"The Reality Is, Half Of Americans Can’t Afford To Write A $500 Check"

Tyler Durden's picture

The CEO of Assurant appeared on Bloomberg TV to explain why demand for his services is likely to increase: the chief executive of the mobile phone insurer said he expects a surge in demand as carriers charge customers more to replace their devices. “If you think back five years ago, you as a consumer didn’t know how much that phone cost, you thought it was free or close to free,” Assurant's Alan Colberg said Monday. “Now you’re paying $600, that’s a lot. So we’ve actually seen the attachment rate, or the number of people buying the product, going up a little bit in the last couple of years.”

He then proceeded to give Bloomberg his traditional sales pitch: Assurant is counting on growth at its business covering phones and appliances to help counter a decline in the segment that insures foreclosed homes for lenders. While improvement in the real estate market has limited the number of vacant homes, Colberg said there are still many cash-strapped consumers.

It is what he said next that caught our attention: “The reality is, half of Americans can’t afford to write a $500 check,” Colberg said. He spun that stunning statistic by saying that when US customers sign up for a cellular plan, they’re willing to buy protection in case “they lose that phone or something happens to it.”

In other words, there are millions of Americans who don't have $500 in the bank but are willing to dish out more than that on a cell phone, and then are stupid enough to make monthly payments that ultimately end up being far higher than $500 to protect their purchase... which they clearly couldn't afford in the first place.

* * *

That said, we decided to look into the CEO's claim about the woeful state of US finances. What we found is that according to a recent Bankrate survey of 1,000 adults, 57% of Americans don’t have enough cash to cover a mere $500 unexpected expense. Turns out the CEO was right. And while that may appear dire, it is a slight improvement from 2016, when 63% of U.S. residents said they wouldn’t be able to handle such an expense.

The survey's findings have shed light on how the so-called recovery of the past 8 years has skipped about half of the US population, which literally live paycheck to paycheck, and reflects a country in which many households continue to struggle with their basic finances more than seven years after the official end to the recession.

Putting the numbers in context: despite steady job growth during the Obama administration - which have been focused on minimum wage industries - wages have been predictably slow to recover, with the typical American household still earning 2.4% below what they brought home in 1999, when income peaked. Meanwhile, costs for essentials such as housing and child care have surged faster than the rate of inflation, placing stress on household budgets and making the accumulation of wealth, i.e., savings, impossible.

The bottom line:  About four out of 10 Americans said they had enough in savings to cover a surprise $500 expense. Another 21% said they would rely on a credit card, while 20% said they’d cut back on other expenses. Another 11% said they’d turn to family or friends for the money.

What is even more striking is that among Americans who earn more than $75,000 per year - a third more than the typical U.S. household earns - almost half also said they wouldn’t be able to cover a $500 surprise expense. Ironically, Millennials represent the generation most equipped to handle an emergency cost, with 47 percent saying they have enough in savings to cover one.

The Bankrate survey findings echoed research published last year by the Federal Reserve, which found that 46% of respondents said they would be challenged to come up with even less, or $400, to cover an emergency expense, and would likely borrow or sell something to afford it. When the Fed asked what types of emergency expenses Americans had actually faced in the last year, more than one out of five cited a major unexpected medical expense. The average expense: $2,782, or almost seven times higher than the Fed’s hypothetical $400 surprise bill.

How do cell phones fit in all of this? When it comes to reducing spending, dining out is the first place where consumers would cut back, with 6 out of 10 respondents saying they would eat out less. What is the "stickiest" expense? According to Bankrate, the least likely expense to face the chopping block are mobile phone plans, with the survey finding that only 35% said they would cut back on their wireless plans to save money.

In other words, Americans would rather be hungry than cell phone free. In retrospect, it may turn out be that Assurant's CEO, whose business model is a big bet on human stupidity, just may have a goldmine on his hands.

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aliens is here's picture

Only a fool would pay $500 for a phone.

SILVERGEDDON's picture

Jerking off the dog to feed the cat - the new All American pasttime. 

TeamDepends's picture

...because "central bankers" have stolen all their wealth. But it is up to them to figure this out, then take back what is theirs. If it takes slitting some banker throats and letting them bleed out live on pirated CNN, well that's just too damn bad for the bankers, isn't it?

