62% of Americans Have Under $1,000 in Savings, Survey Finds • Hacker News Board

Re: 62% of Americans Have Under $1,000 in Savings, Survey Finds

#261

Post by 6stringmerc » Thu, Oct 08, 2015, 8:11 PM UTC

brianclements wrote: post #243

6stringmerc wrote: post #231

Earlier quoted context omitted.

Your perspective is one that I share, on the nature of class-based economics in a 'consumer' society such as the modern United States. I'm going to copy/paste a summary that I sent to a former co-worker (CFA Level 3, >$6B AUM) for his thoughts and he felt I did an okay job (made me feel smart). So demographically, older workers have not saved enough for retirement. That drives them to maintain employment. With a lack…

That covers pretty succinctly a big chunk of a very complex problem. Thanks for that.

Honestly with him as my audience I have to tone down any cause-effect blame / hostilities that I genuinely harbor, because those are different subjects (though I did infer the fact that only workers over 55 in the US have gained in employment since 2008). Just describing the problem in terms people can understand seemed a worthwhile experiment. As context, he's an Asset Manager and Financial Advisor for the public sector, so there's nobody more disappointed in the lack of quality rate bearing gilt-edged securities than him, figuratively speaking.

Re: 62% of Americans Have Under $1,000 in Savings, Survey Finds

#262

Post by jtwaleson » Thu, Oct 08, 2015, 8:11 PM UTC

tracker1 wrote: post #223

Every extra cent I've had for the past 5-6 years has gone towards paying off medical bills from a hospital visit that exceeded my insurance policy's maximum by about $138k... I now have under $8k left to pay (everyone that would take sane payment arrangements or reductions has been paid off at this point). It's been very tough, I emptied my retirement accounts and have handed over tax returns etc. to pay it all off..…

Stories like this make me very happy not to be an ill person in the USA...

Re: 62% of Americans Have Under $1,000 in Savings, Survey Finds

#263

Post by refurb » Thu, Oct 08, 2015, 8:17 PM UTC

Spooky23 wrote: post #258

refurb wrote: post #128

Earlier quoted context omitted.

But what was your real interest rate when they were paying 3-7% in interest? Back in the 1970's savings accounts were paying 15%+. However, inflation was double digits as well. You'd be lucky if your real interest rate was more than a few percent.

That's not what I'm talking about. I was yielding 5% interest on an ING Direct account in 2006 -- not exactly a crazy time for inflation. If you look at historical retail interest rates, 3-5% rates were typical in ordinary times.

I don't disagree, real interest rates are weird right now.

Just trying to call out that it's the real interest rate that matters, not the nominal rate.

Re: 62% of Americans Have Under $1,000 in Savings, Survey Finds

#264

Post by Elepsis » Thu, Oct 08, 2015, 8:19 PM UTC

branchless wrote: post #221

kdamken wrote: post #210

Earlier quoted context omitted.

Except that it's not rubbish. Most people do spend large amounts of their paycheck on things they don't need. Just because he makes good money doesn't mean his concepts of saving a large percentage of what you earn aren't sound. They apply to all income levels, even more so for the lower ones. Following his advice and sticking to a budget has gotten me from saving nothing every month to saving at least half of my tak…

He's not playing it straight. He's deriving income as a rentier but saying we can all live like him. We can't because rentier income by definition is income with zero value added. These guys hiding in the grey area are very damaging. Maybe you were a total fool with your money, but for most people they are on the breadline not because houses are expensive to construct, not because fuel is expensive but because they h…

You are starting from the inexplicable premise that these properties he rents out were somehow ill-gotten, and not the direct consequence of him saving significant amounts of his income while he worked a totally normal job and investing them intelligently in property.

And of course landlords (since you're obviously using rentier as a pejorative) DO provide a valuable service: housing to people who either value the flexibility of renting or don't have the finances to buy housing where they live.

Your apparent disagreement with the entire system of rental property around the world is certainly principled, but singling out Mr. Money Mustache as some kind of hypocrite for earning money off his investments is absurd on its face. Are you also opposed to people buying dividend-issuing stocks?

Re: 62% of Americans Have Under $1,000 in Savings, Survey Finds

#265

Post by hwstar » Thu, Oct 08, 2015, 8:19 PM UTC

The whole economy in America has no margin of safety and is a house of cards just waiting to fall down.

The average employee lives paycheck-to-paycheck.

The small business owner is constantly worrying about making payroll, and is constantly on credit hold with his suppliers.

The large corporations are holding profits offshore and are draining away the opportunities by offshoring.

The banks and Private Equity are conjuring up ways to rip the small business owner and common folk off.

