"A Sad State Of Affairs" - Two-Thirds Of Americans Have No Emergency Savings

Tyler Durden's picture




 

Submitted by Jim Quinn via The Burning Platform blog,

Whenever I see one of these stories about how little Americans have available for an emergency, my blood starts to boil. I understand that poor people making $25,000 per year are forced to live paycheck to paycheck. But when 63% of all Americans can’t handle a $500 emergency, and 46% of  households making over $75,000 can’t handle a $500 emergency, then they are just plain stupid, frivolous, and incapable of distinguishing between wants and needs. Delayed gratification is a trait almost non-existent among Americans today.

 

The first thing that infuriates me is the assumption that a $500 car repair or house repair is an unexpected emergency. It’s a fucking living expense. It’s not a fucking surprise. Your car will need new tires every few years. That’s $500 or more. Your hot water heater, air conditioner, roof, windows, etc. will need to be replaced. Everyone gets sick. That is not unexpected. Anyone who lives their life as if these expenses are a shocking surprise is a blithering idiot. And this country is crawling with blithering idiots.

 

So the majority of Americans can’t handle a $500 expense, but for the last two years there have been 35 million new cars “sold” to blithering idiots on credit or leases. Even though they have no money, they decide it’s a brilliant idea to commit to a 7 year payment of $300 to $500 per month on an asset that declines in value rapidly. Morons abound. These are the same people who must have their Starbucks coffee every day. These math challenged boobs could defer buying a Starbucks coffee every day, save the $3, and accumulate $750 of emergency savings in one year.

Most Americans are one paycheck away from the street

Some 63% of people can’t deal with a $500 emergency

 

Most households struggle to cope with financial surprises.

Americans are starting 2016 with more job security, but most are still theoretically only one paycheck away from the street.

 

Approximately 63% of Americans have no emergency savings for things such as a $1,000 emergency room visit or a $500 car repair, according to a survey released Wednesday of 1,000 adults by personal finance website Bankrate.com, up slightly from 62% last year. Faced with an emergency, they say they would raise the money by reducing spending elsewhere (23%), borrowing from family and/or friends (15%) or using credit cards to bridge the gap (15%).

 

This lack of emergency savings could be a problem for millions of Americans. More than four in 10 Americans either experienced a major unexpected expense over the past 12 months or had an immediate family member who had an unexpected expense, Bankrate found. (The survey didn’t specify the impact of that expense.) “Without emergency savings, you may not have money to cover needed home repairs,” says Signe-Mary McKernan, senior fellow and economist at the Urban Institute, a nonprofit organization that focuses on social and economic policy. “Similarly, without emergency savings, people could raid their retirement account.”

 

The findings are strikingly similar to two other reports, one by the U.S. Federal Reserve survey of more than 4,000 adults released in 2014. “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. And another survey of 1,000 adults released last year by personal finance website GOBankingRates.com found that most Americans (62%) have less than $1,000 in their savings account (although that doesn’t include retirement or other investment accounts).

 

Why aren’t people saving? Millions of Americans are struggling with student loans, medical bills and other debts, says Andrew Meadows, a San Francisco-based producer of “Broken Eggs,” a documentary about retirement. Central bankers hiked their short-term interest rate target last month to a range of 0.25% to 0.50% from near-zero, but that’s still a small return for savings left in bank accounts. Indeed, personal savings rates as a percentage of disposable income dropped from 11% in December 2012 to 4.6% in August 2015, according to the Bureau of Economic Analysis, and now hover at 5.5%.

 

More money and education can help. The latest Bankrate survey found that savings increased with income and education: Just 46% of the highest-income households ($75,000-plus per year) and 52% of college graduates lack enough savings to cover a $500 car repair or $1,000 emergency room visit. And while those figures could still be lower, Americans are willing to cut back on at least some expenses when money is tight: 58% say they’re “very/somewhat” likely to cut back on eating out, are likely to decrease their cable bill and 41% are likely to spend less on coffee at places like Starbucks, while 39% will seek out lower-cost cellphone bills.

