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On The Verge Of The Next Economic Crisis, 62% Of Americans Are Living Paycheck To Paycheck
Submitted by Michael Snyder via The Economic Collapse blog,
Nearly two-thirds of all Americans are completely and totally unprepared for the next economic crisis. As you will read about below, a new survey has found that only 38 percent of Americans have enough money on hand to cover “a $500 repair bill or a $1,000 emergency room visit”. That essentially means that 62 percent of the people in this country do not have an emergency fund. Even after the extremely bitter financial lessons that millions of Americans learned during the last recession, most of us are still choosing to live on the edge. That is utter insanity, and when the next major economic downturn strikes most people are going to find themselves totally unprepared.
The number one thing that you need to do to get ready for the coming economic collapse is to build up an emergency fund.
I know that is not the most “sexy” piece of advice in the world, but it is the truth. Just think about it. During the last recession, millions of Americans suddenly lost their jobs. Because they did not have any cushion to fall back on, millions of them also suddenly could not pay their bills and their mortgages. Foreclosures skyrocketed and countless families went from living a very comfortable middle class lifestyle to being out on the street in very short order.
And now because the people of this country have been so foolish it is going to happen again.
Because of my website, people are constantly asking me what they should do to prepare for the coming economic collapse.
I think that they expect me to say something like this…
“Sell everything that you possibly can and buy gold and silver, go purchase a llama farm, and dig a bunker where you can bury 10,000 cases of MREs.”
Not that there is anything wrong with those kinds of preparations.
But before you do anything else, you have got to have an emergency fund. My recommendation is to have an emergency fund that can cover at least six months of expenses in case something happens.
Sadly, a solid majority of Americans do not have any emergency cash at all. The following comes from the Wall Street Journal…
Only 38% of those polled said they could cover a $500 repair bill or a $1,000 emergency room visit with funds from their bank accounts, a new Bankrate report said. Most others would need to take on debt or cut back elsewhere.
“A solid majority of Americans say they have a household budget,” said Bankrate banking analyst Claes Bell. “But too few have the ability to cover expenses outside their budget without going into debt or turning to family and friends for help.”
The survey found that an unexpected bill would cause 26% to reduce spending elsewhere, while 16% would borrow from family or friends and 12% would put the expense on a credit card. The remainder didn’t know what they would do or would make other arrangements.
And of course this is not the only poll that has come up with these kinds of results. In fact, a Federal Reserve survey from last year produced similar numbers…
The findings are strikingly similar to a U.S. Federal Reserve survey of more than 4,000 adults released last year. “Savings are depleted for many households after the recession,” it found. Among those who had savings prior to 2008, 57% said they’d used up some or all of their savings in the Great Recession and its aftermath. What’s more, only 39% of respondents reported having a “rainy day” fund adequate to cover three months of expenses and only 48% of respondents said that they would completely cover a hypothetical emergency expense costing $400 without selling something or borrowing money.
Meanwhile, the financial condition of most American families is far worse than it was just prior to the last major economic crisis. As a recent MarketWatch article detailed, the average family currently has far less wealth than it did back then…
But while the jobs market is improving and the Affordable Care Act has given an estimated 15 million people access to medical care, the Great Recession does appear to have taken its toll on Americans’ finances; in fact, they’re 40% poorer today than they were in 2007. The net worth of American families — that is, the difference between the values of their assets, including homes and investments, and liabilities — fell to $81,400 in 2013, down slightly from $82,300 in 2010, but a long way off the $135,700 in 2007, according to a report released last month by the nonprofit think tank Pew Research Center in Washington, D.C.
So we have a lot less wealth, and almost two-thirds of us have no emergency cushion to fall back on whatsoever.
What could go wrong?
