If You Were Laid Off Without Severance, How Long Would your Savings Cover Your Living Expenses?Half of all working Americans have less than a month's worth of living expenses saved up?
* One Week or Less: 34%
* 2-4 Weeks: 16%
* 1-2 Months: 16%
* 3-5 Months: 14 %
* 6 Months or Longer: 20%
I was in that boat during college. When you're 19 or 20 it's scary but not overwhelming. There are still options at that point when you are totally SOL. I can't imagine being in my 30's, 40's or 50's with only a few weeks of savings. This is the stuff of nightmares. I wouldn't be able to sleep at night.
23 comments:
What do you expect? This is what happens when cost of living (esp. on essentials) has constantly risen, while median wages have completely stagnated since the early 1970's.
If those stats are right, the vast majority of Americans are potentially f*cked. A full 80% have less than 6 months of savings on hand. How long does it take for the average bloke to find a new job nowadays? Hell, one medical emergency will wipe out 6 months of savings instantly.
No, the real problem is that for the last two decades of booming prosperity, Americans have been acting like the proverbial grasshopper instead of the ant, and have not set anything aside for a rainy day. Wasn't it only a couple of years ago that the savings rate was negative? How many of those in the "one week or less" category have a negative net worth?
the last two decades of booming prosperity
Most, if not all of that "prosperity", was built on an illusory or even fraudulent base.
Face it, wage stagnation has played a large part in many people's inability to save money. "Keeping up with the Joneses" also plays a part, I'll give you that much.
I have to say I think that is pretty close to right. Most people wouldnt make it two months without a paycheck. I also agree with the other posters I thonk it is a combination of factors. Of course I choose to live in a high cost area, but I dont get pay increases that keep up with price increases. But I also agree people arent saving as much as they could. I mean I dont pay for alot of luxuries, primarily my broadband, and cable, I could save 1500$ a year if I cut that out. Then again that is about one housing payment, and so it isnt going to take me very far if my pay is disrupted anyway. I dont want to make the sacrifice. I would look at it differently if I had a family to support. But since it is only my own ass on the line i'm more cavalier about it. I always figured I could get some sort of work if your not choosy when you get laid off right? Not necessarily in this economy. We are seeing thousands of people showing up for 10 jobs postings.
Paul writes,
There never was the 'money', even the paper funny money to 'save' during good times. Prices, labor, houses, cars were priced, or cost-ed depending on if you were selling or buying, on not the available 'money' but credit.
Due to fractional banking there was, at a minimum, ten times as much credit, then all available cash. And credit dictated prices/costs.
Further, if suppose everyone did 'save' the money would of been deposited and credit manufactured by ten, increasing costs again.
What I am getting at, is that it is physically impossible to save for the future in a fractional reserve fiat money economy.
Now, People are saving. At record rates, and look what's happening. The fiat paper money machine of the Federal Reserve and Treasury are printing debts and devaluing the 'savings' i.e, dollars, faster than you can 'save'.
Getting 1.5%, pre tax, on a CD, when just the Federal government is printing near two trillion dollars over what just it spends just this year, well, what are you going to do, a year from now, with all that big profit 1.5% CD?
Towards the end of the Roman Empire, citizen families would show up at the estates of Roman Senators and trade their rights as free voting citizens for food and shelter.( Think scally cap Massachusetts peasants towards the Kennedy royalty ).
Today, everyone's looking for a govey job.
The last century, hundreds of millions were killed and billions ruined by the utopian left of Communism, Socialism, and National Socialist Workers Party.
The 1913 Federal Reserve and the income tax were all children of never scientific 'scientific' social planning and economic planning of the late 1800's that gave birth to all the monsters.
We're just going to have to ride this out, as best you can. Much like billions have before us.
There is no plan, just deluded hack politicians pushing buttons and pulling levers and trying to look smart while doing it. ( Think many Three Stooges meets economic Chernobyl.)
Me? I'm thinking of a used sailboat. They are cheeper every week, and a year in the Bahamas living off fish, rice and beans with a thousand hard books.
