69 Percent Of Americans Do Not Have An Adequate Emergency Fund

Tyler Durden's picture

Authored by Michael Snyder via The Economic Collapse blog,

Do you have an emergency fund?  If you even have one penny in emergency savings, you are already ahead of about one-fourth of the country.

I write about this stuff all the time, but it always astounds me how many Americans are literally living on the edge financially.  Back in 2008 when the economy tanked and millions of people lost their jobs, large numbers of Americans suddenly couldn’t pay their bills because they were living paycheck to paycheck.  Now the stage is set for it to happen again.  Another major recession is going to happen at some point, and when it does millions of people are going to get blindsided by it.

Despite all of our emphasis on education, we never seem to teach our young people how to handle money.  But this is one of the most basic skills that everyone needs.  Personally, I went through high school, college and law school without ever being taught about the dangers of going into debt or the importance of saving money.

If you are ever going to build any wealth, you have got to spend less than you earn.  That is just basic common sense.  Unfortunately, nearly one out of every four Americans does not have even a single penny in emergency savings…

Bankrate’s newly released June Financial Security Index survey indicates that 24 percent of Americans have not saved any money at all for their emergency funds.

 

This is despite experts recommending that people strive for a savings cushion equivalent to the amount needed to cover three to six months’ worth of expenses.

For years, I have been telling my readers that at a minimum they need to have an emergency fund that can cover at least six months of expenses.  It is great to have more than that, but everyone should strive to have at least a six month cushion.

Unfortunately, that same Bankrate survey found that only 31 percent of Americans actually have such a cushion

The June survey also found that 31 percent of Americans have what Bankrate considers an ‘adequate’ savings cushion — six or more months’ worth of money to pay expenses — which means that nearly two-thirds of the country isn’t saving enough money.

That means that a whopping 69 percent of all Americans do not have an adequate emergency fund.

So what is going to happen if another great crisis arrives and millions of people suddenly lose their jobs?

Just like last time, mortgage defaults will start soaring and countless numbers of families will lose their homes.

If you do not have anything to fall back on, you can lose your spot in the middle class really fast.  And in the case of a truly catastrophic national crisis, trying to operate without any money at all is going to be exceedingly challenging.

Just recently, the Federal Reserve conducted a survey that discovered that 44 percent of all Americans do not even have enough money “to cover an unexpected $400 expense”.

That is almost half the country.

And a different survey by CareerBuilder found that 75 percent of all Americans have lived paycheck to paycheck “at least some of the time”.

Unfortunately, in a desperate attempt to make ends meet many of us continue to pile up more and more debt.  According to Moneyish, Americans have now accumulated more than a trillion dollars of credit card debt, more than a trillion dollars of student loan debt, and more than a trillion dollars of auto loan debt.

We’ve racked up $1 trillion in credit card debt — and that’s just a fraction of what we owe. That’s according to data released this year from the Federal Reserve, which found that U.S. consumers owe $1.0004 trillion on their cards, up 6.2% from a year ago; this is the highest amount owed since January 2009. What’s more, this isn’t the only consumer debt to top $1 trillion. We now also owe more than $1 trillion for our cars, and for our student loans, the data showed.

Overall, U.S. consumers are now more than 12 trillion dollars in debt.

We often criticize the federal government for being nearly 20 trillion dollars in debt.  And that criticism is definitely valid.  What we are doing to future generations of Americans is beyond criminal.

But are we not doing something similar to ourselves?

When you divide the total amount of consumer debt by the size of the U.S. population, it breaks down to roughly $40,000 for every man, woman and child in our country.

When someone lends you money, you have to pay back more than you originally borrow.  And in the case of high interest debt, you can end up paying back several times what you originally borrowed.

If you carry a balance from month to month on a high interest credit card, it is absolutely crippling you financially.  But many Americans don’t understand this.  Instead, they just keep sending off the “minimum payment” every month because that is the easiest thing to do.