Escrava Isaura's picture

Half Of Americans Can’t Afford To Write A $500 Check"

Don’t worry. In four years they will.

 

knukles's picture

I'll let you tell Mrs K she can't write a $500 check.

Escrava Isaura's picture

Sure. Not a problem.

It would go something like this: Honey I don’t have any more money, but I have plenty of time for you…………….well, until I finish blogging at Zero Hedge.  

 

Shocker's picture

Sounds like a problem with priorities. We all know the economy has been tough but if it been tough for you... then you make wise choices with your money.

Full Layoff List: http://www.dailyjobcuts.com

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TDK's picture

Man, your country is f*cked, what are you lot doing over there? And the orange ooma loompa in charge, governing by tweet like a grumpy schoolkid - unbelievable, you guys are gonna have to spend ages earning back the respect of the world that is slidin comically down the toilet... so long

beemasters's picture

Writing is easy. Paying it back is the problem. :)

techies-r-us's picture
techies-r-us (not verified) beemasters Mar 6, 2017 10:30 PM

"The Reality Is, America Is Cursed With A Curse"

http://biblicisminstitute.wordpress.com/2014/07/17/is-america-cursed/

Mano-A-Mano's picture
Mano-A-Mano (not verified) techies-r-us Mar 6, 2017 10:32 PM

That's why I moved South of the Border, watching all these poor souls moving North, not knowing what awaits them.

chunga's picture

Have you guys heard about shep wave, it's awesome.

Bill of Rights's picture

What paradise you live in asshole...

nightshiftsucks's picture

Like we give a fuck about what the world thinks.

NidStyles's picture

Respect of the world?

Japan loves us. Europe wishes it were us. No one else really matters.

QuantumEasing's picture

The Orange Oompa Loompa is still pretending he is in office. Even had his handler move in with him. But he is more of a shit umber color, rather than orange.

And if you are referring to the current president, get your eyes checked, he ain't orange.

But then again, you knew that already, and were just being an oxygen-stealing troll.

The respect of the world...hmmm, let me see how much that's worth...I have 27 cents in my pocket. I'd say that's about how much I'd spend.

Go grope a bullshark.

divingengineer's picture

You first asshole.
In case you didn't notice, the whole world is totally fucked up.

IntTheLight's picture

Well if you are a European, presumably 80% of your earnings go to government. But you get everything for free! Especially the Muslim and African immigrants.

Here, when you add in federal, state, sales and real estate taxes, it's about 50%. With Obamacare, more income goes to health insurance as you can no longer get a cheap catastrophic plan. We now pay for birth control and sex changes as a basic plan.

Add to that that the obscene cost of University and the fact that white men have been shut out of the workforce, life is hard for many decent people who are not splurging.

Tiwin's picture

You keep on fighting that good fight. Worrying and bitching about PENNIES whist the PENTAGON and LOCKHEED MARTIN rake in the 100 dollar bills!

Sex changes and birth control, a grain of sand....War and grafty weapons, the rest of the whole beach.

Good Partisan, good talking points! *pat pat*

IntTheLight's picture

I'm not fighting the good partisan fight. Pointing out why you once could get a catastrophic plan for 200 a month with 5000 deductible and now the plan starts at 900 with 5000 deductible. That's reality. Obamacare sucks.

Your condescension doesn't work with me. I see the big picture. I see the forest through the trees. But I also see the trees. And they matter!

Pat pat you condescending prig.

TDK's picture

if you were in europe, you would be paying about the same rate of tax but Health care and University would be FREE ... and there are less immigrtants than ion the states - you fuckwit - ignorance is no excuse !

unsafe-space-time's picture

We are printing all the green shit you can eat.

Escapeclaws's picture

Yeah, you got Merkel and Hollande. Ain't you the lucky ones.

prime american's picture
prime american (not verified) Escapeclaws Mar 7, 2017 7:29 AM

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... http://bit.ly/2jdTzrM

TeraByte's picture

Sorry the currency is already debased. A half of the world´s population cannot possibly sort their accounts by these simple means. Maybe such a practice still works in Brazil, but elsewhere high supply to demand puts prices into a deflationary spiral.

Caught_Fish's picture

Whats a check?

I haven't used them for over 20 years. Checks came from the same period as telegrams I believe, just after tally sticks. (look them up).