Doesn't anyone have a name today? Jeez.
Do you really think the cost of living is rising faster than wages in the longer term? Maybe almost all my family and (older) friends were simply in poverty in the 1970's, but almost without exception, things are better for them now, way better -- for them AND their kids.
I see people around me driving better cars and living in better houses and far cooler gadgets than in the 1970s. And nobody I work with is scrimping the way we did back then.
I see a small handful of relatives who are in dire straits -- of their own making. Sometimes it's continual refusal to transfer to a new job, sometimes very poor career choices (market-useless Lib Arts degree), and sometimes just sheer laziness. They, of course, feel hard done by!
Hell, one medical emergency will wipe out 6 months of savings instantly.
Not so likely if you got yourself some decent insurance. And signed up for COBRA coverage after you lost your job.
Oh, and for the guys in the office here who "cannot save", I have many things to tell them, but one thing first: What the frick is that tricked out car you're driving, huh? Oh, it's the Harley you drove in today? And they can't find things to cut out? I lose sympathy fast.
NoVa sideliner;
Yeah, I can save a lot, supporting two kids on minimum wage, or 1,256 per month.. No cable tv, the car is paid for thank goodness. Yeah, we've got internet, but the kids do homework with it, and I will need that to start selling stuff on ebay to earn money for when the car breaks down.
It's so comforting to blame the victim, because then you can smugly think, "*I* will never be in that situation."
Better hope not, or you might reap the lack of sympathy you're sowing now.
Hey Bogulusan,
I'm not talking about you. I've been there before (sans kids) and saved basically nothing. I've also had some good times and saved lots. But people like you are not what I see around me now.
Maybe things are more prosperous in this DC area (sucking $$$ from the rest of the country) than where you are. (SE La?)
You have a car paid for -- good for you. I respect anyone who drives a paid-for car. No cable? Even better. (I've lived without even a TV at all for years of my life, too cheap to pay TX tax.) Dude, you don't get my scorn -- you get my praise for working out what you can with what you have.
The people I'm talking about are, for example, the co-worker I just got off the phone with. Two new cars on borrowed money, new deck on his house (done in cedar, not pine "bacause it really looks a lot nicer"), manager's salary and his wife working as well, yet he can't/won't save a dime. How do you feel about them?
I do have great sympathy for those who strive to make it but sometimes can't, through no fault of their own. I help those folks, too. (Had some stay with us for months once.) It's the ones who *can* save but instead squander it every week who annoy me.
Bogalusan, Bogalusan. Got it. Sorry. I just can't spell sometimes.
If we are so much richer, in real terms, how come we can't pay our bills? How come when we were supposedly poorer, we were the worlds bank, and now that we are so so rich, we have to supplicate ourselves to the Chinese to keep our day to day affairs running?
Who said we were richer in real terms now? Me? OK, maybe!
But seriously, the problem I see around me is plain old overspending. I'll reiterate: Paying $35,000 for a minivan is just way over the top for a typical family. They don't have that money in the bank, so they end up in debt for 6 years for that depreciating thing. At least the car is safer than 35 years ago, and better equipped as well.
And in recent years, I've seen a lot of friends buying niiiiice HDTV's -- on credit -- and to match that, they go off and get the $100+ per month cable package. Sure, you guys reading this blog might not buy that stuff, but I know a lot of people who do -- people who say they "can't" save money.
I don't have many friends who still live in 1-bath houses, either, like I lived in of my younger life. Now every kid gets his own bedroom, and 2 or 3 baths per house. That's not "richer" than the 1970's?
These are people who claim to be living on the edge, but compared to life in the 1970's when people complained about prices and bills as well, it is really that bad now overall? Live on the edge then, live on the edge now... I'll take now.
$35,000 for a minivan is just way over the top for a typical family.
That's the issue at hand... in 1970, a "minivan" didn't really exist, but how much did a brand-spanking-new 4-door-sedan (seats 5 people) cost circa 1970 relative to the average wage? Two or three months' wages?