If you ever want to achieve financial freedom, you have got to get rid of your toxic debts.  There are some forms of low interest debt, such as mortgage debt, that are not going to financially cripple you.  But anything with a high rate of interest you will want to pay off as soon as possible.

And everyone needs a financial cushion.  Unless you can guarantee that your life is always going to go super smoothly and you are never going to have any problems, you need an emergency fund to fall back on.

Yes, you may need to make some sacrifices in order to make that happen.  Nobody ever said that it would be easy.  But just about everyone has somewhere that a little “belt tightening” can be done, and in the long-term it will be worth it.

When you don’t have to constantly worry about how you are going to pay the bills next month, it will help you sleep a lot easier at night.  Many of us have put a lot of unnecessary stress on ourselves by spending money that we didn’t have for things that we really didn’t need.

And now is the time to get your financial house in order, because it appears that another major economic downturn is not too far away.

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NotApplicable's picture

I'm pretty sure that everyone has a penny jar, so it's all good.

Yukon Cornholius's picture

They got rid of pennies up here in the Great White North. Fuck UNICEF they said.

Muddy1's picture

"at some point"

That is a very safe statement for you to make Michael.  Even ZH hedges its' prediction by saying "on a long enough timeline..."

Your predictions a year ago for the fall of 2016 were a complete farce.  Perhaps it's time you found another line of work.

Paul Kersey's picture

And 76% of Americans are living from paycheck to paycheck, while 25% of children in America are living on food stamps (SNAP). Over 49% of Americans are receiving some sort of Government benefits, and, for those who are working, robots are being created every day to take your jobs. If only we could all get government cushy jobs with government pensions and just forget about that ever growing national debt.

Got The Wrong No's picture

This article reinforces my belief that I do not have an adequate ammo fund

GunnerySgtHartman's picture

You really think that government jobs like air traffic controllers are cushy?  I have ocean-front property in Arizona for sale ...

Paul Kersey's picture

"You really think that government jobs like air traffic controllers are cushy?"

Actually, looking to the future, I no longer count air traffic controller jobs as government jobs. So GunnerySgtHartman, get with the program. Today's government jobs may soon become tomorrow's private industry jobs.

"Trump Announces Plan To Privatize Air Traffic Control"

http://www.npr.org/2017/06/05/531574945/trump-announces-plan-to-privatiz...

GunnerySgtHartman's picture

I'll "get with the program" when those jobs are actually moved to the private sector (which is where I think they should be).  Until that happens, they are still government-sector jobs.

And I would like to see the naysayers on ZH handle the stress that goes along with being an air traffic controller ... bottom line: they couldn't do it.

Paul Kersey's picture

You really have no idea about the depth of the people who read and comment on this blog.  There are engineers, computer geniuses and even multi-millionaires.  The only commenter you can accurately speak about and for, on ZH, is yourself.

Déjà view's picture

German ATC has been operating under private rules since 1993...why can't U.S.?

DFS Deutsche Flugsicherung GmbH is responsible for air traffic control in Germany and is headquartered in the town of Langen close to Frankfurt. It is a company organised under private law and 100% owned by the Federal Republic of Germany. Founded in 1993, DFS is the successor to the Federal Administration of Air Navigation Services (BFS), a government authority. The German Constitution and the German Aviation Act (LuftVG) had to be amended by the Bundestag to make this possible.
https://www.dfs.de/dfs_homepage/en/About%20DFS/Business/

Endgame Napoleon's picture

Government jobs are mostly not cushy, but are steady with incremental pay increases, assuming you get through the bully gauntlet to get civil servant status, and in many cases, 80% of the people who do are -- magically -- are racial minorities.

For others, the problem is not just barely covering bills while employed, but covering bills Between low-wage, churn jobs, especially when bullied out by nice "working families" before the cutoff for UC.

Many people just go from temp job to temp job or from churn job to churn job, with most never getting UC, and the only workers whose wages are boosted up by monthly welfare and taxfare of up to $6,269 are single moms and immigrants.

