Do you think this "fact" is true?

[disneysteve]

I saw one of those lists that circulates on facebook and it was a bunch of "facts" about America. The one that caught my attention was:

If you have $10 in your pocket and no debt, you are wealthier than 25% of Americans.

Do you think that is true? I guess it really isn't too hard to accept since most people have some type of debt: car, home, school, credit cards, etc. However, most people who have debt also have assets so that alone isn't enough of a criteria. We have a mortgage and a car loan but our assets exceed our debt by a whole lot more than $10.

[Petunia 100]

No, I don't think it is accurate. Just Googling quickly, I saw this paper http://web.stanford.edu/group/scspi/...lth-levels.pdf which says the 25th percentile had a net worth of $3,200 in 2013.

Not impressive, but more than $10.

[disneysteve]

No, I don't think it is accurate. Just Googling quickly, I saw this paper http://web.stanford.edu/group/scspi/...lth-levels.pdf which says the 25th percentile had a net worth of $3,200 in 2013.

Not impressive, but more than $10.

On the other hand:

http://usatoday30.usatoday.com/money/perfi/basics/story/2012-05-12/households-net-worth-university-of-michigan/54912016/1

This article says that 1 in 5 households have more consumer debt (not counting car loans) than they have in assets.

http://www.marketplace.org/topics/wealth-poverty/about-half-america-has-zero-net-wealth

And this one says that 50% has a zero net worth.

http://www.fool.com/investing/general/2013/06/10/america-is-richer-than-ever-most-americans-are-not.aspx

And the 3rd chart down shows that 23% of households had a negative net worth in 2010.

[JoeP]

There are two primary problems with any net worth calculation.

The first is ignoring the penalty for accessing taxable funds. So that $600k retirement account is actually worth less once you figure tax loss upon withdrawal. Of course, you rarely withdraw the whole amount at once, so what remains (usually) grows some as well.

The second is estimation on the actual cash value of assets. A house really doesn't have any value until the transaction has completed and money is in hand.

So in truth, one's net worth is an exercise in 2 calculations that are fluid.

But back to the OP, people probably don't care. As long as they have some spending money every week and nice cars, they probably feel successful...even if they have student loans, 3 car loans, a 30 year mortgage, no retirement, no emergency fund, perpetual credit card balance, etc.

[QuarterMillionMan]

[marvholly]

I do not know if that "fact" is true. it is NOT within my experience in life EVER. The people I associate with (friends & family)have WAAAAY more than $10 between cash on hand, checking, savings, CDs, IRAs, 401k/403b........

On the other hand both daughters teach in different nearby towns w/significant numbers of people getting housing, food, free lunch........types of assistance. that said, I have OFTEN seen people paying for groceries partly w/food assistance programs & partly cash (some junk food but mostly things like toilet paper, cleaning supplies & personal care items which are NOT covered).

[bjl584]

Not sure if that's true or not. But, it does point out that most Americans do truly have nothing. Most of my coworkers and friends have more debt than assets, so with $10 in your pocket, you may very well be "richer" than most people.

[feh]

I do not know if that "fact" is true. it is NOT within my experience in life EVER. The people I associate with (friends & family)have WAAAAY more than $10 between cash on hand, checking, savings, CDs, IRAs, 401k/403b........

Yes, but how much debt do they have?

The OP was about net worth.

[Reggie]

The exact numbers may be a bit exaggerated, but the point is that a lot of people are carrying a lot of debt. Yes, they have money in the bank and drive new cars, but they are slaves to payments and will have to work forever.

I can almost understand car loans and mortgages, but credit card debt is just inexcusable for most people.

[ua_guy]

I don't know if I believe those exact statistics, but I'm willing to believe the majority of Americans are one paycheck away from being insolvent, and have inadequate resources in general.

[disneysteve]

I don't know if I believe those exact statistics, but I'm willing to believe the majority of Americans are one paycheck away from being insolvent, and have inadequate resources in general.

I've seen various reports saying that 70% of Americans live paycheck to paycheck. Pretty scary stuff.

[humandraydel]

Do you think that is true?

I don't know what the net worth of the 25th percentile is, but I have no doubt that the spirit of this fact is true - that the net worth of the 25 percentile is surprisingly low.

[Singuy]

Considering most college students essentially lived 4-8 years of their lives on government money, it will take these graduates forever to see a positive net worth...not to mention when you put a mortgage and a car payment on top of that.

My wife: 2 years out of school making 140k/year. Total net worth, still $-50000

[disneysteve]

My wife: 2 years out of school making 140k/year. Total net worth, still $-50000

That's pretty darn good. When I was 2 years out of school I owed about 100K in student loans and had just taken out a 128K mortgage so I was negative over 200K.

[hamchan]

It's highly unlikely that a homeless person would have zero debt. Part of the reason I wound up homeless ten years ago was because my credit score was so ****ed from medical debt that I could not get any kind of credit at all.