50% of Americans can't even come up with just $2,000 in an emergency given a month's time.
Got $2 000 in a pinch?- MSN Money
Got $2 000 in a pinch?- MSN Money
This is astounding...
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aaronc879
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This topic was posted a couple months ago: http://www.early-retirement.org/for...icans-are-56257.html?highlight=emergency+fund
HFWR
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powerplay
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And they still don't have $2000...
+1
It is really sad though not really a big surprise. I'm so glad I'm not in that camp.
My sister and brother in law would fall into this group. They make about $200K per year combinded, live in a low cost of living area, yet carry huge amounts of credit card debt with no real savings outside pension, 401k. They waste a lot (perhaps most) of it spoiling their 3 kids. They have every gadget and toy known to man (ipads, 4-wheelers, a boat)etc.....but can't afford a minor emergency or unexpected expense without putting it on their credit card.
I blame part of the societal aspect of this in the U.S. on our tv shows. Many of today's show glamorize the consumption mindset and make people believe that is how everybody lives.
I blame part of the societal aspect of this in the U.S. on our tv shows. Many of today's show glamorize the consumption mindset and make people believe that is how everybody lives.
MissParker
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Sounds like most of my relatives!
aaronc879
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I don't think a high percentage of the people in the article are like the people you describe. They have a pension and probably 6-figures in retirement savings. They should be fine. I think the article is more like my brother or people even worse off. He has a college degree but has been working as an Assistant Manager for the last decade since graduating. Has never even made $25K/yr. He has a 1 bedroom apt., cheap car, never goes on real vacations. He's never taken a day off that wasn't paid and he volunteers to work holidays for the time and a half. The only time he ever has $2000 in the bank is right after tax return time but it gets spent on things he's been putting off like car repairs or work cloths. The are millions of other hard working people who are even worse off. They don't have iPhones and garages full of toys but still struggle to get by.
MasterBlaster
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Was there a point you wanted to make regarding your post ?
GregLee
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What's wrong with that? I buy virtually everything now with a credit card. These days, I'm able to pay all my credit card bills as they come due, but a few years ago, I got about $20k behind -- but I could still buy stuff, emergency or not. I think credit cards are wonderful.
MasterBlaster
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Don't confuse credit cards as convienience as opposed to credt cards as the last chance (ie. loanshark) loan.
Perhaps what should have been posted was that some have trouble with a mere $2k emergency without going (further) into debt.
obgyn65
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Quite sad indeed. Do they realize the financial situation they are in ?
What wrong with that? Are you serious? The point is they have to use their card because they don't have enough money in the bank to pay for it!! They are not using the card for "points" or convenience. Every non-reoccuring or surprise expense goes and their card and builds their balance! They don't pay it off each month in full because they are not saving any money. They literally spend all the money they make on what they consider their "normal" expenses then get frustrated when something like the transmission goes out on their car.
People need to learn you need to "plan" or allow for these type of expenses in your monthly budget. I personally set asided $200 per month for "random repair" and maintenance of my condo even though its only 4 years old. I also set aside $200 per month into a car repair and maintenance savings account. I don't even consider these accounts a part of my assets or net worth. I just use them when something goes wrong with the car or condo. It makes the "emergency" totally stress free.
No, it doesn't seem like they really know how bad their situation is. They feel like this is "normal" and sadly it sort of is based on the article above. If my sister (primary bread winner) lost her job for more than 4-5 months, they would likely be facing bankruptcy. What is frustrating is she graduated #2 in her high school class, has an engineering degree and is the top manager at a very large automotive parts warehouse. Point being she is a very bright person with all other things in her life expect to managing and controlling her own family spending.
I think alcohol is wonderful. But I recognize that it is extremely destructive to many.
It's the same with credit cards, for many it is too easy to get into a downward spiral that they can never recover from.
We provided both our kids with credit cards with $500 limits when they went to college, and after they were both burned by late payment charges or over the limit charges, they cut them up, and in their 30's still don't have a credit card.
I'm not surprised that so few folks have $2k available for emergencies without going further into debt.
C'mon, don't get jerked around, both of you understand that credit cards are a wonderful payment convenience whether they're used responsibly or not.
At times it is certainly convenient but I can use my debit card just as easy when I need to buy something online or pay for a purchase that I don't have enough cash on me to pay for...but that is a different topic that has been debated before on here. The point of the post is they needed to use their credit cards because that is the only way they have to pay the bill.
MasterBlaster
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When I went to college, My bank had a deal that included a checking and savings account and a VISA credit card with a $100 credit limit.
That $100 limit was supposed to teach you to use credit sensibly.
The problem our daughter had was that the 'limit' was not a real limit. It just meant she just got hit with immediate $50 penalties if she mis-calculated and went over by a few $
It taught her that she didn't want to have a credt card ever again.
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My primary point was not the convenience of credit cards or the features of debit cards or the responsibility of their owners, but rather that you're being jerked around.
GregLee
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I understand that point, but I disagree. When I got behind on my credit card accounts, I kept my checking account as close to zero as feasible, since I wanted to use all my cash to minimize interest on my credit card debt. It didn't make sense to me to keep money in cash for an emergency, when (1) that cash was costing me in extra interest on my credit card, and (2) I didn't need the cash for emergencies, because I could use a credit card for that. When you have a CC and good credit, it seems to me to be bad advice to keep an emergency fund in cash.
You've pointed out that a bad thing about CCs is they tempt you to buy too much on credit. I knew that. I'm pointing out to you that a good thing about CCs is that they make it unnecessary to have a cash fund for emergencies.
The standard advice is to carry an emergency fund that can see you through 8-12 months of expenses. If you've got a credit limit equivalent to a year of your salary, your income is likely so high as to make an emergency fund largely an option. For most people, however, an emergency fund is very necessary. And last I checked, there are no exorbitant interest charges when paying in cash.
Mulligan
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stoutboy said:The standard advice is to carry an emergency fund that can see you through 8-12 months of expenses. If you've got a credit limit equivalent to a year of your salary, your income is likely so high as to make an emergency fund largely an option. For most people, however, an emergency fund is very necessary. And last I checked, there are no exorbitant interest charges when paying in cash.
Although I confess to having to do as Greg Lee has in past, I have an emergency fund now. When CC is the emergency fund your terms are subject to their various changes such as limits, interest rates, and fees. They keep raising my limits most of them 25 k , which I don't know why as I don't ask for it and rarely use them. I shudder at some of the things I used to do with CC's in the past as it could have led to a disastrous end.
GregLee
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Probably I wasn't clear about the interest concern. Suppose you're in the hole on your CC account, and you manage to get $500 ahead of expenses some month. You could keep the $500 in cash to bolster your emergency fund (earning negligible interest on it) or pay down $500 of CC debt that month saving the CC interest charge on $500. As a consequence of your decision to put $500 into a cash fund for emergencies, you have to pay a high rate of interest on the $500 which remains a part of your CC debt.And last I checked, there are no exorbitant interest charges when paying in cash.