The immigrants use their American-born children's SS cards to get benefits and always have a single, male-earner household, while the single moms use their own income, which usually consists of the 20 hours of required work per week / per welfare "reform," regardless of how this issue is dishonestly discussed by politicians who have never worked at the Department of Human Services, consulting the Earned Income Screen on a daily basis.

With so many welfare/taxfare moms and married moms with spousal income working for low wages that are supplemented by unearned income, wages will never go up for those with no unearned income.

But all Congress does is add more privileges for "working families."

The "working families" are always the focus, even though they either have two earned incomes or one income and free food, free rent, free energy and Child Taxfare Credit checks of between $3,337--$6,269, among other sources of unearned income added to their wages.

The single, childless people have one, low, earned-only income to cover rent and all other bills, no welfare and tax returns of $300 or less.

When they lose a job, nothing stands between their low wages and the street in many cases. They are also the most likely to lose their jobs and the first to go in cases where companies really have no choice but to let people go due to a lack of revenue.

Bully mommas stick together in hiring/retention absenteeism cliques, and they get away with it in almost every case. I have seen one mom fired for all-day, every-day absenteeism in a position of authority--no others, ever. And no, most of them were not meeting quotas, whereas many childless people who get the boot do.

Employers prefer an expendable workforce with unearned income.

Single, Childless Employee With a $10/hr churn job:

About $1,400/month in take-home pay, assuming she has full-time hours.

Rent -- $700/month in a low-cost city

Groceries, cleaning supplies, etc. -- $300/month

Gasoline -- $70/month, with many $10/hr workers having hr-long commutes that require a greater gas expenditure

Energy bill -- $70/month

Phone bill -- $60/month

State-required auto insurance -- between $20/month and $60/month, depending on everything from age, to profession, to where you live, etc.

Mandatory Obamacare -- From $70 to over $150, depending on age and whether or not your state accepted the Medicaid expansion

Depending on who you are, that amount of spending has already gone over your no-frills budget.

Here are the things you cannot afford ---- Ever:

Decent quality food

Housing in a safe area

A car note

A car repair

Clothing

Gifts for friends and family

Cable or internet service beyond your cellular service

A hobby

Anything that makes life worth living

An emergency fund

An emerhency fund is a good idea, but not realistic when you cannot afford your basic expenses while you search for another low-wage, churn job. Once you land another low-wage churn job, you must also get through the often three-week to a month period before you actually get a paycheck.

There is a ton of expense and hoop jumping even to get that much income. All of the temp and churn jobs that I held -- a Lot -- required everything from lengthy paperwork, to even more tests than the recurring tests I take to maintain my costly insurance licenses and all of the many tests I took to get a bachelor's degree, background checks and urinating in bottles, even though I never did any kind of drugs, not even in youth. I have never even been drunk. Yet, I go through this whole thing for every 6 weeks of temporary work at a low wage.

That is another reason why the concept of liberty is such a joke in this country. It all leads to nothing, not an emergency fund or anything else. You can knock yourself out, generating and retaining accounts, all you want. The absentee mommas who do not bother to 1) work hard or 2) meet the numbers do a little better. Just a few people are retained and paid decently for putting in real effort, mostly (or all) managers. Not that all managers all work hard, but some do.

Omen IV's picture

Well done !

The game is clearly brutal for those who don't have Victim Status

Endgame Napoleon's picture

It is the $80k federal jobs that are cushy. And 99% of those who have them are married to another high earner.

HRClinton's picture

The banks want everyone to have a HELOC, to help their stats and rats.

Blankenstein's picture

Not just HELOCs, the banks want to keep housing prices high so everyone needs a mortgage.  Can't have anyone paying cash and not paying the bank fees and interest. 

And the gullible sheep keep buying these overpriced homes thinking they are making an investment because their realtard told them so.  Most have large mortgages and are essentially renting, while having to paying high property taxes and all maintenance expenses.  

