Half of Americans say that couldn’t come up with $2,000 in 30 days

[jeffrey]

Nearly half of Americans say that they definitely or probably couldn’t come up with $2,000 in 30 days, according to new research, raising concerns about the financial fragility of many households...

The survey asked a simple question, “If you were to face a $2,000 unexpected expense in the next month, how would you get the funds you need?” In the U.S., 24.9% of respondents reported being certainly able, 25.1% probably able, 22.2% probably unable and 27.9% certainly unable. The $2,000 figure “reflects the order of magnitude of the cost of an unanticipated major car repair, a large copayment on a medical expense, legal expenses, or a home repair,” the authors write. On a more concrete basis, the authors cite $2,000 as the cost of an auto transmission replacement and research that reported low-income families claim to need about $1500 in savings for emergencies.

Nearly Half of Americans Are ‘Financially Fragile’ - Real Time Economics - WSJ

[bjl584]

Unfortunate, but not surprising.

[disneysteve]

I've often wondered if Dave Ramsey needs to update his advice. He has been teaching to have a $1,000 starter EF for a long time. $1,000 really doesn't go very far today. One car repair and that's gone. One family funeral to attend out of town and that's gone. One uncovered medical expense and that's gone.

I agree with Brian that this is sad but not a surprise. Isn't the figure something like 65% of Americans are living paycheck to paycheck? That means they have zero reserve. They spend every penny they make when they make it. I think those of us who choose not to live that way often don't realize how very common that way of life is. Most people walking down the street are dead broke.

[bjl584]

Originally Posted by disneysteve

I've often wondered if Dave Ramsey needs to update his advice. He has been teaching to have a $1,000 starter EF for a long time. $1,000 really doesn't go very far today. One car repair and that's gone. One family funeral to attend out of town and that's gone. One uncovered medical expense and that's gone.

I agree with Brian that this is sad but not a surprise. Isn't the figure something like 65% of Americans are living paycheck to paycheck? That means they have zero reserve. They spend every penny they make when they make it. I think those of us who choose not to live that way often don't realize how very common that way of life is. Most people walking down the street are dead broke.

According to this article, 75% of Americans are living paycheck to paycheck.

CareerBuilder: Three-fourths of Americans live paycheck to paycheck | Kansas City Business Journal

[KiwiJo09]

Seems about right. Unfortunately, not everyone has the same mindset as us on this website. Savings is very important.

[maat55]

Not hard to believe. I was in that group at one time. Thrift, patience and personal responsibility are not predominate in our culture today.

[seen]

I only just recently got my sister down the right path in terms of starting to save money. She was one of those people who never saved anything either, so I knew there were other people like that out there too but...50% of the population!? That is an INSANE percentage for such a small amount.

[creditcardfree]

I believe it. I can easily say I know 5 people that $2000 would be a huge problem for. At least I'm not one of them!

[rob62521]

It's a frightening article, but I'd say it is accurate. Many of the folks we know couldn't come up with $2000 in a month without going to a credit card or one of those payday loans. The sad thing is I'm not talking about folks who are unemployed or underemployed -- just that they can't manage their money! They live for now instead of putting money back.

I would agree if Dave Ramsey thinks $1000 is enough for a start up...Suze Orman says at least 8 months and I bet she raises it to more months the way unemployment seems to be going on.

[Rosen4]

I hope I could earn that much here in our country.

[Frugal]

I would think that something more than 65% of Americans live paycheck to paycheck. Anyway, I agree that $1,000 in an EF is not nearly enough, and that advice is outdated!! I know people may think it is high, but I think it should be closer to $5,000. THat is the threshold that I personally feel comfortable with. 10 k is even better.

[dawnwes]

Well, I would be all for going back to the days before credit cards. People actually had to learn to live with cash and within their means.

I do consider myself fortunate in that since I finished college, I have never beeen in a position to worry about money coming in. I had a very secure job. DH now has a pretty secure job.

However, we didn't save nearly what we should have when we were younger and not as worried about $$. But, hindsight, right?

Dawn

[disneysteve]

Originally Posted by dawnwes

Well, I would be all for going back to the days before credit cards. People actually had to learn to live with cash and within their means.

Sorry, that's a myth. Even back in the General Store days, the shopkeeper would keep a record of your account and let you buy stuff on credit as long as he knew and trusted you.

As I've said many, many times, the problem is NOT the credit card. The problem is the person using the credit card.

[dawnwes]

Not really a myth.....the 80s particularly brought about high credit limits and people spending like they had all the money in the world.

The General Store was fairly low credit amounts.

I have credit cards right now with over 30K limits each....and they want me to open up more credit.

but you are right, it is the person using them.....people just don't get that.

Dawn

Originally Posted by disneysteve

Sorry, that's a myth. Even back in the General Store days, the shopkeeper would keep a record of your account and let you buy stuff on credit as long as he knew and trusted you.

As I've said many, many times, the problem is NOT the credit card. The problem is the person using the credit card.

[disneysteve]

Originally Posted by dawnwes

Not really a myth.....the 80s particularly brought about high credit limits and people spending like they had all the money in the world.

Certainly the credit card companies (and Congress for passing ridiculous lending laws) are at fault, too. I think the biggest problem was the disconnect between lending and ability to pay. In the past, you had to sit down with a loan officer and prove you had the means to repay a loan before they would give you a loan. The trouble started when they eliminated that practice. When a college student with no job, no income and no money could just sign up and get a credit card with a couple thousand dollar limit, something was wrong. "No doc" mortgages were the same problem. Lenders stopped requiring borrowers to be able to repay the money. Between our 4 credit cards, we have about $100,000 in available credit. That's insane. Still, at the end of the day, if we decided to actually use all of that available credit, it would be entirely our fault.

[photo]

Originally Posted by disneysteve

I've often wondered if Dave Ramsey needs to update his advice. He has been teaching to have a $1,000 starter EF for a long time.

I think that's terrible advice. I don't like the low interest rates that are paid on money markets, but especially with this economy, $1,000 isn't going to cut it for most families if their money is in the stock market or other investments where timing can be crucial.

[photo]

Originally Posted by Frugal

I would think that something more than 65% of Americans live paycheck to paycheck.

And I'll bet many of them drive newer cars, have more expensive clothing and more electronic toys than you and I do. The tragedy is that they often think they're more suave and sophisticated, that is, until their credit card bills become maxed out and someone loses a job. Then, all of a sudden frugal people are "lucky" they have money. Luck had nothing to do with it.

[nitemarecooper]

[quote=bjl584;294727]According to this article, 75% of Americans are living paycheck to paycheck.

Originally Posted by maat55

Not hard to believe. I was in that group at one time. Thrift, patience and personal responsibility are not predominate in our culture today.

I agree with both of you. Technically, due to my debt, I am in that "boat" now, but in the case of the $2000 in 30 days, that is primarily due to focusing so hard on getting rid of my primary high interest cc before starting even a small emergency fund.

[i.prosperplan]

Simply said, in general 50% of the public do not SAVE...