In addition, there is lots of evidence that much of the country has not bothered to make any preparations at all for even a basic emergency that would last for just a few days. For example, the following are results from a survey conducted by the Adelphi Center for Health Innovation that I featured in a previous article…
- 44 percent don’t have first-aid kits
- 48 percent lack emergency supplies
- 53 percent do not have a minimum three-day supply of nonperishable food and water at home
- 55 percent believe local authorities will come to their rescue if disaster strikes
- 52 percent have not designated a family meeting place if they are separated during an emergency
- 42 percent do not know the phone numbers of all of their immediate family members
- 21 percent don’t know if their workplace has an emergency preparedness plan
- 37 percent do not have a list of the drugs they are taking
- 52 percent do not have copies of health insurance documents
What are all of those people going to do if there is an extended crisis or disaster in this nation?
That is a very good question.
Meanwhile, the signs that we are on the verge of the next major economic crisis just continue to grow. Yesterday, I shared 10 things that happened just prior to the financial crisis of 2008 that are happening again right now.
Today, we learned that a major oil driller down in Texas has just declared bankruptcy, and many more energy companies are expected to follow suit in the coming months. The following is from the Wall Street Journal…
[S]igns of strain are building in the oil patch, where revenue growth hasn’t kept pace with borrowing. On Sunday, a private company that drills in Texas, WBH Energy LP, and its partners, filed for bankruptcy protection, saying a lender refused to advance more money and citing debt of between $10 million and $50 million. Neither the Austin-based company nor its lawyers responded to requests for comment.
Energy analysts warn defaults could be coming. “The group is not positioned for this downturn,” said Daniel Katzenberg, an analyst at Robert W. Baird & Co. “There are too many ugly balance sheets.”
And we also learned today that teen retailer Wet Seal is going to be closing two-thirds of its stores.
Dozens more retailers are expected to make similar announcements over the coming months.
We are moving into the most chaotic time for the U.S. economy that any of us have ever seen, and most Americans are totally oblivious to what is happening and are totally unprepared.
So what is our country going to look like when tens of millions of unprepared people are blindsided by a crisis that they never saw coming?
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It's hard to save when your average gullible, TV-hypnotized serf is too busy trying to keep up with the Joneses.
Exactly, a lot of these people aren't poor and make a decent middle class income (sometimes even upper middle class), they just are people who think they will continue to make money forever and there is no need to save. They are the ones who will be hardest hit in the collapse because they'll have thier lifestyles severely impacted.
What's wrong with pay check to pay check? If they were rich they wouldn't work. That's why we need so many poor people.
Another case of you saying the sky is falling when it's just business as usuall you advertising whore.
https://www.youtube.com/watch?v=VI6tBwVjyOY
Kiss my omnivorous ass.
Invest in the Soylent Corporation.
Yesterday called.
It wants its article back:
http://www.zerohedge.com/news/2015-01-07/3-5-americans-dont-have-savings-cover-unexpected-bills
Even though we are middle class we cannot save up 6 months of expenses. With very frugal living we have saved up 3. We also wish to continue our PM investment, 100% battery backup for our solar and sustainable living. Our incomes are not keeping pace with inflation, we are taxed to death and we've long gone through the easy cuts in our budget. Preparations as these do cost money, time and effort.
There are plenty of people we know in our situation that are living as if there is no end to the largesse. Expensive new cars, vacations and a lifestyle that is probably funded on a significant amount of credit.
Sometimes I really don't know if our approach is the correct one and all of this investment we've made will even pay off in the end.
Miffed
Agree. We drive ten year old cars and save via the usual routes. Our money has mostly gone into educating our daughter (16 yo college frshman) and saving for retirement. The nightmare is that our investments will go to hell and/or the .gov will come in and take it one way or the other to punish us for our unfair advantage/greed...
Miffed could not agree more. We make good money but taxes, fees, health insurance ( if you can call it that) and general inflation sucks you dry. If your kid plays a sport there is another 1,000, schools just passed another $700.00 per kid property tax increase so the teachers can keep up to inflation and fund their pensions. The system is designed to not let us get ahead, if we got ahead we may have time to change the politicians out through grassroots action, a poor serf is an easily controlled serf..
lol
>>What are all of those people going to do if there is an extended crisis or disaster in this nation?
