Most Americans have less than $1000 in savings?

[Mulligan]

I still have about 9% of investable assets in I-bond accounts. Those are my savings.

The interest they pay is so puny, I may have to draw it all out, take a tax hit, and do the SPY+option call strategy to get 4 to 5% a year. I can't stand this low interest anymore!

I thought my IBonds were my "secret sauce" when inflation kicked up. Last year I gave up on fighting the 1980s battle and cashed them all in for preferred stock. Of course I didn't have those 3% fixed rate ones either.


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[MooreBonds]

I thought my IBonds were my "secret sauce" when inflation kicked up. Last year I gave up on fighting the 1980s battle and cashed them all in for preferred stock. Of course I didn't have those 3% fixed rate ones either.

I have about 4% of my net worth in I Bonds with an average fixed rate of 3.3%. Never thought I'd see the day when the composite rate would be almost equal to the fixed! But I'll still keep them stashed away as my ultimate emergency fund.

I was very tempted to cash them in and go all-in back in early 2009 and took a lot of willpower to not do it (especially since back then they were worth roughly 15% of portfolio at the March 2009 low equity values with everything else in the crapper).

In hindsight, obviously I wish I had. But the decent fixed rate is a small consolation for the missed capital gains. And good to know you have a nice stash that could last a few years on minimal budget in case things really got ugly from any cause.

 

[Mulligan]

I have about 4% of my net worth in I Bonds with an average fixed rate of 3.3%. Never thought I'd see the day when the composite rate would be almost equal to the fixed! But I'll still keep them stashed away as my ultimate emergency fund.

I was very tempted to cash them in and go all-in back in early 2009 and took a lot of willpower to not do it (especially since back then they were worth roughly 15% of portfolio at the March 2009 low equity values with everything else in the crapper).

In hindsight, obviously I wish I had. But the decent fixed rate is a small consolation for the missed capital gains. And good to know you have a nice stash that could last a few years on minimal budget in case things really got ugly from any cause.

I dont see how you can ever be criticized for keeping those. Always nice to have those as an ace in the hole. I sure would have kept mine if I had that fixed rate. The only thing I can see that you should beat yourself up over was not buying them with a credit card when it was allowed and you got the credit card "cash back" for buying them.
The two biggest rackets I ever missed out on. 1) Buying 3% IBonds with credit cards 2) Buying free postal delievered dollar coins from treasury with credit card, then immediately dumping them off on the bank.


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[MooreBonds]

The only thing I can see that you should beat yourself up over was not buying them with a credit card when it was allowed and you got the credit card "cash back" for buying them.
The two biggest rackets I ever missed out on. 1) Buying 3% IBonds with credit cards 2) Buying free postal delievered dollar coins from treasury with credit card, then immediately dumping them off on the bank.

LOL - while I didn't get in on the "ordering rolls of coins on reward credit cards", I sure did do the 'buying I-bonds on credit cards"! USAir rewards miles paid for a free flight to NY for a Mediterranean cruise with my grandmother, sister and BIL.

 

[dallas27]

In specific instances some non degreed earners do comparably well, but on average a college degree has proven to earn signifigantly more lifetime earnings. It's not subtle. Labor statistics have been recorded for decades to prove it and these statistics are quoted often in articles and buisness journals. You should read more. (Less tv will help)

Edit. On average it is over 70% more lifetime earnings.

https://www.census.gov/prod/2002pubs/p23-210.pdf




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No, it is correlated, not causal. Nice try on the insult. You don't understand the statistics you are quoting and why they are misleading. May I suggest you read deeper, then think critically.




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[Mulligan]

LOL - while I didn't get in on the "ordering rolls of coins on reward credit cards", I sure did do the 'buying I-bonds on credit cards"! USAir rewards miles paid for a free flight to NY for a Mediterranean cruise with my grandmother, sister and BIL.

Well now I am really jealous. Pat yourself on the back!


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[purplesky]

There has never been a strong causation effect behind a degree and earnings. Earnings are tied to basic intelligence and work ethic. It's a subtle deceit that "college graduates" earn more.


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I just threw in college grad millennial to help make my point.

You might be correct. All workers are now fair game when it comes to "The race to bottom" economics and financial engineering.

 

[MichaelB]

We can disagree without being disagreeable. We're friends here, so let's keep it friendly.