 

But while unemployment is falling (5% in November 2015 versus 5.8% in November 2014) and the Affordable Care Act has given an estimated 16.4 million people access to medical care, the amount of wealth held by the middle class is shrinking. The share of income held by middle-income families has plunged to 43% of households in 2015 versus 62% in 1970, according to a report released last month by the nonprofit think tank Pew Research Center in Washington, D.C.

*  *  *

There are millions of brain dead Americans who are going to reap a whirlwind of consequences when this shit show implodes. They’ll be wailing and gnashing their teeth when their years of living for today catches up to them. Too fucking bad. The only way to accumulate wealth is to spend less than you make. It’s a lesson they failed to heed, and they will regret it for the rest of their pitiful lives.

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Thu, 01/07/2016 - 14:58 | 7012848 Dickweed Wang
Dickweed Wang's picture

They almost did not accept the money; the guy actually scolded me for carrying so much cash around, saying it is dangerous.

 

At that point I would have walked out of the store with my middle finger in the air . . . FUCK Apple!  Their shit is way over priced and is made by slave labor in China.

Thu, 01/07/2016 - 15:24 | 7013019 edifice
edifice's picture

Well, I was going to do so. As I was walking out, he apologized and gave me a student discount. LOL

Thu, 01/07/2016 - 21:28 | 7014997 Low IQ fan of VVP
Low IQ fan of VVP's picture

also teaching "economics" (read: Marxist interpertation every few sentences in the Development section and Keynesian in the more Financial/Trade section later on) instead of money...

"economics" != money; two very different things.

Thu, 01/07/2016 - 12:19 | 7011662 SillySalesmanQu...
SillySalesmanQuestion's picture

This country is crawling with blithering idiots.

We see them every day, at Wal-Mart, any fast food franchise, convenience stores, institutions of "higher" education, your local public school...and they are multiplying, daily.

Thu, 01/07/2016 - 12:47 | 7011903 cheech_wizard
cheech_wizard's picture

I never knock Walmart. I buy a new pair of made in China sneakers there every 6 months (average cost $10-$15).

When the sneakers wear out, the dog gets them as his new chew toy.

Standard Disclaimer: But you go ahead and spend upwards of $100 for the same thing...

(swoosh. he scores)

Thu, 01/07/2016 - 12:54 | 7011960 Polymarkos
Polymarkos's picture

How long until your dog goes after your new shoes instead of gnawing the old ones?

Thu, 01/07/2016 - 13:14 | 7012084 cheech_wizard
cheech_wizard's picture

In the 4+ years I've had him, he has never once gone after the new sneakers. He is surprisingly well trained. Of course it helps to remove any temptation by putting the new sneakers in the closet every night. 

Standard Disclaimer: I could probably train him to shit on a picture of Obama, since he is toilet trained to the point that if he does have to crap inside, he goes to the same spot on the dog pad every time.

 

Thu, 01/07/2016 - 14:55 | 7012836 Dickweed Wang
Dickweed Wang's picture

How long until your dog goes after your new shoes instead of gnawing the old ones?

 

The better question is how long before the dog goes after him for feeding the dog Chinese made shit . . . .

Thu, 01/07/2016 - 16:57 | 7013605 cordial savage
cordial savage's picture

The $100 is assumingly going to be a higher quality shoe, and should assumingly last longer with reasonable care.  I've had a pair of Nike cross trainers for ~4 years and will probably get a couple more.  Looks like we're even.  How are those cheap kicks working for your legs and back?

There's some argument for buying quality, within reason.  I have some Allen Edmonds dress shoes I bought for ~$200 about six years ago.  All I have to do is get them re-soled.  I work with guys who like to get bargain dress shoes for <$100 and have to replace them about annually.

Thu, 01/07/2016 - 13:35 | 7012258 ItsSnowingInColorado
ItsSnowingInColorado's picture

If someone doesn't have 500 bucks savings they are too poor to buy cheap shit. 

 

Thu, 01/07/2016 - 12:21 | 7011677 BobbyRay
BobbyRay's picture

Most are controlled by the limbic part of their brains and are addicted to one of the many possible addictions out there .... sex, drugs, cellphone, you name it. Assimilation almost complete.