Your $35,000 minivan today is close to a full years' after-tax salary for a helluva lot of people. I know the response is, "Well, they should buy a used minivan then". Maybe they should, but it shows how vastly decreased our purchasing power has become.
Houses have undergone the same thing. Even if you stick with "1-bathroom houses" or whatever, you can't seriously tell us the same house is more affordable today than it was 40 years ago.
I think minivans are more like $18k if you go with a Chrysler product. Caveat: It will break easily.
Nope, a 2009 Town and Country van starts at over $27K. For $18K you can barely buy a Corolla or Civic.
I can remember in the 70's my parents buying new cars for like $3K. Of course, Dad made around $16K so we were sitting pretty.
Oh, and that $3K was for a station wagon. Remember those? The un-tall predecessor of the mini-van?
My first goal with a job was to have a years worth of wages saved. That, at least, allowed me to say FU! to any job that crossed lines. FWIW, I survived the great oil crash of 1982 here in Houston...
Michael, when I read the Barnacle auto section I see ads for sub $20k Chrysler mini vans.
Anon, I got my first "real" post-college job during the tail end of the Houston oil bust. Lucky, I guess. I hooked up with a company that wasn't tied into the oil and gas business. We sold FORTRAN subroutines. Heh!
I think I am one of the oddities: A Houstonian with a degree who has never worked in anything energy related.
Well, I know houses, and affordable, safe, cheap houses are illegal. You have to overbuild starter homes. So, people build illegal basement and garage apartments.
For example, 1970's single pane, no storm window might be a hundred buck, or less. Illegal now. Hear, on the coast, you have to have a hurricane approved window. Try 3-4 hundred.
Also, lot size. You used to have affordable, one parent working( remember those?) on a eighth of a acre lot.
Illegal.
I could go on.
Well, I know houses, and affordable, safe, cheap houses are illegal. You have to overbuild starter homes.
I'll certainly agree with you on that one. Every time I see do-gooders in the government "raise the standards", I have to think it's another cut in the death-by-a-thousand-cuts for home affordability.
North of here, in Frederick County MD, is a fine example: There, new houses now have to have a frikkin' fire sprinkler system! It's not just the cost of the system -- it's also the required double-flow well if you're in exurban areas. It adds "only a few thousand" to the cost of the house, say the proponents. Like eight thousand. OUCH!
And it's illegal to say no thanks. :-( This is just one of the many things that we are doing to our own selves to push affordability out of reach.
At risk of spouting a platitude, freedom means the ability to make choices, be they good or "bad".
Is it better to be in debt to my ears and have a safe, eco-friendly house that's 2/3 the size I want? Might be good for some, but I'm I don't like being forced into that deal.
Houses and vehicles are the biggest expenses for most households.
In the late 1970s I grew up in what was then a mansion - a 4200 sqft. home.
It was fun hiding from siblings, but in reality we used little of that space - formal spaces like living/dining/library were never used except for once/year parties.
Now 5000+ sqft. 'McMansions" are common, and still make economic sense for no one but millionaires, even if the builder will finance it for you at 4%.
$75,000+ Mercedes and Beemers were another way for the middle class to fritter away their money.
Many even now earning nice low to mid-six figure incomes happily did the above over the last couple of decades, and are now paying the piper.
I think minivans are more like $18k if you go with a Chrysler product.
You're definitely in the ballpark for any but the un-cautious shopper -- or those who just have to have a really nice ride.
Actually, around here at Fitzgerald's no-bargaining place, you can get any number of Toyota Siennas for about $25k, or try a new Hyundai Santa Fe for under $20k. This is with no negotiation. A sharp bargainer will go for the new 2009 Santa Fe for $15,300+tax/fees at College Park Hyundai.
By the way, the Chrysler Town and Country looks bloody expensive (to me anyway) for what you get. I wouldn't go near it at those prices, or is there something in that thing that I'm not seeing?
Post a Comment