They will not be able to sell for more than they paid, because we are already WAY beyond the prices that the underlying fundamentals dictate and are in the late stages of housing bubble 2.0.

Déjà view's picture

Most income goes towards debt service...e.g.. mortgage...'hellscare'...tames INFLATION...less income remaining for items which are included in CPI.

Not A Doug's picture

That means that a whopping 69 percent of all Americans do not have an adequate emergency fund.

 

But, every one of them has a cellphone plan, cable, and internet.  The necessities of life, you know.

swmnguy's picture

The cell phone and the internet are indeed necessities these days.  Many jobs can only be applied for online, and require e-mail and cell phone contacts.  Indeed, with lower-cost unlimited data plans, if you buy an unlocked phone, it's cheaper than having a hard-line conventional phone, and the cheapest DSL service.

If I were still living at that subsistence level, as are many to most Americans, I'd have a cell phone with a good data plan before I'd have a car, probably.  Things have changed enough that that's the priority of needs.

Cable TV on the other hand is completely ridiculous.  I cut the cable years ago when my minimum package went above $25.  Now it's over $40.  The only channels I was interested in didn't show anything but programs about serial killers and Nazis when I had time to watch TV, and now they only show fake "reality" shows.  I made my own HDTV antenna with stuff I had in the garage and still have more TV than I care to watch, and less worth watching.  Netflix and Eurozone streaming websites fill all my movie and sports watching desires, but I'd rather read or work on things anyway.

Automatic Choke's picture

"...If I were still living at that subsistence level, as are many to most Americans, I'd have a cell phone with a good data plan before I'd have a car, probably...."

....But then what would you live in?

 

NordikAvenger's picture

Dude - that is totally retarded.  This isn't the 80's where you could live without those things. Today, and unless you pick the fields or do some sort of menial labor, most economic activity centers on the usage of a mobile phone and internet access (forget about cable, I agree with you there).  

Unless, of course, you are advocating withdrawing from this modern life -- then doing away with the mobile phone and internet is your first step.  Are you actually supporting a rejection of the modern order?

rbianco3's picture

My wife and I have discussed the idea of trashing our cell phones. The bullet points of our discussion:

  • Internet is a cess-pool of fear porn which can be self-fulfilling prophecy
  • Internet addiction is the elephant in the room- children are getting the same exercise that 60-year olds used to get
  • We both admit being addicted to the internet - and have been justifying it like any addict does
  • Technology being discussed (probably used) that targets people with dangerous radio frequencies in the vincinity of your tracking device (pinpoint attacks). 
  • Risk of being targeted and attacked by Alphabet agencies, and Alphabet company, (no coincidence) based on meta-data, possibly by mistake
  • Dumping phone may result in major negative life impacts, social, economical - is it worth it?

Anyone have the answers? Something doesn't feel right - and my instincts have served me well to date.

Kidbuck's picture

Pretty much a waste to teach the young how to handle money when they won't ever have any. As practical as teaching them how to handle kriptonite.

order66's picture

So glad that I get to pay $1100 a month for family health insurance that we don't use. Good times.

ParkAveFlasher's picture

Somebody's using it, is what's important.  Why, it could be a fine Muslim family, with lots of healthy young men who would make excellent sons-in-law (not like those terrible Amish).

It's also important that you have debt.  May use your debt to buy the goods that you need, like flat screen televisions and outdoor furniture.  Debt may also be used towards paying for food, in combination with WIC and other forms of credit.

SLEEEEEEEP

shovelhead's picture

Out here in thrifty flyover country, when your indoor furniture collects enough cigarette burns it becomes your outside furniture.

The really smart ones buy the metal outside furniture and put it inside and just sit on the old cars and appliances in the yard.

brushhog's picture

Dont pay it. Think about it like this....if your family is fairly young and healthy and you go 10 years without a major illness, you'll have saved 132,000 dollars. In my area you can buy a small house for that. If something does happen you can go out and buy a policy anyway because they cant turn you down. It's a no brainer.