Thu, 01/07/2016 - 12:21 | 7011679 BobbyRay
BobbyRay's picture

Most are controlled by the limbic part of their brains and are addicted to one of the many possible addictions out there .... sex, drugs, cellphone, you name it. Assimilation almost complete.

Thu, 01/07/2016 - 14:53 | 7012812 Dickweed Wang
Dickweed Wang's picture

. . . . and are addicted to one of the many possible addictions out there .... sex, drugs, cellphone, you name it.

 

Yes indeed!  TPTB surely know this (in fact have promoted it wherever and whenever they can) . . . it's simply the modern day version of the "bread and circuses" days in ancient Rome - and look what ended up happening in the end to that society.

Thu, 01/07/2016 - 12:22 | 7011683 Collapsed_Elast...
Collapsed_Elastic_Pants's picture

The standard of living is in dramatic decline. It takes more debt now to maintain the standard of just 10 years ago. Most people chase their tails and sign up for payment plans. For everything. Coming soon....grocery mortgages! The majority of folks I know can't distinquish an asset from a liability.

Thu, 01/07/2016 - 12:23 | 7011689 Batman11
Batman11's picture

"Delayed gratification is a trait almost non-existent among Americans today."

With industrialization and rapid gains in productivity the elite recognized that profits would be limited if people only bought what they needed, massive effort has been put in to ensure people respond to immediate wants with consumer purchases using subconscious desires that advertising and marketing appeals too.

People have been made this way to enable a consumer society and increased profits for the elite.

Without the desire for immediate gratification a consumer society would collapse.

 

 

Thu, 01/07/2016 - 12:24 | 7011705 ReaperCapital
ReaperCapital's picture

In other words, 46% of households making over $75,000 are overpaid AF

 

46% of  households making over $75,000 can’t handle a $500 emergency, then they are just plain stupid, frivolous, and incapable of distinguishing between wants and needs. 

Thu, 01/07/2016 - 12:25 | 7011710 matinee55
matinee55's picture

Jesus, you just made millions rush out to Starbucks for the $5 laaaatay to easy the stress!

Thu, 01/07/2016 - 12:25 | 7011713 o r c k
o r c k's picture

The only cure will be helicopter drops. (coming soon)

Thu, 01/07/2016 - 12:28 | 7011735 moonmac
moonmac's picture

One out of every 10 people in my subdivision has been living rent free for the last 6 years. I sure hope they were able to put away some Emergency Savings.

Thu, 01/07/2016 - 23:42 | 7015482 mkkby
mkkby's picture

Here's a hint.  Look at all the new trucks in the driveways.

Thu, 01/07/2016 - 12:29 | 7011742 taketheredpill
taketheredpill's picture

 

 

We live in one of the better neighbourhoods of my city.  All my nighbours drive BMW/Merc/Audi etc etc.  I drive a 2003 Civic, take transit to work every day, have shifted from Starbucks to Tim Hortons (soon to be Chai made in the office).  I also found a way to shave $5 off my daily lunch expense so there's $1,250.  I know there are people in my area that are going to be gutted in the next two years.  Live and learn.

 

Thu, 01/07/2016 - 12:31 | 7011763 edifice
edifice's picture

I have a 2003 Civic, too; the coupe! It has 230,000 miles on it, still runs like a champ. Colleagues ask when I'm getting a BMW or Merc (to, presumably, match theirs). I just shake my head, chuckle, and ask what their payment is. I haven't had a car payment in 10 years.

Thu, 01/07/2016 - 13:09 | 7012082 DanDaley
DanDaley's picture

I have a 2003 Civic...

 

Hey, me too...115K, 36mpg...good to hear that your is still running at 230k. I don't laugh at people with exorbitant (meaning: any) car payments because I've done lots of stupid things in my life, too. 

Thu, 01/07/2016 - 12:35 | 7011793 Lost in translation
Lost in translation's picture

My office is in a not-so-desirable, yet not inner city or an economically depressed area.  More like a dying, lower MC neighborhood.  Blue collar/working class, mainly.

I can't count the number of BMW's, Mercedes, and Lexus I see roaming around here and parked in driveways.  All of them new.