Re: 62% of Americans Have Under $1,000 in Savings, Survey Finds

#266

Post by fancyketchup » Thu, Oct 08, 2015, 8:20 PM UTC

branchless wrote: post #196

whyleyc wrote: post #189

Earlier quoted context omitted.

I'm not sure you can argue MMM is trying to hide his rental situation given that he has published numerous blog posts discussing it in depth starting in 2011: http://www.mrmoneymustache.com/2011/05/23/get-rich-with-owni... http://www.mrmoneymustache.com/2011/06/29/good-times-for-lan...

His whole message of frugality makes zero sense in the wider context of his behaviour. He's giving advice to everyone but if everyone behaved as he did the world would end because we can't have a world where every family derives a significant proportion of it's income from two other families for zero value added.

And if everyone became doctors, who would you call to fix the toilet?

Re: 62% of Americans Have Under $1,000 in Savings, Survey Finds

#267

Post by morgante » Thu, Oct 08, 2015, 8:21 PM UTC

toomuchtodo wrote: post #190

morgante wrote: post #174

Earlier quoted context omitted.

> You're exactly the kind of person this article is pointing out, because your ability to be wiped away by the market is a precarious position to be in. Any scenario where the stock market declines by 99% ($100k to $1k) would basically mean the collapse of the entire financial system. I doubt your bank savings account would be very useful in that scenario. Moreover, I don't think this article is actually talking abou…

> Moreover, I don't think this article is actually talking about people who do save but just choose to save into high-return assets. I save 80-90% of my income, but it all goes into index funds. Does that mean I am not "a saver?" Not at all. This article is about people who aren't saving because they don't think its necessary or because they can't afford to. An emergency fund IS NOT an investment. It is insurance; tr…

> An emergency fund IS NOT an investment.

Why should one have an "emergency fund?" I would genuinely love to hear a good argument for why keeping any cash assets when one has significant liquid investments, as I've never encountered one.

Insurance companies invest their premiums. Why shouldn't I?

Re: 62% of Americans Have Under $1,000 in Savings, Survey Finds

#268

Post by abritinthebay » Thu, Oct 08, 2015, 8:23 PM UTC

throwawaymsft wrote: post #195

abritinthebay wrote: post #121

And people wonder why they say Tech is out of touch. Reading the comments here is a great demonstration. Examples: > who uses savings accounts anymore? > Cash on hand or it's invested in stocks, bonds and my home. > The truth is you're losing more money by not having any of it generating higher potential yields. > the total net worth of my wife and me is many orders of magnitude greater than what our savings account…

Thank you, the comments look like something from the Onion. "Oh, I don't have any savings either, it's all tied up in my money market account, stock portfolio, house, car, and business." When someone reads "less than $1000 in savings" and interprets it as "they must mean less than $1000 in a single investment vehicle" there's a huge empathy gap.

Seriously, the headlines write themselves:

"Young Tech Entrepreneur Says People in Poverty Just Need To Have More Money."

Re: 62% of Americans Have Under $1,000 in Savings, Survey Finds

#269

Post by donjh » Thu, Oct 08, 2015, 8:23 PM UTC

tootie wrote: post #34

nostromo wrote: post #10

Earlier quoted context omitted.

Also, the article title is very different than the actual survey question: > How much money do you have saved your savings account ? That's a very specific question. A person with $5k in their checking account or a person with $100k in a retirement account might still answer that they have no savings.

My net worth is probably top 5% or so and I haven't even had an open savings account in 10 years. Cash on hand or it's invested in stocks, bonds and my home.

The thing that I don't understand about this logic is that in the event of an economic downturn or disaster, if you lost your job the market would also be on the decline - the worst time to sell. Isn't it better to keep a couple month's expenses in savings, even if only for the peace of mind?

Re: 62% of Americans Have Under $1,000 in Savings, Survey Finds

#270

Post by hwstar » Thu, Oct 08, 2015, 8:23 PM UTC

brianwawok wrote: post #89

ryandrake wrote: post #69

Earlier quoted context omitted.

Curious, not criticizing: What is your plan if you get sick or laid off, or for some other reason need a large amount of cash immediately? I always thought it was common advice to keep ~6mo living expenses in cash savings for emergencies.

6 months is usually far too long to keep in direct cash / savings. I think 2-3 months direct cash/savings/checking is fine, then move excess cash to CDs or something semi-liquid. You totally CAN get money out of CDs, just sometimes lose your interest. If you have some kind of CD ladder or such going on - you can have a new CD coming out every 1-3 months anyway, which will give you the cushion you need after savings r…

I disagree with this. If you are semi-retired like me, you need to have enough cash on hand to weather a market downturn of 1-3 years. That way you are not selling stocks at fire sale prices to keep a roof over your head and food on the table.