 21, 2011, 03:14:22 PM »
Quote from: ncjeeper
The government doesnt want you to save your money. The feds want you to spend it. Hence the ridiculously low rates paid on savings and money market accounts. Then on top of that you get taxed for the little interest you might earn.
Absolutely spot on.  If the government wanted savers, they'd impliment a national sales tax in place of an income tax.  They'd eliminate the dividend tax and capital gains taxes so folks would save and invest more.

Offline ag2

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Re: Half of US doesn't have $2,000 for an emergency
« Reply #14 on: July 28, 2011, 10:26:12 AM »
Convert your savings (all or a portion of it) to a mix of physical gold and silver to keep up with inflation.  Consider guns also.  These always appreciate in value.

endurance

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Re: Half of US doesn't have $2,000 for an emergency
« Reply #15 on: July 28, 2011, 11:11:51 AM »
Convert your savings (all or a portion of it) to a mix of physical gold and silver to keep up with inflation.  Consider guns also.  These always appreciate in value.
I'll disagree because of what I saw in November 2008.  By March of that year, gold had soared to over $1000/oz. due to fears about the stock market, housing market, lehman bros., bear sterns, etc.  Did the economy get better or worse between then and November 2008?  Worse, much worse.  The Dow was in freefall beginning in September and didn't hit bottom until March 18, 2009.  Yet the price of gold was down over 25% to $720 in early November.  Why?  Because banks, which hold roughly 20% of the world's gold needed cash to stay liquid and big investors needed to cover margins.  Cash was king.

Gold is even more inflated now than it was then, yet there is more gold in the world in circulation today than three years ago (ongoing mining activity and very low industrial usage). 

While I do hold gold, it's a part of a diversified portfolio that includes real estate holdings, stocks, bonds, cash, silver, food, guns and renewable energy.  Gold is not an inverse to the economy at large, it's a part of it.  When people get in trouble, they sell it.  When people have abundance, they buy it.  Value is not inherent, it's market based and controlled by supply and demand.  Personally, I'm selling some so I can get more solar panels right now.  My long term view is that energy prices are going to rise, but I don't fathom to guess what gold prices will do.  I'm up over 60% on my gold purchases, so that's a sell signal for me.

Offline summer98

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Re: Half of US doesn't have $2,000 for an emergency
« Reply #16 on: August 03, 2011, 06:05:04 AM »
Half of the U.S. makes less than $45000 a year. Much of that group makes much, much less. If you make $2000 a month or less and have to support yourself, you aren't going to be saving much money. K and I make just over that and we have an extremely difficult time saving -despite not eating out, not having much debt, and doing everything we can to cut costs. We do it, but only just.

You also have to take into account all of the people who are on unemployment or just plain unemployed. They certainly aren't saving any money.

Offline LdMorgan

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Re: Half of US doesn't have $2,000 for an emergency
« Reply #17 on: August 10, 2011, 03:32:02 AM »
The very essence of being a wage slave is having to live from one paycheck to the next.

That is a carefully orchestrated thing in our society. Workers are supposed to stay put, shut up, and work at the same dead-end job until they die of old age. End of story.

Next worker, please.

The masses are NOT to be allowed to become wealthy.

That's why we have taxes. In fact, that's the ONLY reason we have taxes.

No one should save any part of their income. What they could put in a bank they should instead be put to work.

Any kind of work that returns more than a bank would pay.

A family's emergency reserve should be extractable from it's income-producing capital at need. But until it is actually needed, it should be right in there working alongside the rest of the family's "savings".

Only thus can a family that didn't inherit wealth hope to climb up from being a "have-not" to a "have".

Well, other than winning the Lottery, anyway.




endurance

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Re: Half of US doesn't have $2,000 for an emergency
« Reply #18 on: August 10, 2011, 11:25:50 AM »
Well, other than winning the Lottery, anyway.
I have a friend who calls state lotteries a "hope tax".

Offline MTUCache

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Re: Half of US doesn't have $2,000 for an emergency
« Reply #19 on: August 10, 2011, 02:11:34 PM »
I have a friend who calls state lotteries a "hope tax".
That's actually a better nickname than the typical "math tax"... most people who play know that it's a long shot, they understand at least that much.

Pretty grim when you're making "investing" decisions based upon the difference between having $50 in your pocket and no hope or having $45 and a faint glimmer.  :-\

Offline tomtom

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Re: Half of US doesn't have $2,000 for an emergency
« Reply #20 on: August 22, 2011, 03:49:05 PM »
I am proud to say I just got to the $2k mark, I plan to keep going with the savings.

Offline bigbear

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Re: Half of US doesn't have $2,000 for an emergency
« Reply #21 on: August 23, 2011, 12:19:14 PM »
I am proud to say I just got to the $2k mark, I plan to keep going with the savings.

Congrats!!!   ;D 

No one should save any part of their income. What they could put in a bank they should instead be put to work.

Any kind of work that returns more than a bank would pay.

A family's emergency reserve should be extractable from it's income-producing capital at need. But until it is actually needed, it should be right in there working alongside the rest of the family's "savings".

I agree with this logic for investing/saving.  I do not agree with this logic for insurance.  The $2k (or $1k if you're a Ramsey fan) is more akin to insurance against emergency costs.  If your 'emergency fund' is tied up in assets, then it's not liquid or easily traded. 

Half of the U.S. makes less than $45000 a year. Much of that group makes much, much less. If you make $2000 a month or less and have to support yourself, you aren't going to be saving much money. K and I make just over that and we have an extremely difficult time saving -despite not eating out, not having much debt, and doing everything we can to cut costs. We do it, but only just.