My now-departed mom used to say, "anyone can drive a nice car.  Show me where they live."

 

 

Thu, 01/07/2016 - 14:47 | 7012772 Dickweed Wang
Dickweed Wang's picture

I can't count the number of BMW's, Mercedes, and Lexus I see roaming around here and parked in driveways.  All of them new.

 

I live near one of the most economically depressed cities of the USA and can totally validate what you've said above.  You can go down into the "hood" in the city I live near and find almost every shit shack and dilapidated house has a car in front that is less than a few years old.  We're not talking about econo-boxes either - these are Denali's, Caddy's, BMW's, Lexus - you name it.  You also see these same people pulling up in the burbs where I live in their new cars shopping at the local super markets (there are NO super markets where they live) using their EBT cards for payment.  Something is definitely wrong with this whole scenario . . .

Thu, 01/07/2016 - 12:45 | 7011888 stock market loser
stock market loser's picture

Where should I mail your trophy?

Thu, 01/07/2016 - 14:38 | 7012711 Dickweed Wang
Dickweed Wang's picture

Good points!

Anyone that downvotes you is either a moron or a person that you happened to hit a real chord with (i.e. they know what you are saying is vaild but it rubs them the wrong way since it would require them to change their life style in some way to "get with the program").

Thu, 01/07/2016 - 12:32 | 7011765 Miss Expectations
Miss Expectations's picture

A survey of 1,000 is not large enough to conclude anything.  Don't even know if this survey was taken in Detroit.

Thu, 01/07/2016 - 12:42 | 7011816 Skiprrrdog
Skiprrrdog's picture

Idiots and their Starbucks...LOL. While I would be the first to admit they have some tasty beverages, there is *no way* I am spending $5.00 for a cup of coffee. If the average basement dweller/millennial saved that $5.00+ every day, imagine what just that would look like after 20 or more years. Assuming $35.00 a week, that makes $33,600.00 after two decades, not including whatever appreciation they managed on it. Pretty expensive cups of coffee...

Thu, 01/07/2016 - 12:39 | 7011822 ArgentDawn
ArgentDawn's picture

I know how Americans come up with $500 in an emergency, they dont pay the CC bill that month. Simple. FICO scores are for home buyers, they'll give a car loan to anyone.

Thu, 01/07/2016 - 12:39 | 7011824 youngman
youngman's picture

But they will vote for the first politician that will say they are going to double or triple Social Security payments to them....

Thu, 01/07/2016 - 12:51 | 7011937 Polymarkos
Polymarkos's picture

I agree: they'll vote for more...even if the more is just two times zero, or three times zero, or ten times zero.

 

Basic math seems to be the rocks upon which modern man is smashed.

Thu, 01/07/2016 - 12:42 | 7011848 Dickweed Wang
Dickweed Wang's picture

But while unemployment is falling (5% in November 2015 versus 5.8% in November 2014) and the Affordable Care Act has given an estimated 16.4 million people access to medical care, . . . .

 

By making the above statement the author puts the entire article in question as to it's conclusions and vailidiity . . . what is said above is TOTAL BULLSHIT!

Thu, 01/07/2016 - 12:45 | 7011879 Yen Cross
Yen Cross's picture

 If everyone did their part, and bought one ounce of gold, the world would be a much better place... :-D

Thu, 01/07/2016 - 13:26 | 7012202 edifice
edifice's picture

I've done my part. I have 1 beautiful Buffalo in the safe. Now, where's my trophy??  :)

Thu, 01/07/2016 - 12:45 | 7011881 Duc888
Duc888's picture

 

 

What is "emergency savings"?  If you have zero's and ones in someone’s bank terminal, that is not YOUR "money". 

If you have Greenbacks stuffed under your mattress, those FRN's are a debt instrument backed by nothing.

Thu, 01/07/2016 - 12:59 | 7012001 silverer
silverer's picture

Agreed.  And if that doesn't constitute an emergency all by itself, what does?

Thu, 01/07/2016 - 12:48 | 7011908 Project_Engineer
Project_Engineer's picture

Any extra $$$ I have after paying bills goes as extra payments on the last student loan. Of course I have a small enough emergency fund setup to cover unexpected issues that may arise.