No problem here. Some of "those people" will feel compelled to take any job from any source of authority and a paycheck... working for any purpose.
They will be told that they are doings God's work, for community and nation, dealing with malcontents and domestic terrorists.
Well said. By the way who are your picks for the divisional playoffs this weekend?
What's a ‘paycheck?’
Well, at least I can now go to community college for free as per Barry’s new plan. I hear the chicks there are hot!
After all, it’s “Free" right.
If the chicks are free you better bring your Captain Morgan as well.
Wow. Deja vu.
I've been ready for the collapse for years. (As ready as I can be, anyway.)
By the way, MRE's taste horrible. There are MUCH better long-term food storage options out there.
Fellow humans?
I've researched some "Long Pig" recipes. Some of them look down-right tasty!
It's advisable to avoid the brain tissue, however.
Vegen, the sweetest meat of all.
#41
A list of drugs I am taking, hmm.
OK.
1. Captain Morgan.
2.....
If we try harder, we can get this percentage up to 90%. Come on you slacker Amerikan's!
98% of the people are sheep, and will continue to be led to the slaughter.
99% of the people who use the term "sheep", will be led to the slaughter
Dudes you gots to be buying bitcoin.
Doesn't sound edible.
Nope. We're bullying bitcoin
EBT to EBT
One mantra to consider is; treat others as one wishes to be treated. Most often, but not always, good things, sometimes magical, come back. It's one of the better investments for the portfolio, imho.
I wish to left alone.
100% tho knows who their favorite negro football star is and what time the latest episode of the lardassians comes on.
When I had to go see a occupational counselor back many decades ago she said a career in animal care would be a good choice. I figured she meant cage cleaner at a vet. I walked out and eventually got a job with no skills at a foundry then they closed up and things were pretty desperate. I don't know how it would have been possible to save a dime back then. For many people saving $50 is an impossible feat. There are many subsisting on aid through no fault of their own and it is a tragic failure of my genefation . late boomers that this country has fallen onto these circumstances
I know very few who have good, stable, well paying jobs...with good benefits...who are not directly or indirectly getting a paycheck from the Government.
Police
Firefighters, EMTs , etc.
Teachers
Buerocracy , of all shapes, sizes and colors.
Defense contractors
Government suppliers
Government Contractors ( where 90%+ of the business is .gov)
But, but, think of all the money you would've made cleaning up after Paris Hilton's dog!
A missed opportunity, lost forever...
The key to living in bubbles is to realize that you are in a bubble. Cater to the crazy people, and tuck that money away elsewhere. A fool and their money...
You didn't have "any" skills? Clearly you could've been an occupational counselor
Or president of the United States
living with stone age people can open your eyes wide shut..but it's hard..i have lived on $5.00 a month, but that just supported me..a family and a wife and well you need $$..things you could do while young you cannot past 55 or so, no not sex - think cutting logs and hauling them on your back. most of the world spends much less than minimum wage in us and lives..we have as a country have a long way to fall - and for us middle class it is going to be hard very hard.
I have no debt, a job, and savings worth many tens of thousands.....and still i'm depressed here chasing valium with wine...
Yep, at the end of the day all we have is each other. Everything else is just noise.
You need a drinking buddy?
Good for you. Most of the idiots on here are chasing silver mining stocks with gold mining stocks
Everything about the current system from the top down has totally perverted the concept of debt, consequences associated with being deeply in debt, and benefits and incentives for saving. I can hardly fault people living in a country that only exists now for the purpose of being raped by its financial institutions, for following the examples set from 'the upper echelons of society' and grabbing what they can while they can.