Now Czechs, there are some beautiful Czech women out there.

Of course you may need wet checks.

 

toady's picture

Had to write  $7k check in January... totally pissed off! 

I've dug out from under now, but it was tight for a while there.

Escrava Isaura's picture

Well, that places you on the top 10/20 percent.

But you can always join us down here on the 80 percent, because we sure can’t join you there, with, or without Trump.

 

cbxer55's picture

My sister is in hard times now, I wrote her a $600.00 check today, for her rent this month. Also paid her auto insurance for six months last week, which was a $500.00 check.

 

chunga's picture

And for saying you helped your sister you get junked. How nice!

cbxer55's picture

Yeah, it's sad. There obviously are some asshats on this site that think helping one of your family is a BAD THING!

NidStyles's picture

That's what you get for being White and hanging out with the cool kids.

Trucker Glock's picture

"Had to write  $7k check in January... totally pissed off!"

Now we know where the spammer gets his $7k per month.

cowdiddly's picture

Funny I wrote a 7800 dollar check and a 9500 dollar check the day before yesterday. I just payed the last 15 mortgage pmts on my house. Payed my mortgage OFF in 9.5 years never refied, I just got with it.. Pat's self on back. (and no, I did not get to have a lot of fun lately doing it)

Sorry I cheated they were not real checks. I used two different checks you get with a credit card that offered me zero interest for 15 months and 13 months. I figure those will just about stop as soon a Janet raises rates.

Screwed that sorry assed bank out of even more of their ursury they were planning on me gouging me for.

And the beauty of that is, I can pay the monthly minimum or any amount free of interest charge, pay more or just default the cards if I absolutely had to and the loan is now unsecured through NASA credit union and another bank. The unencumbered title is in the hand.

Oh, and if the Homeowners Ins trys rate jacking this time I really don't have to play the game unless I decide to keep it.

As a bonus, I have never had any relation to NASA whatsoever but I got into their credit union by using the check. Looking to be debt free by year end and its been awhile since I escaped the debt plantations. So close.

divingengineer's picture

0% You're doing it banker style now.
Citi offered me a 0% loan for a boat back in 2007.
Probably a coincidence.

Mustafa Kemal's picture

"The unencumbered title is in the hand."

Feels nice dont it. I did that exact same thing a few years back. Made losing my job much less stressful. Then on to a new job, with no mortgage payment. Whatever comes down the tubes, I dont have to worry if I can pay the mortgage payment.

Escapeclaws's picture

Don't forget to pay the rent--I mean property tax.

brianshell's picture

Just hope your CC bank doesn't sell out. The new bank will surely raise your rate to 23%. It happens.

Agstacker's picture

I remember reading a guys's comment a few years back here on ZH where he said he applied for and got several credit cards with 5 to 7 thousand dollars credit, was going to buy gold with all of them then declare bankruptcy.

rahrog's picture

Wonderful idea!

 

Pardon my French, but to borrow a phrase from their revolution - Let them (the banksters) eat debt certificates.

 

Vive la Revolution!!!

 

August's picture

To paraphrase both TeamDepends and Lord Acton, one fine day every unrepentant "banker" will have to be dragged out of his office, or from his very attractive home, frog-marched to the nearest major intersection, and shot in the head.

Just to be sure, perhaps the repentant "bankers" as well....

Gophamet's picture

Many will then steal the cats food!

Son of Loki's picture

Obama's recovery was too robust for many people and companies:

 

J.C. Penney closures could push dying malls over the edge


http://www.msn.com/en-us/money/companies/jc-penney-closures-could-push-d...

y3maxx's picture

Obama helicopter $$$ to the rescue.

Wait a minute....Obozo's gone now.

vato poco's picture

gonna need more than a bankrate poll and a ZH story to fix this. 

when was the last time you saw a kid driving an old beat-up clunker car? been awhile, right?

divingengineer's picture

Shitbags all drive NICE new cars now.
Never seen so many shithouse rats in new muscle cars as this last year.

Mustafa Kemal's picture

Chargers, Camaros, Mustangs. Lots of em.

a Smudge by any other name's picture

This is so strange. I keep telling myself I'm not that bad off. Here's proof.

WORKING POOR KICK ASS! WE'D KICK YOURS TOO IF YOU PAID US!