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Many don't have $2,000 for a rainy day

money.cnn.com

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Re: Many don't have $2,000 for a rainy day

#121

Post by robflynn »

artmageddon wrote: post #22
robflynn wrote: post #13

Earlier quoted context omitted.

Six months salary is what I'd always aimed for. I managed that well until recently. Now it hurts.

I read your other posts and hope you are able to work toward better days sooner than later. I have to wonder though - if you hadn't been prudent before everything happened, how much worse off would you be now? Something of a rhetorical question, of course :)

I probably would have been quite screwed. I didn't think that I would end up needing a bigger safety net than that, but I'm glad I had that around. Saved my butt!

Re: Many don't have $2,000 for a rainy day

#123

Post by aquark »

hugh3 wrote: post #73
ssharp wrote: post #11

I think it's very important to instill saving behaviors early on in your adult life. After graduating college, I had plenty of debt, but still made sure I was putting money into a savings account. Technically, it would have been much wiser to put any excess money towards 15% APR credit card debt than in 5% saving accounts (5% savings accounts did exist for a few years prior to the 2008 collapse), but actually having…

I think it's very important to instill saving behaviors early on in your adult life. Why early in your adult life? People should begin saving as children. My parents were sensible. I got my first bank account at the age of five, I think. They paid me some small amount of pocket money (two dollars a week?), and encouraged me to save it up to buy things I wanted, and to worship the magic of compound interest (it helps…

Agreed -- but that worked much better when I could buy a 13% savings bond (late 80's) than showing my kids the I realize that inflation may well have eaten into that 13% hugely but as a pre/early-teen that didn't factor into my view.

Re: Many don't have $2,000 for a rainy day

#124

Post by tricky »

hugh3 wrote: post #50
ebiester wrote: post #24

Earlier quoted context omitted.

You're looking at it from a middle class perspective. Unfortunately, most of these people are also deep in debt and have already made such cuts. This is the byproduct of double digit unemployment as much as anything. As much as we talk about consumption, most of it is at the middle class level. Now, I've seen poor people make very bad decisions, but many are on purchases you and I would make without a second thought.…

Unfortunately, most of these people are also deep in debt and have already made such cuts. Sometimes I wonder about this. How many poor folks are wasting their limited budget on frivolous crap? One reality show I really would like to see would be about a sensible financial advice type who parachutes into the lives of low-income, deeply-in-debt people and shows them how to budget properly.

I have a friend at work who I try to help. I can't count the number of times or ways I've tried to tell him pay day loans are bad news. The one time he came into some money (by cashing in a part of his 401K) I suggested he open an account at a credit union or even walmart (he lives 3 blocks away) but he ended up opening a "savings" account at a pay day loan shop because it was just around the corner.

It is horrible and sad but the reality is there really is no helping some people...

Re: Many don't have $2,000 for a rainy day

#125

Post by eli »

noodle wrote: post #45
pavel_lishin wrote: post #23

Earlier quoted context omitted.

Does having a credit card count? What if someone has a $5k debt on a credit card, and only $1k in savings? Should they prioritize getting more cash into a low-interest savings account, while racking up interest on the CC?

this is how i typically recommend people to prioritize their money: (1) pay your bills (2) get a small emergency fund together (enough to pay for a small emergency, car breakdown, 1 month's living expenses, etc) (3) pay down high interest debt (credit cards, etc) (4) get a large emergency fund together (enough to support you for a few months if you lose your job, major emergency, etc) (5) invest and pay down low inte…

I'd extend that emergency fund to more than a "few" months worth as soon as possible.

If you lose your job, it may take quite a few months to find a new one.

Re: Many don't have $2,000 for a rainy day

#126

Post by robflynn »

pyre wrote: post #118
sunchild wrote: post #56

Earlier quoted context omitted.

Don't be embarrassed. Many "rich" people have similar problems. It's just that, in their case, the cash flow figures are larger by orders of magnitude. Desperation can be a tremendous motivator, and a great way to set priorities. Think of yourself as a newly-arrived immigrant. Now make your way in your new world. Whatever you do, don't let depression set in. Depression = failure. Even if you struggle to pay the bills…

> Depression = failure Just to clarify, depression (mostly) leads to failure. Depression doesn't define you as a failure.

Correct. I got what he was saying but I can see how it could be read another way.

Depression did set in for a while, which is why I allowed myself to get stuck with the unsatisfying job. "Work is work, right?"

I've since kicked the depression from everything that happened in those few years and am feeling great. I can finally see where I need to be and the path to get there... so that feels good. :)

Re: Many don't have $2,000 for a rainy day

#127

Post by hugh3 »

djcapelis wrote: post #112
hugh3 wrote: post #50

Earlier quoted context omitted.

Unfortunately, most of these people are also deep in debt and have already made such cuts. Sometimes I wonder about this. How many poor folks are wasting their limited budget on frivolous crap? One reality show I really would like to see would be about a sensible financial advice type who parachutes into the lives of low-income, deeply-in-debt people and shows them how to budget properly.

One reality show I would really like to see would be about sending entitled people into low income neighborhoods so we can all watch them realize just how hard working some people are and just how well most people manage their money. Maybe then they'd stop saying misinformed stuff like "all that person really needs is someone to help them with a budget." A budget helps you cut excess spending. There's not a lot of sp…

One reality show I would really like to see would be about sending entitled people into low income neighborhoods so we can all watch them realize just how hard working some people are and just how well most people manage their money.

That would indeed be interesting if it were true, regardless of your snarkiness. I'd be interested in seeing a show just like that regardless of how it works out.

Re: Many don't have $2,000 for a rainy day

#128

Post by btilly »

djcapelis wrote: post #112
hugh3 wrote: post #50

Earlier quoted context omitted.

Unfortunately, most of these people are also deep in debt and have already made such cuts. Sometimes I wonder about this. How many poor folks are wasting their limited budget on frivolous crap? One reality show I really would like to see would be about a sensible financial advice type who parachutes into the lives of low-income, deeply-in-debt people and shows them how to budget properly.

One reality show I would really like to see would be about sending entitled people into low income neighborhoods so we can all watch them realize just how hard working some people are and just how well most people manage their money. Maybe then they'd stop saying misinformed stuff like "all that person really needs is someone to help them with a budget." A budget helps you cut excess spending. There's not a lot of sp…

I know a lot of poor people who work hard and manage their money well. I also know a lot who could save themselves a ton of money with obvious (if not easy) steps like quitting smoking.

Re: Many don't have $2,000 for a rainy day

#129

Post by troels »

PonyGumbo wrote: post #32
naner wrote: post #16

$2,000 is not a "large medical bill" in the US. An unexpected medical problem will likely cost a lot more.

An appendectomy with an overnight hospital stay (went in at 8pm, left around 3pm the next day) was $24,000.

Ouch. Is this because you don't have any insurance?

Re: Many don't have $2,000 for a rainy day

#130

Post by noodle »

eli wrote: post #125
noodle wrote: post #45

Earlier quoted context omitted.

this is how i typically recommend people to prioritize their money: (1) pay your bills (2) get a small emergency fund together (enough to pay for a small emergency, car breakdown, 1 month's living expenses, etc) (3) pay down high interest debt (credit cards, etc) (4) get a large emergency fund together (enough to support you for a few months if you lose your job, major emergency, etc) (5) invest and pay down low inte…

I'd extend that emergency fund to more than a "few" months worth as soon as possible. If you lose your job, it may take quite a few months to find a new one.

agreed, this is just a back-of-the-napkin beginner's advice.
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