Dependency has been a method to control man since the beginning of time. Empire's methods don't change - why fix something that is not broken. Rome had content slaves, America has "the great society". You tend to find dependent people are those with the least desire for knowledge or desire to learn.
Dependency has been a method to control man since the beginning of time. Empire's methods don't change - why fix something that is not broken. Rome had content slaves, America has "the great society". You tend to find dependent people are those with the least desire for knowledge or desire to learn.
Control through corruption is at the other end of spectrum.
After living through hurricane sandy and having no power for a month I know that there will be no emergency services. It was probably the best dress rehearsal we could have had. My wife gets it now. We have a season worth of firewood at all times and the means to hunt duck and other water fowl. The bank can Send the bill collector if they dare, good luck to them. After the initial shock, riots, fema roundups , it's going to be a fluid situation which will be hard to prepare for. I could see entire suburban areas burned down without fire services so being mobile is key too. Sheltering in place in my neck of the woods is not a viable strategy. Good thing there are a few sailboats that can be borrowed nearby.
You sound like a man who can learn to trap.
Thank you for this, what is the best source for good quality snares? I have been trying to teach myself snaring, but my loops dont close every time..
With about %60 labor participation rate that's about right. EBT and unemployment not considered a paycheck.
Why in fuck ZH posts this stupid copypasta shit I'll never know. It's the economic collapse, but don't forget your emergency fund.
I don't worry too much about it. I know what to do. As for the rest of the Americans in the survey, they VOTED for it. They WANTED this. And now they HAVE IT. Good luck to them. Actually, I really don't care if they have good luck or not. When you hand your life and decisions over to other people, you are already dead anyway.
Here's the thing you need to know, snyder- that same sixty-two percent are the ones who underpin what we currently call an economy. And, it's shrinking every day
That sixty-two percent includes the lower deciles of .gov employees, so- suffice to say, we have no hope of reviving this once proud republic.
More than half our population is dependent on .gov, in some way, shape or form.
No .gov has ever survived this, ever.
May all your babies be born naked.
That's 62% of the ones that do have a paycheck.
What's the overall figure though?
I don't see a reason to keep extra food and non-perishables around. My local Costco is loaded with them.
I don't either. Although I love using the term "non-perishables".
You ZH'ers crack me the f up. Name one fiat currency that died because of deflation. Bueller?
Taking on debt right now might be the smartest decision one can make. The Fed can NEVER raise rates - never ever never. If they do, hyperinflation sets in. If they don't, they will simply print until they achieve their inflation "goal". A 30 year mortgage at 3% is a steal.
A 3% mortgage represents buying 1,000,000$ house for 1,500,000 over 30 years.
Not much of a steal if you ask me.
Better off saving the money on the side and buying the house in 20 years instead of 30.... at which time rates will probably be 1.5%.~1.2%
in fed. speak, mission accomplished.
Aside from all the jokes, it sucks when you see it coming and everyone you know doesn't care. I'm 21 and I feel helpless. I've done my best to explain to my fam what's in store for us. They called me a fear mongerer. It's okay anyways, I only have an AR for one person. Enjoy the Captain Morgain, I'm more of a cannabis person. Smoke one. Drink one. Have a wonderful night ZH'ers.
I'm in Europe and most of the folks in my country live not even paycheck to paycheck. I guess 90% don't have any savings. I don't care. If things come crashing down you can always hang yourself or something. All that anxiety to survive is creating more anxiety.
I have watched way to many WW2 movies and some very hungry, thinny concentration camp prisoners have survived, whilst some fat ass and fit Nazi leaders ended up dead. At the end you can be a tough son of a bitch because you are a human. That is how we roll. No need to prepare. Just sit back and wait and enjoy your present Life as much as you can. Try to develop good social and mental skills, always helps in crisis situations.
Good luck to all of you, wherever you are.
Paycheck to Paychek hu?
What happens when Obamacare taxes steals one or two paychecks?
the country is going to look like a hot mess