 

[brett]

When I got my first paper route my grandfather made a deal with me. He would give me twenty five cents for every dollar I saved. The reckoning would come each Christmastime.

He was as good as his word. He stopped doing this after a few years but that was enough for me to gain an understanding of saving. It was a lesson of a lifetime as well as his sage advice that if I took care of the dimes the dollars would take care of themselves. Typical....Scottish Presbyterians.


My parents encouraged me to pursue an education. Not because of the income attributes but because I could work at something I truly enjoyed and would not be beholden to an employer. There were bumps along the way but I discovered the value of this advice many times over.


I view myself as being a very fortunate person.

 

[marko]

He stopped doing this after a few years but that was enough for me to gain an understanding of saving. It was a lesson of a lifetime as well as his sage advice that if I took care of the dimes the dollars would take care of themselves.

Almost 60 years ago, when I was in first grade, the local savings bank had a lady come over to our class each week (Miss McMahon...I still remember!) and she opened a savings bank book for each of us.

Every week or so, she'd come to class and we'd give her a nickle or dime. She'd make a big deal about it.

Of course, nowadays, she and the bank would be vilified for drumming up business on impressionable minors (or other such nonsense) but that bank did instill savings as a life-long habit.

 

[ERD50]

I didn't say it was "easy" to get through it then, just that it's easy to say that if "we" (being 20, 30 or more years older) were able to do it, there's no reason other than laziness or "bad decisions" why today's young adults can't do it just as easily.

OK, and I'm not saying it is 'just as easy' either. I really don't know, and I don't know how to compare. So many variables.

What I do know is - if a young person is smart and hard working and motivated, and gets a degree (or skill) in some in-demand field, and is careful about spending (try an in-state school, or other good value school for example) they will probably do well. That doesn't mean it's easy, just that it's possible.

There has never been a strong causation effect behind a degree and earnings. Earnings are tied to basic intelligence and work ethic. It's a subtle deceit that "college graduates" earn more.
...

Interesting. It's one of those oft-quoted stats, that we tend to accept at face value. I think what you are saying is - it's 'smarts' that allow people (on average) to advance. And, in general, people with 'smarts' get degrees. But was it the degree, or was it the smarts?

Reminds me of the Freakonomics study. Some group noted that students with books in their home did better. So this group purchased books for students to add to their home library. Surprise (not)! It didn't help. The reason that books were in tet homes of good students was that their parents valued and supported learning. Just adding books didn't change that. It was the difference between cause and effect.

-ERD50

 

[MooreBonds]

Interesting. It's one of those oft-quoted stats, that we tend to accept at face value. I think what you are saying is - it's 'smarts' that allow people (on average) to advance. And, in general, people with 'smarts' get degrees. But was it the degree, or was it the smarts?

Reminds me of the Freakonomics study. Some group noted that students with books in their home did better. So this group purchased books for students to add to their home library. Surprise (not)! It didn't help. The reason that books were in tet homes of good students was that their parents valued and supported learning. Just adding books didn't change that. It was the difference between cause and effect.

-ERD50

I'm sure there is a lot of correlation rather than causation in the subset of those who stick with college and complete their degree...however, I think most people would readily agree that many (most?) employers will routinely select many specific job openings for only those with degrees.

Yes, extensive work experience and your skillsets is a big part of what ultimately defines your worth in the marketplace, and there are many examples of those without degrees who achieve financially rewarding careers. But I think most of us will agree that if you were to look at the average salaries of those positions that employers will self-select out 95% of the applicants as needing degrees vs those positions that they really don't care if the applicant has a college degree or not, you'd probably find a noticeable difference in the average annual salary and future growth prospects.

 

[M Paquette]

"Handbook of Labor Economics", Volume 3, Part A, 1999, pages 1801-1863:
"The Causal Effect of Education on Earnings", David Card

The article reports on a number of effects, including education, credentialing effect, family background, and ability, among others, to specifically identify that portion of earnings explicitly correlated with education. The explicit correlation is constrained by time ordering to an event, education which is strongly associated with a later effect, earnings. In other words, a set of factors, on of which is education, are directly related to a phenomenon, the earnings of an individual. The connection of factors directly related to a phenomena is referred to as a causal nexus.