You also have to take into account all of the people who are on unemployment or just plain unemployed. They certainly aren't saving any money.

All legit concerns.  Plus, how much $45k buys varies widely across the country.  It goes much further in Arkansas than in New Jersey.  If you're near a city, it's even more true.  If you have a car payment, too big of a mortgage/rent, credit card/school debt, child care payments, cable, expensive cellphone/internet packages, etc, etc... it's even more of a struggle...

Unemployment would be a great reason to have already had a $2k emergency fund (and 3-6 months of savings).  Obviously once you're unemployed it's too late and you haven't prepared.

Offline summer98

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Re: Half of US doesn't have $2,000 for an emergency
« Reply #22 on: August 26, 2011, 05:30:11 AM »
All legit concerns.  Plus, how much $45k buys varies widely across the country. 

True, but my point was that HALF of the people in the country make less than that. Often much, much less, even when they work full-time and have college degrees. Do you have any idea how hard it is to save when you only make $24,000 a year? Before taxes. It doesn't matter where you live; that's rough. There are teachers with master's degrees who don't make any more than that.

Wages are also on the decline, save for certain very select professions. Everyone I know who has been laid off and has managed to find another job (most of them are struggling on unemployment while they look) has had to take a wage cut, sometimes a substantial one. They'd also either lost benefits, had to accept worse benefits or are paying more for their benefits.

It's no wonder most people aren't saving.

Offline bigbear

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Re: Half of US doesn't have $2,000 for an emergency
« Reply #23 on: August 26, 2011, 08:28:14 AM »
HALF of the people...  Do you have any idea how hard it is to save when you only make $24,000 a year? Before taxes. It doesn't matter where you live; that's rough. There are teachers with master's degrees who don't make any more than that.

The stat is the half of HOUSEHOLDS (husband/wife/etc) not individuals.  But yes, I do by that measure.  With 3 kids.  It's rough.  No doubt.  The system is rigged.  But it's still much much more income (purchasing power) than the majority of the rest of the world. 

I'm not sure where you're getting your numbers from, but the average salary of the lowest paying state for teachers (South Dakota) is $37k.  Which is $12k less than the national average for teachers' salary.  Plus, these amounts don't include other benefits (medical insurance, pension, extended period of days off).

http://www.teachersalaryinfo.com/average-teacher-salary-south-dakota.html

Aside - if you look at the bottom of that link there are some pretty interesting and telling financials.  Total expenditures per student ($9,658) exceeds revenues per student ($4,887) by $4,771.  That is the definition of unsustainable.  Yet teacher pay increased from 2008 to 2009 by 2.46%?

Offline creativem2

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Re: Half of US doesn't have $2,000 for an emergency
« Reply #24 on: August 26, 2011, 08:29:26 AM »
I was talking to my neighbor the other day and she told me that their hot water heater went out.  She said, and I quote, "We're lucky that our friends let us borrow their Lowes credit card to buy another one."  I didn't say a word but thought to myself that I better keep an eye on these folks if the SHTF.  There are a lot of people in some really unbelievable situations out there and it's scary when they're right next door. 

Offline TexDaddy

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Re: Half of US doesn't have $2,000 for an emergency
« Reply #25 on: August 26, 2011, 10:14:02 AM »
...Do you have any idea how hard it is to save when you only make $24,000 a year? Before taxes. It doesn't matter where you live; that's rough. There are teachers with master's degrees who don't make any more than that...
This statement about teacher pay isn't true in Texas. The minimum salary in Texas for a teacher with 0 years of credited experience is $27,320. http://www.tea.state.tx.us/index2.aspx?id=2147501688
Here in Arlington, the begining teachers pay is $45,876. http://www.aisd.net/aisd/Default.aspx?alias=www.aisd.net/aisd/jobs
There may be teachers who make as little as $24,000 a year, but not around here.

Offline Roundabouts

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Re: Half of US doesn't have $2,000 for an emergency
« Reply #26 on: September 29, 2011, 10:35:15 AM »
You know it's really sad that so many people don't have a savings.  It's sadder that people that think just because they don't make a certain amount of money they are to "poor".   Not saving money is more of a mind set and attitude problem than a money problem.  Saving just $25.00 a month or even just .25 cents is still saving.

 As a kid I was taught a penny saved is a penny earned.  We had to earn our allowance and we were expected to save some of it.  Birthday money save some of it.  We were also taught no matter how bad things are they can always be worse so be grateful for what you have now because somewhere someone would love to have what you have, that you so easily dismiss.  Guess that's why I love the book by Larry Winget You're BROKE Becasue You Want to Be. 

Way back when I was on welfare I still saved something even if it was $1.00.  If I had to clean houses in the evening for $2.00 an hour I would at least save 25 cents of it if not more.  I would pick coins up off the street gather pop cans and bottles out of the trash.  Collect stuff people didn't want and have yard sales.  I would skip a meal here and there. We did what we had to. 

Being homeless twice and jobless several times I can say I never ever want to do that again.  I am not perfect and have fallen into the consumer mentality over the years. I have let debit build and savings disappear.  I am not perfect.  But every time I go through something I learn a little more.  Now we are debit free and 1-2 yrs away from being mortgage free.  We have an ER fund and manage to save 50% of our gross pay.  From time to time I do feel like dang it I deserve XYZ I am tired of going without.  Then I look around and say wow having a home on 5 acres producing your own food is going without?  WOW must really be rough you bet ya it's worse than being homeless and jobless.  My gratitude comes back real quick.