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I ran into an article that may interest some of you. It states that the personal savings rate for individuals in 2006 was a negative 1%, the lowest since the great depression (when it was a negative 1.5%). Really scary stuff considering how well the economy has been doing in the last 5 years. People are REALLY spending, a lot!
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Re: Personal savings - lowest since great depression
That is crazy! We have a savings account, but awhile ago we had to use some of it and haven't put anything back in. This reminds me that I need to! -
Re: Personal savings - lowest since great depression
There is another thread about this. It was on yahoo this morning, so I guess we all read it.Comment
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Re: Personal savings - lowest since great depression
Oups, sorry for being redundant.Comment
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Re: Personal savings - lowest since great depression
That's ok, maybe more people will read and become aware of this!Comment
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Re: Personal savings - lowest since great depression
Getting sleepy, not thinking straight....
Anyways, I firmly believe that the vast majority of country do not save enough to save themselves. I also have no intentions of joining that vast majority.Comment
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Re: Personal savings - lowest since great depression
Agreed Broken Arrow. I will continue to save and invest for myself and my loved ones no matter what some "expert" says. I have heard this argument before where people say that people like us here on the forum hurt the economy because we don't spend enough money.BrianComment
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Re: Personal savings - lowest since great depression
We spend money!! I have a big house and fancy car!! I just scrimp on other things!!Comment
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Re: Personal savings - lowest since great depression
Saving is important and it comes out of my checking every month on an automatic basis. I live my life as if the savings don't exist. I then look to save more. I like the expression "we do not have to go to the bank" to be a reality all the time and not just in movies.
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Re: Personal savings - lowest since great depression
I heard this one the radio yesterday saying savings is at an all time low. Of course it is. People buy into the media blitz of you can have it now -- why wait. Very few people (except most of us on this forum) save for anything. I think people miss out on the anticipation factor as well of not saving.Comment
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Re: Personal savings - lowest since great depression
On the other thread regarding this topic, there was a link about how they calculated the savings rate. Amazingly, they don't include 401k contributions because they are taken out pretax. The calculation only includes what is saved out of disposable income!My other blog is Your Organized Friend.Comment
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Re: Personal savings - lowest since great depression
The rich people and seniors are supposed to spend. That is why they get nicer tax cuts. If the economy isn't moving along it's their fault. They're supposed to buy the overpriced houses and Hummers -- those luxuries are priced for them to afford. And with rising healthcare, insurance, and education costs for riffraff like my family, my spending costs aren't reducing at the rate I'd like.I will continue to save and invest for myself and my loved ones no matter what some "expert" says. I have heard this argument before where people say that people like us here on the forum hurt the economy because we don't spend enough money.
I'll be saving too, especially when the daycare/preschool years are over. And what I do spend, will be mostly for home improvements and efficiencies that will improve my net worth.
And I don't understand the argument about how savers are hurting the economy. Aren't savers deferred spenders? Aren't they securing the economy at some future point? At some point I'm going to want to buy a replacement vehicle. How is it helping the economy more if I take a loan out from a financial institution to buy a car, rather than using what would have been the interest charges for food or charitable giving or whatever?Comment
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Re: Personal savings - lowest since great depression
Whenever we build a house and sell it, we save the entire profit and do not spend it. We keep it in the bank.Comment
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Re: Personal savings - lowest since great depression
I know this one is a late response, but I only joined this year.Originally posted by thekid
I have a simple question.
They state "Savings is -1% for all of last year". But they never define "savings".
Is it money that is only put into a "savings" account? Does it count money that someone puts into a CD or Money Market account?
The reason that I ask is simple (if not obvious).
However, I'd like to provide examples wherein things may look skewed. My meaning here is that everything can't be looked at in a vaccuum.
Example 1:
I borrow $40,000 on low interest rate credit cards in 2005, and use the savings account as a means to pay the minimum payments back, all the while earning a higher interest rate in the savings account itself. Since the balance transfer needs to be paid off in 6-12 months (usually), I take the amount necessary to pay the credit card in full before the high interest rate starts up, which occurs in 2006.
Under this scenario, 2005 would have shown I had deposited an $40,000 in 2005, but in 2006 I would have spent almost $40,000.
Admittedly not everyone can do this, but I have.
Example 2:
I have already saved $75,000 and I'm only earning 2% (admittedly nowadays you can get 4%-5% on a savings account). I have a mortgage with $50,000 in principle left that has an interest rate of 9%. I cash out $50,000 to pay off the mortgage, because I'm still loosing 7%/yr, simple because I have a mortgage.
In this case, even though I had saved in all the previous 10-15 years, I decided to payoff the mortgage because I was about to retire or whatever. So now I have just taken out 66.67% of my savings, which will adversely affect the entire U.S.'s savings rate outlook.Comment
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Re: Personal savings - lowest since great depression
How is the number compiled?
If they ask my bank where I've got my checking, "Does Lux have a savings account?" Then the answer would be no.
If they ask my other bank, "Does Lux have a savings/MM/CD's etc.?" then the answer is yes.
I guess I don't understand how a reasonable compilation of this information would occur??? Are they tracking savings by your SS number?Comment
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