Here is the actual paper: http://web.stanford.edu/group/scspi/_media/pdf/Classic_Media/Card_1999_Education.pdf

Caution: PDF document; contains math

 

[bclover]

Almost 60 years ago, when I was in first grade, the local savings bank had a lady come over to our class each week (Miss McMahon...I still remember!) and she opened a savings bank book for each of us.

Every week or so, she'd come to class and we'd give her a nickle or dime. She'd make a big deal about it.

Of course, nowadays, she and the bank would be vilified for drumming up business on impressionable minors (or other such nonsense) but that bank did instill savings as a life-long habit.

LOL, I most definitely remember that Marko. better yet, do you remember when banks gave you small appliances like toasters and such if you opened up a savings account.


I got into a huge verbal argument at the Phillies game this past summer. My sons and I took in a Phillies game and they had a booth hawking Phillies visas issued by Chase. Now first, the booth is manned by two or three buxom babes in Phillies colors, which is enough to lure my two college students over to hear the spiel, next of course they are giving away free "stuff" to apply. "Free" and my sons are in a relationship, regardless to whether or not they need, want or like the item, if it's free, they are hooked.
Anyhoo, I mention to the young lady that my youngest is a Jr at Temple university working part time at Wawa. Translation: he's broke.

She says to me, "oh he can still apply, they will issue him one on his "potential"!
WTF his potential what? the boy has a minimum wage job out of which he has to save 10% (mom rule) pay for his cell phone, buy gas and spending money.

I thought the cc companies were supposed to stop that practice?

 

[travelover]

LOL, I most definitely remember that Marko. better yet, do you remember when banks gave you small appliances like toasters and such if you opened up a savings account.


I got into a huge verbal argument at the Phillies game this past summer. My sons and I took in a Phillies game and they had a booth hawking Phillies visas issued by Chase. Now first, the booth is manned by two or three buxom babes in Phillies colors, which is enough to lure my two college students over to hear the spiel, next of course they are giving away free "stuff" to apply. "Free" and my sons are in a relationship, regardless to whether or not they need, want or like the item, if it's free, they are hooked.
Anyhoo, I mention to the young lady that my youngest is a Jr at Temple university working part time at Wawa. Translation: he's broke.

She says to me, "oh he can still apply, they will issue him one on his "potential"!
WTF his potential what? the boy has a minimum wage job out of which he has to save 10% (mom rule) pay for his cell phone, buy gas and spending money.

I thought the cc companies were supposed to stop that practice?

That is all very interesting, but did you take any pictures?

 

[Independent]

"Handbook of Labor Economics", Volume 3, Part A, 1999, pages 1801-1863:
"The Causal Effect of Education on Earnings", David Card

The article reports on a number of effects, including education, credentialing effect, family background, and ability, among others, to specifically identify that portion of earnings explicitly correlated with education. The explicit correlation is constrained by time ordering to an event, education which is strongly associated with a later effect, earnings. In other words, a set of factors, on of which is education, are directly related to a phenomenon, the earnings of an individual. The connection of factors directly related to a phenomena is referred to as a causal nexus.

Here is the actual paper: http://web.stanford.edu/group/scspi/_media/pdf/Classic_Media/Card_1999_Education.pdf

Caution: PDF document; contains math

Maybe you can cut through the math and answer a question. Does this data only talk about averages, or does it talk about variations within groups?

Suppose we find that, for people who attempt four year college:
1/3 drop out before they graduate,
1/3 graduate, but end up in jobs that don't require college degrees,
1/3 graduate, and get jobs that use the skills/knowledge they acquired in college.

For comparisons, lets look at the subset of HS grads who have the grades, test scores, and behavior records that suggest they could go to college, but decide not to. I'll call them HPHS.

Suppose that the last group makes a lot more than the average in HPHS. The first two groups make about the same as the average in HPHS.

Would Card determine "College causes higher incomes", or would he determine that "College causes higher incomes for some individuals" ?

If he were making recommendations to HPHS grads, would he say "You should definitely go to college because college has a positive ROI", or would he say, "Maybe you should go to college. It has a positive ROI for some people, but a negative return for others"?

 

[marytaz]

I'm one of those that probably never saved in my life until I got the opportunity to actually think about retiring. I have $5K in there now and my 1st goal is to get to $10K.

 

[pb4uski]

.....Now first, the booth is manned by two or three buxom babes in Phillies colors....

That is all very interesting, but did you take any pictures?

+1 pictures would be helpful.