Now a days you basically have to pay them just to have the savings account. .00000005% interest with a $4 service charge. Yes, I know there are places that offer 1% but most do not.

The title is right its a pretty sad state of affairs....

Thu, 01/07/2016 - 13:23 | 7012179 edifice
edifice's picture

My bank pays %0.001 interest per month. So, for every $1,000 in deposit, I earn $1 per month. Pretty sad. There is a $10 service charge, but it is credited back onto the account, since it has a positive balance. I keep $5k-$10k in there, for emergencies. 

Thu, 01/07/2016 - 12:48 | 7011909 Polymarkos
Polymarkos's picture

HOW CAN WE HAVE ANY SAVINGS? The Oligarchy is impoverishing us faster than we can accumulate anything. Prices go up, income doesn't. I've worked 55 plus hours per work week average over the last year, yet get to keep less and less.

NO cable, no credit cards, no new cars, no new this or new that. All DVDs come from the $5 bin at WalMart, when we can manage to afford even that.

 

I wish I made 75K a year; that'd be more than my family combined income EVER.

 

HOW IN HELL DO YOU GET A JOB YOU CAN LIVE OFF OF?

Thu, 01/07/2016 - 12:55 | 7011972 cheech_wizard
cheech_wizard's picture

You want my honest answer, it is expertise. (and in more than 1 area of study). Preferably in STEM.

Standard Disclaimer: Especially if you don't have nepotism in your corner.

 

Thu, 01/07/2016 - 14:10 | 7012506 Lost in translation
Lost in translation's picture

In my AO the STEM jobs are almost exclusively H1b visa-holders.  China, Taiwan, India, et al.

Not sure what the rest of the US looks like...

Thu, 01/07/2016 - 14:30 | 7012651 cheech_wizard
cheech_wizard's picture

I know exactly what you mean. I contracted as a verification engineer for Qualcomm in N.C. and I was the token white engineer. The other 9 in the group were H1-B visa holders from India. I also happened to have 20+ years of experience on them so while they got paid $23/hr, I pulled in $48/hr, and asked for a raise after a year. Another $5/hr...

But I quit after getting offered a full time position w/benefits. Took a small paycut, but the job is in the Midwest and the cost of living is a lot lower than the coasts. Last bastion of American-born engineers is in the Midwest.

 

Thu, 01/07/2016 - 14:21 | 7012585 Richard Head
Richard Head's picture

If you don't wanna end up like everybody else, you have to do things differently than everybody else. Advice like "go into STEM" is destined to fail because too many people are looking for easy answers like that. In the end, I think it all boils down to making yourself valuable and, to some degree, getting lucky with seeing or coming across opportunities.

Thu, 01/07/2016 - 14:36 | 7012691 cheech_wizard
cheech_wizard's picture

My digital fingerprints are on a lot of shit these days.

Every Sun server/workstation from MicroSPARC-II up through Victoria Falls...

Own the latest x-box/playstation? I worked on first silicon at AMD.

Own a Qualcomm cellphone? Yes, my fingerprints are there as well.

Standard Disclaimer: Why did I choose to become an engineer? Because generally I can't stand people. The fact that I have worked on so many microprocessors (in just about every capacity) over the past 20+ years makes me an easy hire these days.

Thu, 01/07/2016 - 14:41 | 7012730 Thick Willy
Thick Willy's picture

Yea, I work with WAY too many people these days in my IT career.  Way too many "normies" too, like people that watch football and TV.  It...sickens me.

Sat, 01/09/2016 - 13:23 | 7022270 Polymarkos
Polymarkos's picture

Easier said than done. Believe me, I've spent a lot of time over the last 20 years trying to find something to improve my lot in life. Even tech positions aren't as secure as they used to be.

Thu, 01/07/2016 - 12:48 | 7011917 Yen Cross
Yen Cross's picture

 The 'Law of Darwin", is alive and well in Amerika.

Thu, 01/07/2016 - 12:50 | 7011927 silverer
silverer's picture

The good news is that 2/3 of Americans voted for the situation they now live in.  As far as I'm concerned, they got what they voted for and should be celebrating.

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