Bemused Observer's picture

Stop paying it.

This health care crap is ridiculous...health insurance has nothing to DO with health, or insurance. It is simply a guarantee that the doctor and the insurance company will be paid for any health care you DO manage to get...it is insurance for THEM, not for you. Why on EARTH would anyone PAY for someone else's insurance? Fuck THEM, let 'em buy their OWN fucking insurance on their OWN dime!

 

They're gonna want me to do my Medicare stuff soon...I am NOT paying for some 'part ABC' crap, for the reason stated above.

 

I am also NOT making ANY decisions on future medical issues, including the need for supplemental plans, until these fucking DOUCHEBAGS figure out what the fuck they're DOING with healthcare! I'm not a fucking PSYCHIC, and it's not my job to try and guess what they might be up to. They can call me when they get it figured out...I won't be holding my breath though.

Considering the current state of healthcare, and the lack of ANYTHING remotely resembling a plan, there is NO legal reason whatsoever for anyone to continue paying mandated amounts for healthcare insurance. Refuse to pay, and make them tell you just WHAT is in the works for this system. They won't, because they CAN'T, obviously...

It is not legal for them to do this, but it will have to hit the courts before they'll stop. They have zero legal basis for demanding that you pay into a system they haven't even set up yet but is already being dismantled, and where the things you are paying for today may not even be available tomorrow.

 

This is the gist of the convo I'll be having with Medicare soon. It'll be interesting to hear what they say.

ShrNfr's picture

I'm making book on how many times ZH will run this story in july. They appear to trot it out once a week.

xrxs's picture

 It's a big deal that more than half the country has nothing and storm clouds are on the horizon.

Philo Beddoe's picture

Wanna know how bad it is? True. I fucking swear....I lent my accountant $1000 bucks in April. 

nmewn's picture

Geeez, he's not even smart enough to embezzle funds and not get caught? 

I'd find another accountant if I were you ;-)

clade7's picture

Right?  We may not have any money or an 'Emergency Fund', but we got checkbooks and plenty of credit cards!   Fuck You Article Author!  You know Nothing about how we roll here!

rbianco3's picture

Holy freaking sheet.  

I'd never have guessed that in a million years -  his/her last name is definitely not Goldstein, Silverstein.

brushhog's picture

What percentage of American households have a positive net balance?  10? Less?

Hongcha's picture

Sheep are ripe for the shearing ... just a matter of timing.  Until then, sheep may safely graze. 

Yukon Cornholius's picture

What are you going to shear off a sheep with no wool?

Jason T's picture

we live and have lived in a time when it doesn't matter how much money you have saved, what matters is how much you can borrow.

 

This will pass however one day.  Let it not be premature.  

rbianco3's picture

I don't understand this part.

Losing our home (partially by choice, partially robbery) was the best thing that could have happened to us. We've purchsed a home with cash, have the fattest bank account we've ever had, an exploding crypto currency account, and we haven't taken out new credit since 2006 and have no plans to start. Why would I need to borrow money? Is it to leverage ourselves and capitalize on the coming inflation storm? For giggles, I applied for credit on Amazon, and they approved me for $5,000 - no idea why because my score is under 600 - possibly they can see the balance of our checking account - not sure. 

Should we focus on improving our credit score? 

ToSoft4Truth's picture

'No money but I got laid!'

Rainman's picture

The only man who sticks closer to you in adversity than a friend is a creditor.”
-Unknown

brushhog's picture

People are stupid, that's why.

Cozy Vanilla Sugar's picture

Spending all your money on dinners/drinks gets you laid. Very powerful motivator relative to "a comfortable future", which doesn't exist. 

The other issue - if you're currently a 22-35yo college/grad school grad, unless you got a scholarship, you borrowed $80k-$200k from the richest toll booth collectors in America just to get a job. Nearly impossible to save when you're paying $500-$2000 per month on student loans.

foodstampbarry's picture

This article has been posted every month since Lehman.